Evaluating India’s Evolving Demographics

CEIC India Data Talk - August 19, 2014 The CEIC India Premium Database now includes population projection datasets generated by CEIC ‘in-house’ statisticians. These projections are based on data from the Census of India (conducted decennially) and the Central Statistics Office (on an annual frequency) to provide users with a long-term view of India’s population with a granular perspective of its demographic structure – both by age and gender. Given the long-term nature of demographic factors, these projections can help users identify particular growth sectors in the context of life cycle theory of consumption and analyse implications of long term policies. Understanding Factors behind Demographic Changes Vastly lower mortality and actual death has been instrumental in shaping India’s current demographic structure as well as its projected path. The death rate fell to 2.18% in 2012 from 2.58% in 2000; infant mortality declined to 42 per thousand live births from 68 per thousand live births over the same period. This encouraged a lower birth rate and marginally lower fertility rate, allowing the median age to rise within the economically active levels (among the 15-64 year-old cohort). What does the Future Hold? Based on the single-year projection (which uses an extrapolation method), India’s population is expected to breach the 1.5 billion mark by 2035 from its present 1.23 billion as of 2014, implying the peak population growth rate occurred during 1961-1981 when it consistently grew in excess of 2%. This puts India on track to overtake China’s population by the late 2020s (the Chinese Bureau of Statistics puts China’s population at 1.36 billion as at 2013). Combined with India’s relatively young population, India’s demographics, if well managed, bode well for the country’s economic growth and development over the next couple of decades. The 10-year cohort component model, on the other hand, presents a more granular view of India's demographic projections. While India's population is projected to age in line with present demographic trends, the population's median age which stood at a young 23.9 years as at 2011, is expected to increase to 29.3 years in 2031, still at a relatively young enough level to provide the country with ample human capital potential. Indeed, the share of the population aged 15-64 is expected to comprise 66.9% of the total by 2031, from 63.6% in 2011. This allows India greater leeway in keeping its associated dependency ratio (the ratio of the population below 15 and above 65 to those aged between 15 and 64) low, indeed declining from 57.1% in 2011 to a projected 49.6% in 2031. Implications for Policy At first glance, India’s projected population opens a floodgate of opportunities. The relatively low population above 65 years old (projected at just 5.52% of the total population in 2031, marginally increasing from 5.48% in 2001) means that pensions management is not a major issue in the context of sustaining the elderly. The lower projected dependency ratio also allows India room for supporting its industries. However, while lower projected dependency ratios are desirable in theory, in practice they are more relevant if the “economically active segment” is actually engaged in gainful employment. Snapshots of India’s employment statistics, however, are not promising. Just 365 persons were employed per 1,000 persons during 2005 (a few years before the global financial crisis) of which 346 persons claimed to be employed full time. These numbers put to question India’s ability to capitalise on favourable economic cycles and manage the employment expectations of its growing labour market entrants. Indeed, many of these population segments are making their voices heard. During the last Indian General Elections held in May 2014, voter turnout stood at a staggering 66.4% where employment creation took centre stage as an election topic. The rising prominence of youth voters is likely to be influential in shaping policies and, indeed, the associated political landscape. By Ian Lim - CEIC Analyst Discuss this post and many other topics in our LinkedIn Group (you must be a LinkedIn member to participate). Request a Free Trial Subscription. Back to Blog
19th August 2014 Evaluating India’s Evolving Demographics