India will overtake China as the most populous country in 2023

The 2022 version of the United Nations World Population Prospects was released in the second week of July. He said the world’s population will cross the eight billion mark on November 15 this year.

And India will overtake China next year to become the world’s most populous nation with over 1.4 billion people. In 2050, the country should have 1.66 billion inhabitants, well ahead of China’s 1.31 billion.

This could be not only because the population growth rate in India is higher than in China, but the neighbor is also expected to experience an absolute decline in population as early as next year.

This increase in population will put additional pressure on resources, which are already depleted. Changes in the size of a country’s population are always the result of demographic transitions. One of these phases is when the growth of the working-age population – aged 15 to 64 – temporarily exceeds the combined shares of younger and older ages.

This represents an opportunity for accelerated economic growth and social development, known as the “demographic dividend”.

In 2020, there were about 900 million Indians, or 67% of the total population, in the working age group, compared to 64.9% in China.

The UN population report mentions that the working age group will continue to grow for some time in Asia.

Madan Sabnavis, Chief Economist, Bank of Baroda, says the news on population growth at first glance looks good as India will have a larger labor force. It will be a challenge to ensure that the population is well educated and that the workforce contributes to the GDP, and there is a need to create viable jobs in the knowledge economy.

India invests just 1.29% of its GDP per year in health, less than Bangladesh and Nepal. In contrast, China spends 6.7% of its GDP on health. Meanwhile, India’s spending on education, at around 3-3.5% of GDP, is well below the global average of 4.2% or, say, Brazil’s 6.3% of GDP. .

In terms of job creation, if India does not create enough jobs and its workers are not sufficiently prepared for those jobs, then the demographic dividend can become a liability. Currently, the labor force participation rate, which is the proportion of the working class willing to work, is lower in India at 46% to 68% in China, according to a World Bank database.

This is explained by the low participation rate of women in the labor market in India, which is around 19%, compared to 62% in China.

In August 2020, a McKinsey Global Institute report said that India needed to generate 90 million non-farm jobs between 2023 and 2030 to absorb new workers and 30 million additional workers who could move from agricultural work to sectors. non-agricultural.

“To absorb this influx, India would need nearly 12 million additional gainful non-farm jobs every year from FY 2023. This would be triple the four million non-farm jobs created every year between 2012 and 2018,” the report notes. .

To create jobs on such a massive scale, India’s GDP will need to grow by 8-8.5% per year over the next decade and productivity growth will need to be maintained at 6.5-7%.

Moving on, should we be alarmed by the rate of population growth in general? Not really. India’s total fertility rate – the average number of children that could be born to a woman in her lifetime – fell from 2.2 in 2015-16 to 2 in 2019-21.

The Institute of Health Metrics and Evaluation projects the country’s total fertility rate at 1.29 births per woman by the end of the century. This is well below the United Nations replacement level fertility rate at 2.1 children per woman.

The latest NFHS survey also shows that more than two-thirds of Indian states have fertility rates below replacement level. Sub-replacement fertility rates eventually lead to negative population growth.

While India is expected to have a demographic dividend, reaping its potential benefits requires significant investment in education and health, and working towards the availability of gainful employment. This is a challenge not only for the government, but also for the private sector.

Akash Podishetty & Bhaswar Kumar are regular contributors to Business Standard.

Comments are closed.