Demographic destiny

India has a limited window of growth

Last week, the United Nations (UN) released the “World Population Prospects” report, which, among other things, estimates the future path of demographics in the world as well as makes predictions for countries and regions. The report argues the world will continue to see an increase in population, which will cross 10 billion, till the early 2080s; after that, an aggregate decline will set in. This overall trend, however, conceals considerable regional and national variation. Much of the population growth in the later years of this period, for example, will happen in Africa, particularly sub-Saharan Africa. Many of the countries there, such as Somalia and the Democratic Republic of the Congo (DRC), are economically backward and politically unstable. Some of them, such as the DRC, are also in possession of considerable natural resources, which will only increase in value over the coming decades. They will unquestionably — with young and restless populations and competition over resources — become future global and geopolitical flashpoints.

The report also suggests India will remain ahead of China in terms of population for the foreseeable future. However, it estimates Pakistan will continue to grow and eventually overtake the United States, stabilising at around 390 million. This is of consequence to India and the world. It remains to be seen if New Delhi’s policy of seeking to isolate and ignore Pakistan is sustainable when it becomes the world’s third-largest country. India’s population, according to the report, will start declining in 2062, about two decades before the world population peaks.

What is of the highest importance, perhaps, is the estimate that just under a decade before India’s overall population starts declining, the working-age population will stop increasing at a faster rate than the general population. The dependency ratio — the ratio of the number of people below 15 and above 65 to those in the working-age population between those two ages — will then rise. Countries with a high and rising dependency ratio have usually passed the point at which they can see a steady increase in per capita income. Economic and policy implications for India are clear. It has three decades to grow rich. If it fails to use these three decades wisely, then it will be stuck at the middle-income level, failing some extraordinary increase in population productivity.

The oldest members of the workforce in 2054 are job-seekers today. Images of under-educated young people lining up for public-sector jobs should thus concern policymakers. It is upon these particular individuals that India’s future for the next century and more depends. Do they have the skills and opportunities required to take India to upper-income levels? The answer to that does not appear to be in the affirmative. Thus skill upgrade must become the government’s number one priority. Simply focusing on the “creation” of employment is not enough if the workforce is not adequately skilled to take advantage of raging opportunities. Multiple models of higher and lifelong education must be tried, and apprenticeships and vocational training expanded. Time is running out to seize India’s demographic dividend. Ageing is an irreversible process and India must capitalise on its demography over the next three decades.