Why is it in the News?

The projection by the UN Population Division is that India will have a population of close to 1.7 billion by 2065 before it starts declining.

Context:

• In recent findings, The Lancet has projected a decline in India's Total Fertility Rate (TFR) to 1.29 by 2051, contrasting with the government's technical group estimate of 1.94 for 2021-2025, and 1.73 for 2031-2035.
• Additionally, the UN Population Division predicts India's population will be near 1.7 billion by 2065, surpassing The Lancet's projections.
• These diverging forecasts suggest that India's population may stabilize below 1.7 billion well before 2065.

Insights into Demographic Projections:

• According to the UN Population Division, India is expected to approach a population of nearly 1.7 billion by 2065, followed by stabilization. In contrast, The Lancet report forecasts a decline in the total fertility rate (TFR) to 1.29 by 2051.
• These projections signal a significant evolution in India's population dynamics, suggesting broader implications beyond population size.
• Government projections and data from NFHS 5 further corroborate this trend, indicating a declining trajectory in the TFR and hinting at the possibility of population stabilization occurring sooner than expected.

Implications of Decreasing Total Fertility Rate (TFR):

• Economic Impact: The decline in TFR alters the age distribution, resulting in fewer children and more working-age adults.
  • Initially, this demographic shift presents an economic opportunity, fostering growth through increased productivity and surplus income.
• Dependency Ratio: A reduced TFR lowers the dependency ratio, lessening the burden on the working-age population to support dependents.
  • This enhances economic productivity and allows for better resource allocation towards development endeavors.
  • However, aging populations may necessitate adjustments in healthcare and social welfare policies.
• Labour Market Dynamics: Demographic changes influence employment patterns and wage structures.
  • A larger working-age cohort relative to dependents may increase labor supply, affecting wage levels.
  • Shifts from agriculture to other sectors may alter employment opportunities and skill requirements.
• Social Welfare and Healthcare: Aging populations due to declining fertility rates require tailored social welfare and healthcare services.
  • This includes pension schemes, long-term care facilities, and healthcare programs addressing age-related ailments, essential for ensuring the well-being of the elderly.
• Education and Human Capital: Decreasing TFR reduces the demand for primary and secondary education infrastructure.
  • However, investments in higher education and skill development become crucial to equip the smaller cohort of young adults with the necessary skills for a competitive workforce.

How India’s Decreasing Fertility Rate Poses Advantages:

• Enhanced Labor Productivity: A declining total fertility rate (TFR) results in a demographic dividend, with a larger proportion of the population in the working-age bracket compared to dependents.
  • This surplus labor force can drive heightened productivity across various sectors, fostering innovation, specialization, and overall economic growth.
• Capital Accumulation and Investment: Lower fertility rates prompt households to channel more resources towards the education and well-being of fewer children.
  • This leads to increased savings and investment at the household level, facilitating capital formation and investments in critical areas such as infrastructure, technology, and human capital.
• Efficient Resource Allocation: Decreasing TFR necessitates a shift in resource allocation away from childcare and education expenses for larger families towards investments in education, skill development, and healthcare for a smaller number of children.
  • This reallocation optimizes the utilization of public funds and private investments, fostering human capital development and long-term productivity gains.
• Regional Development and Urbanization: Declining fertility rates often coincide with urbanization and regional development, with urban centers emerging as economic hubs.
  • The concentration of populations in urban areas promotes economies of scale, knowledge sharing, and networking opportunities, stimulating entrepreneurship and industry growth.
• International Competitiveness: A transition to lower fertility rates enhances a nation’s international competitiveness by cultivating a younger, better-educated workforce.
  • Such a workforce is more adept at adapting to technological advancements, competing in global markets, and attracting foreign investment.
  • Additionally, a favorable demographic profile can strengthen a country’s creditworthiness, investor confidence, and long-term economic resilience.

Way Forward:

• Empowering Women and Marginalized Communities: Prioritize skill development initiatives, especially targeting women and underprivileged groups, to adapt to demographic shifts.
  • While declining fertility rates may ease pressure on educational systems, efforts must focus on reducing dropout rates in higher education and promoting women's workforce participation.
• Sectoral and Geographical Workforce Redistribution: Respond to workforce transitions from agriculture to industrial and service sectors by implementing skill development programs, particularly for marginalized populations.
  • Facilitate spatial redistribution of labor, especially north-south migration, to balance labor markets, enhance working conditions, and promote wage equality.
• Strengthening Healthcare Preparedness: With increasing life expectancy, anticipate challenges associated with an aging population and rising healthcare needs.
  • Develop robust healthcare infrastructure and formulate policies tailored to address the requirements of the elderly, ensuring effective utilization of the demographic dividend.

Conclusion

India stands at a crucial crossroads in its socio-economic evolution marked by its demographic transition. Addressing the challenges and opportunities inherent in this transition demands strategic policy interventions, emphasizing skill development, gender equality, labor reallocation, and healthcare readiness. By navigating this transition with foresight and flexibility, India can unlock its full potential for long-term growth and development, positioning itself effectively on the global landscape.