Biotech Values

[DewDiligence]

India’s Population Reaches 1.2 Billion

[India will almost certainly surpass China as the most populous country in the next few decades. See #msg-50473238 and #msg-42162914 for related info.]

http://online.wsj.com/article/SB10001424052748703806304576233981941525872.html

›APRIL 1, 2011
By TRIPTI LAHIRI

NEW DELHI—India Thursday released the first results of a new census showing that the world's second-most populous nation added 181 million people—equivalent to about five Canadas—in the past decade to reach a total of 1.21 billion.

The new numbers were higher than the 1.19 billion estimate that the Registrar General of India had previously projected for this year even though there was a slowing in growth from the previous decade, including in some of India's most populous states. Overall, the nation's population growth for the decade slowed to 17.64% over the past 10 years [I would have placed quotation marks around the word, “slowed”] from 21.54% in the decade to 2001.

Literacy increased for the country as a whole—climbing to 74% from about 65%. But on the gender front, the sex ratio among children up to age 6 dropped to 914 girls for each 1,000 boys from 927 a decade ago, showing that female foeticide continues to be a widespread practice because of a traditional preference in some communities for boys. Census Commissioner C. Chandramouli described that statistic as "grim."

Population density in the country increased as well, with the country averaging 989 people a square mile, up from 842 a decade ago. The area around the Indian capital was the densest in the nation, reaching 29,000 people a square mile. Final population figures are slated to be released next year.

The population data, taken together with unemployment and job-creation figures due toward the end of the year that were gathered after India's period of high economic growth, will give a sense of whether the country can take economic advantage of its youthful work force through a so-called "demographic dividend"—or whether demographics will turn into an economic liability for the world's largest democracy. That is one of the biggest questions hanging over India's future.

The country has slipped hugely from the goal it set for itself a decade ago of reaching "replacement" fertility—generally considered to be roughly 2.1 children per woman over her lifetime, just enough to allow a woman to replace herself and her partner.

Reaching that rate now would have meant that India would stop growing before the middle of this century. Instead, the population may not stabilize until 2065, a report prepared for the country's Planning Commission has said. The country will knock China from the spot of the world's most populous nation far sooner than that—around 2030, the U.N. estimates. (China's population is about 1.34 billion, according to state media reports.) And yet, it has been a long time since India expressed the sort of unmitigated concern over its population as it has in previous decades.

While economic thinking since the 18th century has largely focused on the burdens of a large population, over the past decade a different view has taken hold since two Harvard economists, David Bloom and Jeffrey G. Williamson, wrote an influential 1998 paper linking the economic success of the East Asian economies to a boom in their working-age population.

According to them, it is possible to attribute as much as one-third of East Asian economic growth between 1965 and 1990, measured in per capita income, to demographic changes. India could experience something similar over the next 40 years.

"The dividend is very much on offer for India," said Mr. Bloom, now head of the department of global health and population at the Harvard School of Public Health, while on a recent visit to New Delhi.

The "dividend" isn't just the sheer number of people available to work. It also refers to a change in something called the dependency ratio—the proportion of working-age adults to the number of people too young or too old to work. Presently, every 10 people of working age in India need to support close to five children or teenagers as well as almost one elderly person.

In an additional 15 years, those 10 workers will be responsible for well under four youngsters, and one elderly person. This happens because improvements in health care can reduce infant and child mortality quickly—creating a sudden boom in numbers of the very young. It takes a little while, though, for a society to realize what is happening and reduce family sizes in response. That lag is what creates this bulge of workers who have fewer people to support than their parents do.

Instead of having to spend largely on immediate needs like food and clothes for children, these workers will be free to save more and those savings then create the capital to invest in infrastructure, in research and in technology, the thinking goes, providing an economic boost in the process. A recent working paper by two International Monetary Fund economists suggested that India may have already seen some fruits of this demographic transition. "It's been a very important component of the growth story in India for the last 30 years," said Shekhar Aiyar, one of the report's authors.

In particular, the paper hypothesized that the booming economies of three states—Gujarat, Karnataka and Tamil Nadu—were linked to their lower dependency ratios compared to poorer states that have been slower to reduce fertility. Across India fertility rates and dependency ratios vary widely, with some states at European levels of fertility and already beginning to age, while others are still experiencing very high fertility.

Mr. Bloom says reaping the demographic dividend is not a given, however. It will depend on India's policy choices, particularly in education and health. In effect, there is little advantage in having a big population if they aren't sufficiently educated to take up productive employment, or if there aren't enough meaningful jobs to accommodate the millions who come of working age each year.

Where a job, and therefore the dividend, can be fully seized, the results for individual prosperity can be dramatic. In a congested southwest Delhi neighborhood, in the home of an 11-year-old girl who was designated the "billionth" Indian when she was born in 2000, there's a living example of that. Although Aastha Arora won't enter the labor force herself for at least another decade, her 19-year-old cousin, Palak Arora, who lives upstairs, started working over a year ago.

Fresh out of high school she went to work at a call center, earning roughly $110 a month in her first job. After completing an airline ticketing course at a state-run institute in the capital, she got a job at an office handling reservations for a Middle Eastern Airline last year, doubling her salary. This month, she switched jobs again, and now works in the reservations office of an American hotel chain in the Delhi suburb of Gurgaon, earning about $330 a month. Her earnings have doubled the family income, which for years relied only on her father's earnings of roughly $270 a month.

Palak Arora, who is naturally shy and was tongue-tied at her very first job interview—she didn't get that job—says she has approached her recent job interviews as a question of "do or die."

Still, in spite of her niece's example, the mother of the billionth Indian worries about the future of her children.

"I didn't even know what a 'billion' was when they told me she was the 'billionth' baby. The population became a billion then. But it hasn't stopped growing," said Anjana Arora. "Even if they study, because of the way the population is growing, will they get employment?"

Presently, almost 13 million people enter the labor force in India each year. Statistics from India's last large-scale employment survey, gathered between 2004 and 2005, showed that India was averaging eight million new employment opportunities a year.

That study also found that unemployment among new entrants to the work force, or those workers aged 15 to 29, continues to be much higher than for the overall labor force. For young urban male workers it's running at 13.7% compared with 7.5% for urban male workers overall. But the last labor survey's figures were also gathered before India posted three years of 9%-plus economic growth. Indian officials will be watching whether the new survey, due in November, will show a decrease in youth unemployment.

Few young Indians are as well prepared to get jobs as Palak Arora. According to labor data from five years ago, less than 10% of people above the age of 15 had college degrees. And only 2% of people above the age of 15 had a technical degree or diploma. For now, employment for many of India's new young workers will likely be a poorly-paying informal construction job.

India still has time. Unlike China, which has bottomed out on its dependency ratio, and will now be watching its baby boomers age in coming decades, the share of India's working age population is going to grow for the next three decades, peaking in about 2045. But it doesn't have forever.

"India has to stay the course on investing in people. There's really a lot at stake," said Mr. Bloom. "If it misses this opportunity it should still do those things in the future but there won't be as big a payoff."‹