India's Becoming the Most Populous Country Is It a Bonus or a Burden?

Every reporter: Cai Ding Every editor: Yang Jun

According to the United Nations Population Division's estimates and projections of the global population, India's population reached 1425,758.5 million in April 2023, surpassing China to become the world's most populous country. At the time of India's independence in 1947, the country's population was about 350 million, which means that in 76 years, India's population increased by nearly 1.1 billion.

Although becoming the world's most populous country is undoubtedly a milestone event for India, a number of domestic and foreign population experts pointed out in an interview with the reporter of "Daily Economic News" that India's population surpasses that of China, and the symbolic significance is greater than the practical significance. "If the Indian government is unable to boost economic growth and increase household incomes, the huge population will be a heavy burden. ”

Darrell Bricker pointed out that while India's population is now growing faster than China's, its economy is not as strong or developed as China's. Courtesy of Darrell Bricker interviewee

In the face of a population of more than 1.4 billion, Indian Prime Minister Modi is facing not only a huge employment problem, but also how to avoid turning the "demographic dividend" into a "demographic burden", which is also the key to Modi's re-election in 2024.

Darrell Bricker, a population expert and CEO (CEO) of public affairs at Ipsos, one of the world's largest research firms, also pointed out in an interview with reporters: "Although India's population growth rate has now surpassed China's, its economy is not as strong or developed as China's. The question is whether India can take advantage of its growing demographics. ”

This is a rough approximation

"India's population surpasses that of China, and the symbolism is greater than the actual significance. He Yafu, a population research scholar and a member of the expert group of Yuwa Population Research Institute, pointed out in an interview with a reporter from the "Daily Economic News".

In fact, from the perspective of population growth, it is inevitable that India's population will surpass China's, and it is only a matter of time - as early as January 2023, there are institutions that say that India's population has surpassed China's. Since the beginning of the census, the United Nations and various population forecasting software have been predicting when India will become the world's most populous country, predicting the results of 2030, 2045, 2050, and even the end of this century, but it has been proven that India's population will surpass China faster than any previous prediction.

Xiang Jing, an associate researcher at the Institute of Population and Labor Economics of the Chinese Academy of Social Sciences, pointed out to the "Daily Economic News" reporter that the large population base, high fertility level, and the inertia of population growth are the main reasons for India's rapid population growth. "This means that even if the overall fertility rate declines, under the huge population base, the annual birth population in India in the short term is 20 million ~ 23 million, coupled with the improvement of medical services, the extension of life expectancy in India, so that the annual net increase in population is still more than 10 million. ”

However, the reporter noted that because the data released by the United Nations is not based on the official census of India, there is always a certain error in the estimation of the data, and it is very difficult to determine the precise time point and number of people in India who surpassed the Chinese population. India's 2021 census has been postponed to 2024 due to the pandemic, so the exact timing of India's total population becoming the world's largest may be subject to revision.

Regarding the accuracy of the data, UNFPA's India representative, Andrea Vojnal, has said the agency is confident in the survey's numbers "because it uses a very strong methodology." Patrick Gran, Chief of the United Nations Population Estimation and Projection Section, said: "This is a rough approximation, a best guess. ”

Converting into dividends is a challenge

The United Nations Population Fund (UNFPA) defines the "demographic dividend" as "the potential for economic growth that may arise from changes in the age structure of the population." "It is most readily available when the proportion of a country's working-age population (15 to 64 years old) is greater than that of the non-working-age population. So, can India turn its "demographic advantage" into a "demographic dividend"?

Problem 1: Nearly half of the population is under the age of 25, but the manufacturing industry is not improving

According to the latest data from the International Labour Organization (ILO), India's agricultural population accounts for more than 70% of the total population, which has the advantage of having sufficient labor for agricultural production. However, agriculture accounts for only 16.8% of India's GDP, and its share has been declining year after year in recent years. Despite India's superior natural conditions, its agricultural development lags significantly behind that of developed countries, and the level of agricultural production is relatively low. In addition, the overall level of education of this part of the labor force is low, and the agricultural sector is no longer able to absorb such a large number of laborers.

Since the 60s of the last century, the government has intervened in the policy of unified purchase and marketing of agricultural products, although it has protected the interests of farmers to a certain extent, but it has hindered the process of marketization and large-scale agricultural production in India. With declining agricultural output and declining investment, Modi needs to create jobs for millions of people entering the labour market every year.

The reporter of "Daily Economic News" noted that after Modi came to power, he launched the "make in India" plan, which aims to vigorously introduce foreign investment and develop labor-intensive manufacturing, so as to increase the proportion of manufacturing in GDP (gross domestic product) and drive employment. Modi, who will seek re-election until May 2024, has also been pushing to increase the share of manufacturing in India's economy to 25% from the current 17%. Modi's manufacturing transformation plan relies on India's large youth population.

According to a Bloomberg report, half of India's population is under the age of 30, and nearly 50% of the population is under the age of 25. In this regard, Xiang Jing pointed out to reporters: "Modi's manufacturing transformation plan is based on its existing population conditions, and the comparative advantage of the huge youth labor force is very obvious. ”

The United Nations report released on April 23, 2023, also noted that India's working-age population and share of the total population is expected to continue to increase by mid-century, providing opportunities for faster economic growth in the coming decades.

However, despite the government's push, India's manufacturing output is still growing slowly. According to the think tank CGGT, India's manufacturing industry has risen recently, but it is still far from Modi's "make in India" strategic target (25%). According to World Bank data, the added value of India's manufacturing industry has accounted for about 13%~17% of GDP in the past 10 years.

Why is it that India, with so many strong workers, has not seen an improvement in manufacturing?

India's unfriendly business environment is a major reason. According to official data released by India, cited by CCTV, in the past seven years, 2,783 multinational companies have closed their operations in India, including Ford and Foxconn, accounting for about one-sixth of multinational companies in India.

Second, although India is a country with a large population, it lacks an effective labor force. He Yafu said in an interview with the "Daily Economic News" reporter that the transformation of the manufacturing industry is inseparable from human resources, however, "although the age structure of the Indian population is much younger than China's, India's employment rate is much lower than China's." "According to the World Bank, the employment rate of India's population over the age of 15 was 44.79 percent in 2021, compared to 64.06 percent in China.

In addition, India's labor force is of low quality and there is a shortage of skilled workers. Taking language as an example, the level of junior high and high school in India is completely different from that of China, and the number of Indians who can speak English is only about 10% of the total population. According to Ho, the number of university students in India is not as high as that of China, which has a gross enrolment ratio of nearly 30 percent in recent years, compared to about 60 percent in China.

Xiang Jing also pointed out to reporters that compared with the period of Chinese population dividend, India's demographic dividend is mainly reflected in scale, and population quality is an important factor limiting the upgrading of its manufacturing industry. "There are still 150 million illiterate people in India, or about 10 percent of the population. India's large young labor force, most of which are not highly educated and technologically qualified, will become a bottleneck in the development of the manufacturing industry if they cannot provide timely and effective labor skills training. ”

Second, India's laws and private land ownership systems also restrict the development of labor-intensive industries in India. The nature of India's political development has led to a complex situation in terms of land tenure and management mechanisms. According to India's The Print news network, the country's land law has failed to balance the interests of landowners with India's development needs, discouraging foreign companies to invest. How to obtain land has also become a difficult problem for multinational companies to develop in India.

Finally, labor-intensive industries require adequate electricity and manpower, which are limited by India's poor infrastructure and labor laws.

Problem 2: The shackles of the caste system

According to the "Research and Analysis on India's Demographic Dividend" released by the Economic Forecasting Department of the State Information Center of China, India's population has a young age structure and has a "demographic dividend" to support economic growth, but the "demographic dividend" is not necessarily transformed into an economic development dividend, depending on whether economic policies and supporting measures match the population base. Affected by multiple factors such as industrial structure, comprehensive population quality, social culture and gender discrimination, India is likely to miss the window period of demographic dividend.

The caste system is an ancient feudal hierarchy in Indian society, which gradually emerged and developed after the Aryan invasion in 1200 BC, and is closely linked to Hindu teachings. According to this system, people are divided into noble and low grades according to different occupations, which are passed down from generation to generation and remain unchanged for life. There are four major castes in India: the first class: the Brahmins, i.e., the monks, the second class: the Kshatriyas, i.e., the warriors, the princes, and the nobles, the third class: the Vaishyas, i.e., the merchants, the fourth class: the Shudras, i.e., the peasants, and the untouchables, also known as the untouchables. For thousands of years, the caste system has had a considerable influence on the Indian people, ranging from clothing, food, housing, transportation, weddings, funerals, and social customs, to the political system, distribution system, and social hierarchy of the whole of India. Although the Indian constitution explicitly provides for the abolition of the caste system, the problem remains serious in rural and economically underdeveloped areas. Some analysts have pointed out that the existence of the caste system has greatly restricted the rational flow and utilization of human resources in society, leading to occupational hereditary and endogamy, and creating social inequality and the gap between the rich and the poor.

According to a report released in early 2023 by charity Oxfam India, between 2012 and 2021, only 40% of the wealth created in India went to only 1% of the population, and only 3% of the wealth went to the bottom 50%.

Problem 3: Brain drain and low female labor force participation

In addition to the lack of growth in manufacturing and the shackles of the caste system, India faces demographic problems such as high neonatal mortality rates, severe brain drain, and low female labor force participation.

First of all, although India's population growth rate has not slowed down and is still the fastest among the BRICS countries, from a longer time horizon, India's population growth rate has shown an overall downward trend since the 70s of the last century. In the 80s of the last century, India's local governments received financial support from the central government and further implemented the country's population control policy, which made the ten-year growth rate of India's population drop from 21.54% in 1991~2001 to 17.64% in 2001~2011. India's population growth rate is set to decline for the foreseeable future.

Second, while India's infant mortality rate has fallen by 70 per cent over the past 30 years, it remains high by regional and international standards. In 1990, there were 89 deaths per 1,000 newborns in India, and by 2020, that number had dropped to 27. Despite this, the neonatal mortality rate in India is still higher than in neighbouring Bangladesh (24 per thousand), Nepal (24 per thousand), Bhutan (23 per thousand) and Sri Lanka (6 per thousand).

Third, India is also facing a loss of high-end talent. Every year, a large number of people who have received higher education go to developed countries represented by the United States to seek development, resulting in a negative number of net immigrants in India. According to the United Nations Population Division, India's total population decreased by 300,000 in 2021 due to migration. UN projections suggest that India will continue to experience negative net migration until the next century.

Finally, India's female labor force participation rate is now one of the 20 lowest in the world. According to official Indian data, the employment rate of women in India peaked at 35 percent in 2004 but dropped to around 25 percent in 2022.

Xiang Jing told the "Daily Economic News" reporter: "When the population growth is much faster than the level of resource supply, we talk about 'population explosion' or 'overpopulation'. For the current demographic trends, India will face the challenge of rapid population growth. India's current GDP per capita is at the lower-middle-income level. If the Indian government is unable to boost economic growth and increase household incomes, the sheer size of the population will be a burden. ”

Darrell Bricker, an expert on population issues, pointed out in an interview with the National Business Daily: "Although India's population growth rate has now surpassed China's, its economy is not as strong or developed as China's. The question is whether India can take advantage of its growing demographics. He Yafu also believes that it will not be easy for India to surpass China economically. He told reporters: "Although population is a fundamental factor in a country's economic development, it is only one of the many necessary conditions for development. If other conditions are played well, a large population is an advantage, but if it is not played well, a large population does have the potential to become a burden. There is a clear gap between India's innate conditions and China's, and India still has a long way to go before it can surpass China in economic development by virtue of its population size and structural advantages. ”

National Business Daily