Tuesday, November 14, 2006

India's "Demographic Dividend": Have we BECOME a "Young" Country?

For a long time, I used to believe that the demographics of India have radically changed during last decade or so - and that India has "become" a young country, with a majority of its population below 25yrs, or in the 15-35yrs bracket.

This belief about India's "demographic dividend" was also reinforced by the media hype about the emergence of Genext, and even some serious studies about the changing demographics in 21st century India.

For instance:

  • a scholarly book, Twenty-first Century India: Population, Economy, Human Development, and the Environment edited by Tim Dyson, Robert Cassen and Leela Visaria, (Oxford University Press), highlighted that a demographically "young India" (median age 22) is, as The Hindu pointed out is "envied".

  • an article in Harvard Public Health Review says:
    "With a median age of 33, China's population is edging toward middle age, while India, with a median age of just 25, is still relatively youthful. The ratio of workers to dependents in China.... will likely peak at 2.6 in 2010, then decline, leaving ever smaller numbers of workers born of the country's one-child policy to support a vast aging population. In India, meanwhile, the demographic transformation will be less sharp but longer lived; the ratio of workers to dependents will peak at 2.2, but not until 2035, suggesting that the potential economic gains from India's demographic dividend are still to come..."

  • the Time Magazine carried an article - India's Real Growth Rate - noting that:
    "Indian politicians at the summit expressed confidence that the country will eventually catch up?not because the government will necessarily get its act together, but because of a long-term trend known as India's "demographic dividend." With 1.3 billion citizens, China is the world's most populous country; India is second with a population of 1.1 billion. But because of Beijing's long-standing one-child policy, China's working-age population will begin to decline in the next 10 years. Meanwhile, India's youthfulness - 350 million of its citizens are under age 15 - ensures its workforce will expand for decades, potentially enabling it to outstrip China's economic pace through sheer weight of numbers. "This is a key thing," said Kamal Nath, India's Minister for Commerce and Industry. "China is aging faster than any other country in history. It is growing old before it has grown rich.""

  • In another article - Incredeible Young India Inside - Arun Maira, the Indian CEO of BCG, noted:
    "There comes a tide in the affairs of nations which taken at the flood can lead to fortune... This pattern is unfolding again. The growth paradigm of western economies requires another kind of fuel - knowledge workers and skilled professionals. In the next two decades developed countries will face a shortfall of fuel (skilled professionals) and will once again have to look towards the developing countries to meet the shortfall.... Development, in almost all countries, has been invariably accompanied by a gradual decline in the proportion of working age people to total population as birth rates decline and life expectancy also goes up. Projections show that by 2020 all developed countries will be short of working age people. Even China, which had forced a decline in its birth rates, will experiencea shortfall in the proportion of working age people by 2020. However, India will have a huge surpluse of 47 million people."

    Etc., etc...

    Indeed, India's "demographic dividends" was such a deceptive and "feel-good" idea that it is not difficult to beleve it.... But...

    Apparently, I was wrong...

    The data (which I have generously borrowed from Dilip D'Souza's blog posting), actually shows that there has been no significant change in the age-profile of Indian population since last 4 census.



    Apparently, demographically, India was always a YOUNG country!!!

    So what has changed - if anything?

    OTHER SOURCES:
    Hype:
  • Think young
  • Frames 2006: What Do They Think Of Young India
  • With median age at 22, India is young and envied
  • India will be 'youngest' nation by '10: Study
    Census Data:
  • Percentage distribution of Population by age-groups 1971 and 1981 Census
  • Distribution of Population by Age and Sex 1991
  • Distribution of Population by Age 2001

  • 6 comments:

    Prometheus_Unbound said...

    Sir,

    The demographic data that you have put forward is totally true. And one has to discount part of the sunshine reports that these think- tanks and consultants have put across based on herd mentality and India being the new flavour of the month. These same institutions overlooked institutional weaknesses in the Asian Tigers and in economies like Latvia post the formation of the CIS in the nineties.

    Hell, one of the biggest MF's in India did a fund on this theme and raked in Rs. 500 crore plus last year. And the concept of the fund was even veted by two of the biggest banks in the world by their financial think tanks based out of Singapore. Only goes to show how easily even the best guys can easily get caught up and believe the fad of the month. ;)

    Regards
    Rex

    kuffir said...

    but there must be some point behind this post - apart from trying to rebut the 'shining india' reports...what's it ?

    Madhukar said...

    Yes, Kuffir
    partly, it is about the "india shining"... but more about the hype that gets built up around a non-issue....

    India was always "young" for, at least, last 3 decades , so there is not much reason that its demogaphic profile will change... even if we take that since the reproduction rate has come down from more that 2 to, I think about 1.3... the same has happened to China and other developing economies...

    Bombay Addict said...

    My take is that the hoopla is about what's going to happen in the future, more than what's happened in the past.

    Indulge me, even if I digress a bit below, because I think there's a broader point here worth exploring.

    Even if I've not read any of the "sunshine reports" of the "think-tanks" and "consultants", I do know that (a) they'd not falsify data (b) at worst, they're guilty of being a tad optimistic about the future.

    I recall seeing some UN stuff (sorry, I can't recall source, which would be relevant from your perspective) which had enough forecasts to suggest that in the next 15 years, the age-profile of our population is going to be significantly younger than the West as well as Japan. Hence we are going to have a larger, younger workforce than most other countries.

    And therein lies the problem. A younger workforce first and foremost needs job creation at a rapid scale and this is just not happening. This, in itself, could lead to disaster.
    If you've written this, I'm sure you'd also be interested in this excellent Financial Times article which, while acknowledging the "demographic dividends" quotes Dr. Ifzal Ali, Chief Economist of the ADB, as "Mr Ali warned that unless economic activity became more inclusive, social instability, political strife, policymaking paralysis and capital flight loomed. He warned, and I quote, that “in India we could step back from 7-8 per cent growth to 3-4 per cent growth very easily within five to six years if unemployment and underemployment is not addressed."

    Thanks.

    Anonymous said...

    It is not so much that India has become younger, but that other countries are getting older and in relative terms, yes India has become young. US, Europe, Japan are all aging. China too will soon. So compared to them India has this demographic advantage and will have for some time to come. Sure, as India itself develops, the birth rate will fall and maybe in another 50 years we too will be an aging population, but till then we will have this advantage.

    vin said...

    yes the demographic data that u have provided are true...and INDIA is always a young country but b4 1992-93 reforms INDIAN economy was a closed one and not market friendly economy was growing at horrible pace that was the time there were no jobs for the yong citizens of our country....but as v have seen post reforms over economy is growing with an avg rate of over over 6%....and e1 peaked to 8.5% b4 global slowdown and now again projected to grow at 8.8%..there are more jobs now then b4 1990's.

    but on the other hand it is also true that we are not capitalizing our full demographic advantage and there are reason to it such as " INDIA may have young population but around 60% or more of them are not educated to be part of skill labor force....... .
    what we needed are reforms in education policy,in our economy(i.e.-India is presently aknowledge based economy,not everyone can be intellectuals thus we have to produce more manufacturing jobs)

    for manufacturing jobs we need entrepreneurial spirit in the nation more and more....

    so what has changed now--
    1)now india is not an state lead economy as it was b4 90's
    2)gdp growth rate was more than 6% in 2009 and was growing for an avg of over 8% for 5 years.
    3)cost of doing business has reduced dramatically after 92-93 reforms b4 that it was almost near impossible to do business in INDIA because of license Raj.
    4)more reforms r coming i.e. GST and direct tax code which will lead to less cost of doing business along with making greater revenues to govt at the same time.
    5)which will ultimately lead us to developing entrepreneurial spirit.
    6)if we can look at education statistics long with age statistics then we will come to know what has actually changed...there were fewer ppl who are graduate and have higher education among 25-35.and the no. of students attending graduation and higher studies have significantly up...that is changed however it can be much better.