India with an estimated population of about 143 crores currently has surpassed China to become the most populous country in the world. This medal highlights the underlying sorry state of economic growth in India; which should be a much greater worry.
In 1950, the Chinese population was about 54 crore; larger by a little over one-half of the Indian population of about 35 crore. In less than 75 years, India has wiped out the gap and has overtaken China. By 2100, the estimated Indian population of about 153 crore will be nearly double the Chinese population of roughly 77 crore.
The next most populous country in the world today is the USA with a population of about 34 crore. The US population is estimated to grow to about 39 crore in 2100. In 2100, the Indian population will be higher than the combined population of the next three most populous countries- China, the USA and Pakistan. Incidentally, Bangladesh was more populous than Pakistan in the 1970s and is expected to reach the year 2100 with a population less than today.
What has made China achieve this remarkable demographic transition? What trick has India missed?
India and China: Similar Foundations
There was not much to separate India and China in 1950 in terms of GDP after their independence in the 1940s. India (in purchase power parity terms) accounted for 4.2 percent of global GDP and China 4.5 percent. Both were, however, terribly poor countries.
Both shunned the market, capital, and private sector. China went the communist way. India adopted a socialist pattern of society. The economy and GDP of both countries languished for 30 years. In 1980, the Chinese GDP was $423 billion and India’s $271 billion (in constant 2015 US$).
Both countries continued to grow their populations though in this period.
India doubled its population to a little over 70 crores in 1980, recording an annual population growth rate of 2.3 percent. Chinese population also grew big though at a slightly lesser growth rate of 2 percent per annum and was on the verge of crossing 100 crore in 1980.
Both continued to be quite horribly poor almost with almost similar GDP per capita and not much different from 1950. The lesson is clear. Without economic/ GDP growth, you can’t bend the population curve down.
India's Story is One of Lagging Behind
In 1978, China embraced and unleashed private sector capital and enterprise, though still wrapped in the garb of party/state communism. China also adopted one child norm in 1980.
India was also quite concerned about the population explosion and adopted the crude population control method of forced sterilisation in 1976. On the economic front, India was slower to learn and change. India undertook significant economic reforms in 1991 only.
Chinese GDP grew to $7.55 trillion (in 2015 constant US$) in 2010. India’s GDP could rise to only $1.54 trillion only. Chinese economy became five times that of India.
Chinese population grew to 136 crores in 2010. Indian population continued to race to catch up with the Chinese population and was 125 crore at the end of 2010. Chinese population grew by a little over 1 percent annual growth rate during this period. Indian population grew at nearly double the Chinese rate at an annual growth rate of 1.95 percent.
With the per capita GDP of Chinese people exceeding $5500 in 2010 and Indian per capita GDP languishing at about $1200, it was no surprise that China could virtually eliminate poverty whereas India continued to be home to the largest number of poor in the world.
India's GDP Slowed Down but Population Did Not
Chinese GDP juggernaut continued to roll on in the 2010s further halting the population growth. Chinese GDP grew massively to a little less than $15 trillion (nearly doubling from $5.55 trillion in 10 years) clocking annual growth of nearly 7 percent. Population, on the other hand, grew to 142.5 crores only at an annual growth of niggardly 0.4 percent.
India, on the other hand, slowed down on the GDP front but not so much on the population front. India’s GDP grew to $2.51 trillion in 2020 recording annual compounded growth of 5 percent. India’s population grew to 141 crore in 2020 recording growth of over 1.2 percent per annum.
Chinese GDP became 6 times India’s GDP in 2020. India’s population was nearly as much as the Chinese population in that year. India was on the verge of overshooting the Chinese population.
Stop Looking at Population Dividend for Comfort
More population provides more labour. More labour produces more goods and services. More labour population, therefore, raises growth. This is the theory of demographic dividend.
More labour produced more goods in agricultural age. In the industrial age, more machines produced more goods. In the digital age we have entered into, more intelligent machines produce more goods and more services.
The labour intensity of GDP is going down rapidly. Labour is becoming increasingly surplus. Today’s big policy issue is to find employment for the existing labour. The demographic dividend is a false prophet.
Other Factors: Health & Education
Economic growth is not the only factor affecting population dynamics. The health and education status of the people also matter. Women’s education and agency make a significant difference.
Sri Lanka and Bangladesh in South Asia, and our own state Kerala, did not attain very high economic growth; yet they achieved population stabilisation.
Economic growth, however, is the most important causative and proximate reason which explains population growth dynamics. About 70 countries in the world have stopped growing in terms of their population; some are, in fact, declining. Almost all these countries are high-income countries or have attained upper-middle-income status.
Economic growth helps by improving health and education standards as well. Women get better agency over themselves when they become financially empowered and independent. Women become financially independent largely when they participate in the economy as labour and entrepreneur, growing the GDP also in the process.
Accelerate Economic Reforms
The government has been taking measures to control the population explosion in India. Persons with more than 2 children are disentitled to contest local body elections. Some governments do not employ or promote government servants with more than 2 children. Many charge lower stamp duty on the registration of property in the name of women. Financial incentives are provided to ASHA works to promote spacing in births. There are some financial incentives for the adoption of contraceptive devices etc.
Almost all of these measures are really symbolic. They make very little difference and that too at a glacially slower rate. Keep doing these things but don’t expect significant results.
Only much higher economic growth can bring faster and better results.
Unfortunately, India seemed to getting unduly complacent about economic growth. In the first four years of the current government term, India’s dollar GDP has grown by only about 3 percent per annum- a very low rate of growth even for India.
Reform momentum has slowed down considerably. The privatisation programme to make India’s public sector assets and businesses perform efficiently and generate better growth has screeched to a halt. Instead, the government is making more investments and that too in loss-making and capital-guzzling enterprises. There is unnecessary protection of the compromised private sector in the goods sector making India's Indian industry non-competitive. Services, which are and can be a much bigger growth engine, are neglected.
Let us shift focus to generate economic growth of 10 percent per annum for the next 30 years. That would require real hard reforms and not a mere expression of wish lists or speculating notions of high GDPs by 2047 based on only arithmetical calculations.
Can we embark on a 75-year race to have a lower population than China?
(This article was first published on 26 April 2023. It has been republished from The Quint's archives to mark World Population Day.)
(The Author is the Chief Policy Advisor, SUBHANJALI, Author: The $10 Trillion Dream and Former Finance and Economic Affairs Secretary, Government of India. This is an opinion piece and the views expressed above are the author’s own. The Quint neither endorses nor is responsible for the same.)
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