The other population problem

For years, one of the major problems facing the world and India was an exponential growth in population. But, in recent years, that problem might have reversed. The United Nations estimates that 27 countries have fewer people now than in 2010, and 55 will have their populations decline in the decades to 2050, which means falling populations will become normal. This brings with it a series of worrying geo-economic consequences. For example, some economists who see economic growth per capita arising from productivity increases, which in turn are driven by innovation, worry that a smaller population might produce fewer innovations — thus, eventually leading income per capita to stagnate even as the population falls. Others are concerned that expectations of a falling population mean that producers’ expectations of future demand are similarly lowered, leading to a crisis of aggregate demand and investment. Yet some others point out that these very effects could lead to a further decline in fertility, as parents feel the need to invest in fewer children given their dimmer prospects.

 

Population stagnation, once associated only with the rich economies, is now also seen in middle-income countries — and in those states of India that are also at the upper-middle income level. The Economic Survey of 2019 had an entire chapter on Indian demographics that will likely become a standard reference in the years to come. It projects total Indian population growth in the two decades between 2020 and 2041 as being just over 12 per cent. But this conceals great variation in population growth and fertility across regions and states. Some states, such as Bihar, will grow by 25 per cent — in other words, at historically comparable levels. Others, such as Andhra Pradesh (AP), will barely see any population increase — the Economic Survey suggests that AP will have its population grow by only 3.4 per cent between 2021 and 2041. By the fourth decade of this century, the Survey suggests that the population of Tamil Nadu will actually be shrinking. The implications of a changing age distribution will begin to be felt even sooner. By 2031, the size of the working-age population will start to decline in 11 states. In other words, Indian policy-makers should be preparing for a situation in which large parts of the country will suffer the “rich economy” problem of stagnant or declining populations.

 

Kerala, which has impressive human development indicators, saw annual population growth of only 0.5 per cent between 2001 and 2011. There is much to be learned from those areas of the country that are dealing with the peaking of school-age population. The effects are already being seen on the school infrastructure. The Survey reported that the number of elementary schools with under 50 students has increased in the 2010s for every state in the country, with the sole exception of Delhi. Health infrastructure will also have to be upgraded to deal with more older patients. With fewer students and a large number of older people to support, the level of human capital imparted to each member of the workforce becomes vital. The macro-economic effects must also be kept in mind. India can no longer hope to depend on the growth impetus that came from an increasing proportion of the workforce — unless that is augmented in other ways. Getting more women into the workforce is the only way to counteract this phenomenon.

 



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