India's Demographic Challenges

CEIC India Data Talk - July 15, 2014 Popular literature often touts India as an industrial powerhouse, supplemented by its large consumer base stemming from its sheer population size. With an estimated population of 1.23 billion as of the quarter ended March 2014, India bears the distinction of being one of only two countries with more than one billion citizens (the other, being China, is somewhat larger with 1.36 billion). India's vast population exhibited modest growth of 1.64% annually during 2001-2011 (according to the 2011 Census; its population far outstrips second runner-up (in terms of population size), United States (with a population estimated at 317 million). Given its diverse and dynamic nature, India's demographic merits a closer examination, both to identify potential growth opportunities and possible problems associated with it. Gender Gap Divide The emergence of several high profile cases of sexual assault and violence against women has cast the spotlight on gender discrimination in India. The general preference for male offspring has tended to skew the gender ratio in favour of males. The male-to-female ratio stood at 1.06:1 in the 2011 census but is as high as 1.62:1 in the Union Territory of Daman and Diu and as low as 0.92:1 in Kerala. Gender ratios are higher in urbanised areas (1.08:1 compared to 1.06:1 in rural areas), although the imbalance has improved given the 1.11:1 male-female ratio exhibited in the 2001 Census. Overall, India's male-female ratio has declined from 1.078:1 to 1.072:1 according to the 1991 and 2001 surveys. Subtle, gender discrimination reduces India's ability to fully harness its population to enhance its production capacity and promote economic growth. This point is further exemplified by the relatively low female participation in the labour force. Labour force participation stood at approximately 25.3% and 15.5% in 2012 for rural females and urban females respectively. These figures stand out in stark contrast to the 55.3% and 56.3% rural and urban male labour force participation rates. Employment-Population Linkages India's population is relatively young, with a median age of approximately 23.9 years as of the 2011 Census. This presents India with both opportunities and challenges in the future. On the one hand, a young population is generally supportive of future economic growth, especially in the context of human capital development. Leaving aside the future problems associated with population ageing, a young population provides India with the required labour force to support further economic expansion. The supply of young labour also gels well with India's aspirations to position itself as a premier provider of Knowledge Process Outsourcing. However, despite its massive potential, the government faces the uphill challenge of providing the necessary infrastructures for supporting its expansion and fostering job creation. Poor "hard infrastructures" (such as transport and telecommunications networks) tend to go hand-in-hand with relatively poor job creation; inadequate infrastructures may discourage firms from investing or expanding, hence retarding job creation. Hard infrastructure considerations aside, education remains a perennial issue given the imperative of equipping students with the required skill-sets to fuel the economy. The student-to-teacher ratio remains high at the primary education level (64.42 as of 2010, rising from 59.07 during 2001), raising concerns that the education system, at the starter level at least, may be overstretched. Failure to foster necessary job creation may turn India's youthful population into a disadvantage as disgruntled labour force entrants possibly resort to crime. Relatively Low Urbanisation Low urban population (just 31.2% of the total population as of the 2011 census) is also an interesting characteristic for India. Its urban population is largely concentrated in the states of Maharashtra, Uttar Pradesh, Tamil Nadu and West Bengal, though state-wise, many are largely rural. Notable exceptions to the predominantly rural nature of Indias state are Chandigarh (with an urban population that is 97.25% of the total state population), Delhi (97.50%), Lakshadweep (78.08%) and Daman and Diu (75.16%). Over the coming weeks, in recognition of demographics as a key variable in economic analysis, the CEIC India Premium Database will be expanded to include broader coverage on key demographic datasets and related socio-economic indicators, including education, health and crime. The expansion will allow users to not just gauge India's economy in terms of its social infrastructures, but to evaluate India's development in terms of intangible social factors. By Yan Ting Hin - 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
15th July 2014 India's Demographic Challenges