India Has a People Problem

(Bloomberg Opinion) -- By the middle of this century, India will have 1.6 billion people. That’s when the country’s population will finally start to decline, ending up at perhaps a billion by 2100. While that is still around 250 million more people than China will have then, every time India’s population is projected, its peak seems to come earlier and crest lower. While India will be a young country for decades yet, it is aging faster than expected.

The latest round of India’s massive National Family Health Survey underscores the point. The average Indian woman is now likely to have only two children. That’s below the “replacement rate” of 2.1, at which the population would exactly replace itself over generations.

A few decades ago, this would have been considered miraculous in a country dismissed as a Malthusian nightmare. As modern health care became increasingly available after independence in 1947, population growth exploded — rising from 1.26% annually in the 1940s to 2% in the 1960s. Twenty years after independence, the demographer Sripati Chandrashekhar became India’s health minister and warned that “the greatest obstacle in the path of overall economic development is the alarming rate of population growth.” The India in which I grew up was plastered with the inverted red triangle of the government’s family planning campaign.

In the end, increasing prosperity, decreases in infant mortality and — crucially — female education and empowerment achieved more than government propaganda ever could. In urban India, the fertility rate is now 1.6, equivalent to the U.S.

This is good news. But unalloyed good news is rare in India and this is no exception. The unexpected speed of the demographic transition has forced India to confront a new problem.

China-watchers have long debated whether that country will grow old before it gets rich. India now has to answer that same question, with far fewer resources at its disposal.

Draconian though China’s one-child policy was, those born under it received unprecedented attention from their families: Average education levels rose sharply, as did the quality of their nutrition. In India, by contrast, the NFHS shows that not only is child malnutrition high, it isn’t improving fast enough. In fact, in the five years after 2015-16, acute undernourishment actually worsened for children in most parts of India.

Meanwhile, India’s education system is clearly failing. Indian companies are already reporting a shortage of skilled manpower. That isn’t because schools aren’t turning out enough graduates: In fact, the Centre for Monitoring the Indian Economy reports the unemployment rate for college graduates is 19.3%, almost three times higher than the national average. Universities just aren’t producing the kind of workers that companies feel they can employ. In large-scale surveys, employers have said that less than half the college graduates entering the workforce have the cutting-edge skills they need or the ability to pick them up in the workplace.

Moreover, too few of these young people are trying to get into the workplace at all. Two-thirds of working-age Chinese are currently either employed or looking for a job, according to the International Labor Organization; at the beginning of the country’s high-growth spurt in the early 2000s, this labor force participation rate hit 80%. (The global average is close to 60%.) In India, by contrast, CMIE estimates that the country’s LPR stands at a mere 43% and that the pandemic has “lowered the LPR structurally” to 40%. One big reason: Just one in five Indian women work, which the World Bank has argued is linked to the social stigma of holding jobs outside the home.  

Forget about growing rich: An India in which less than half of the working-age population is even looking for a job is not one that will be able to escape poverty before it grows old.

More than any previous generation, it is today’s Indian youth who will determine whether India becomes a middle-class, comfortable country by the middle of the century. But they are not being fed properly or educated well, and too many are being forced to opt out of the workforce. China may yet be able to thrive despite its shrinking population. India is far less likely to do so unless it can overhaul its education system and change the norms that prevent women from working.

The one thing the country can’t afford is complacency. A fundamental assumption common among Indians who grew up surrounded by family-planning propaganda is that our country has no resources except human resources and those are essentially infinite. There’s no dearth of people in India, surely? Yet there will be one — and we need to prepare for what that means for our shared future.

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

Mihir Swarup Sharma is a Bloomberg Opinion columnist. He is a senior fellow at the Observer Research Foundation in New Delhi and head of its Economy and Growth Programme. He is the author of "Restart: The Last Chance for the Indian Economy," and co-editor of "What the Economy Needs Now."

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