The global population is currently going through an epochal shift. The latest projections in the United Nation’s World Population Prospects suggest that India’s population, estimated to be 1.43 billion, surpassed that of China in April 2023, making it the world’s most populous country.

The exchange of places in population rankings between India and China is unsurprising, and can be attributed to their respective population policies adopted over the last four to five decades.

China implemented the “later, longer, fewer” campaign in the 1970s, promoting delayed marriages, longer intervals between births, and limiting the number of children. China’s draconian One-Child Policy from 1979 to 2015 was enforced through various measures, including fines, mandatory contraception, and even forced sterilizations or abortions.

In contrast, India’s population policy, implemented primarily through the National Programme for Family Planning (launched in 1952), focused mainly on voluntary measures and awareness campaigns to control population growth, with no strict limits on the number of children couples could bear. Notwithstanding the significant decline in India’s total fertility rate (TFR), from 5.7 births per woman in 1950 to a sub-replacement rate of 2.0 currently, it is but inevitable that India’s population will continue to grow for the next several decades owing to the demographic momentum of the past several decades.

According to the UN’s projections, India’s population will peak at 1.7 billion in 2064, accounting for about 18 per cent of the world population. Effectively, the country will add about 300 million to its existing population, or about 7.5 million per annum, over the next forty years. What will this all imply for a country like India? On the positive side, continued growth in the population of a young nation will undoubtedly prolong the demographic momentum as well as the demographic window of opportunity for the country.

For example, by protracting the period of advantage of India’s low median age (currently at 28.2 years, about 10 years less than that of China), population growth can positively impact consumer spending, boost innovation and entrepreneurship, attract foreign investments, contribute to the country’s international competitiveness in manufacturing and services, and augment overall productivity and economic growth.

According to CII, if India can properly leverage its 1-billion-strong working-age population projected by the end of this decade, the GDP of India’s consumer-driven economy can potentially grow to $9 trillion by 2030 and $40 trillion by 2047.

Besides, as India’s working-age population rises, the dependency ratio (the number of dependents per working-age individual) is expected to decline from 0.48 in 2021 to 0.45 in 2030 and to 0.39 in 2050. This can lead to several economic benefits, including higher savings and investment, higher productivity and faster economic growth.

However, the benefits of a higher population and favourable demographic structure will be contingent on substantive economic and social policy reforms. India’s population bulge and the favourable demographic transition can turn from being a ‘dividend’ to a ‘burden’ if some of the key challenges associated with a burgeoning population are not addressed urgently.

First, NSS 78th round ‘Multiple Indicator Survey in India’, published in March 2023, reveals the grim reality of India’s youth unemployment. As per the NSSO survey, 32.9 per cent of the youth (between 15-29 years) are not in education, employment, or training (NEET). The survey also reveals a stark gender gap in the NEET population ~ 51.7 per cent female, compared to 15.4 per cent male, across rural and urban areas.

India’s NEET numbers measure poorly against the global average of 22.4 per cent for the comparable group. The tag of a ‘young nation’ will mean little if reform measures do not improve access and quality of education, modernize training modules to develop employable skills, and generate more job opportunities for India’s youth, particularly women.

Second, the continuing rise in population, coupled with the rural-urban growth divide, is likely to increase rural out-migration, posing substantive challenges to balanced urbanization. According to UN projections, 675 million Indians will live in cities by 2035, and by 2050, the share of the population residing in urban areas will surpass those living in villages.

The planning and financing challenges posed by greater demand for infrastructure and basic services like water, sanitation, housing, electricity, and transportation in urban areas will multiply manifold. World Bank estimates suggest India must spend $56 billion annually to address its urban infrastructure needs.

The government must find the necessary fiscal and other resources to address the impending challenge. Third, the scarcity of skilled manpower, including technical professionals, is real. The India Skills Report 2022 points out that only around 48.7 per cent of the current jobseekers in India possess the necessary qualifications to be considered “highly employable”.

A recent Teamlease survey reports similar numbers for digitally skilled professionals aged between 22 to 25 years. Given the rapid growth in digitally-focused workplaces, the skills gap issue can only exacerbate with a bulging youth population, unless greater and swifter action on skilling, re-skilling and upskilling programmes in areas of emerging technologies are taken up at all levels.

Fourth, India’s population bulge is also likely to strain sectors like education and healthcare, which suffer from massive underinvestment currently. India’s healthcare spending at 2.1 per cent of GDP is extremely low, even by developing country standards.

With people aged 65 and above expected to double between 2023 and 2050, providing access to affordable and quality healthcare will be a significant challenge for India’s policy wonks.

Similarly, India spends $52 billion in educating almost 350 million children, which averages to a meagre $148 per child annually.

UN projections show that India will add 190 million children of primary and secondary school age by 2030. It is, therefore, crucial that the country must proactively invest in enhancing human capabilities to benefit from the power of absolute numbers. Policymakers must look beyond the headline numbers and address the real challenges facing the country and its growing populace.

Whether India becomes an economic superpower in the coming decades will critically hinge on how and when we leverage the demographic gift of plenty

(The writers are, respectively, Assistant Professor and Doctoral Scholar in the Economics Area at the Indian Institute of Management, Ranchi)