India needs to avoid the demographic time-bomb

India needs to avoid the demographic time-bomb

By John Dobson | 19 August, 2017
India, demographic time-bomb, Africa, Asia, Peak Child, China, youthful workforce
If demographics fault in India now, the failure is not of the numbers.

London: How many people do you think are currently living on this planet? Rounding up the latest figures, there are approximately 1 billion (bn) living in Europe, 1bn in the Americas, 1bn in Africa and 4bn in Asia, giving a total of 7bn. Of course the numbers were not always this big. Demographers tell us that in 10,000 BC, there were about 10 million humans on earth, a number which grew very slowly until the start of the industrial revolution in 1800, when it had reached 1bn. It then grew fast to reach 2bn in 1900, 3bn in 1950 to reach today’s 7bn. Should this rapid rise worry you? Probably not, as something rather extraordinary has happened. Extrapolations show that at mid-century, the populations of Europe and the Americas will remain the same at 1bn each, Asia will grow slightly to 5bn and the population of Africa will double to 2bn. Moving on to the end of the century, there will be no change in Europe, the Americas and Asia, but Africa will double again to 4bn, giving a grand total of 11bn. It will then flatten, or increase only very slightly, but note that when it does, more than 80% of the world’s population will live in Africa and Asia. This will, of course, cause considerable strain on resources, but experts believe that these can be contained by correct policies on food growth, climate change, etc. In overall numbers, therefore, there will probably be no world demographic time bomb. The distribution of people around the world, however, will cause considerable political headache for many leaders. In those countries where numbers are declining they will be trying to find ways to pay for an ageing population. In other countries, many of which are in Africa, they will almost certainly fail to find employment for a burgeoning population, which will double by 2050 and double again by the end of the century.

The key to understanding demographic trends is the number of children being born each year. Life expectancy plays its part, of course, but the main driver is births and it is here that something has happened, which is unprecedented in human history. The average number of births per family has fallen from five, 50 years ago, to 2.5, the replacement rate, today. At the beginning of this century there were 2bn children; at the end of the century there will still be 2bn children. In other words we have reached what demographers call “Peak Child”. In most countries, this remarkable change has been brought about by better health provision, requiring fewer births per couple in order to have at least two surviving beyond five years, better education service and, of course, the availability of family planning. Nowhere is this better illustrated than in Bangladesh, where the birth rate in 1972, the year of independence, was 7 babies, with a life span of 50 years; incredibly it is now 2.2, with a lifespan of 70 years. The population of Bangladesh will of course increase over coming years to reach a maximum of about 150 million, the densest in the world, but because the birth rate has declined to just replacement, it will go no further.

Just as reducing birth rate to replacement levels helps to stabilise a country’s population, reducing it further is likely to create very serious policy decisions for leaders. The brutally enforced one-child family policy in China, introduced nearly 40 years ago on an already downward trend in fertility, was an important contributor to China’s rapid economic growth, called a demographic dividend. Although this policy ended in 2015, with couples now allowed to have two children, there are reports that young couples are content with the lower costs of one child and the birth rate will not increase considerably. The current rate of 1.6 births per woman indicates that the projected population of China at the end of this century will fall from 1.3bn to less than 1bn. There are also serious concerns on the non-working-age (dependent) population to the working age population, called the dependency ratio. From about 55%, meaning 55 dependent persons to 100 working age persons in 2015, the dependency ratio will increase in China to 90% at the turn of the century. Although less than Japan’s, which will rise to nearly 100% by 2050 and remain flat, this will be a major problem for Chinese leaders, proving the one-child policy to be a serious mistake. Who will create the wealth to provide for the young and retired? Will China grow old before it gets rich?

India is in a completely different position to China. In a few years India’s population will overtake that of China and is forecast to reach 1.7bn by 2050. The fertility rate has reduced to 2.2 and the dependency ratio is just 40%. Add to this the fact that the average age in India will be 29 in 2020, by comparison with China, where it will be 37 and Japan 48, India will have one of the best demographic profiles in the world for business. The challenge will be for the government to provide employment for this youthful workforce, which is wage and skills competitive even with countries such as Bangladesh and Vietnam. As China’s middle class forces up wage rates there, firms seeking alternative manufacturing centres must be encouraged to consider India as a viable alternative. To achieve this, there must be massive deregulation to attract overseas investment and to create a business friendly environment. Controversial issues such as land acquisition reform with fair compensation and transparency of process should be vigorously pursued in order to rapidly increase the opportunity for the development of necessary infrastructure. If there is to be a demographic time-bomb in India in this century, it will not be because of the numbers; the finger of guilt will point to the failure of government policies to prevent one.

John Dobson worked in UK Prime Minister John Major’s Office between 1995 and 1998 and is presently Chairman of the Plymouth University of the Third Age.

 

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