Tale of Two Populations

Much has been said about population growth in India and how China has successfully "managed" the problem. At first blush, it does seem like India has a population growth problem. In year 2000, the gap between the population of the 2 countries was 210 million. By 2014, India had closed the gap to almost 70 million. According to the World Bank, as of 2014 China's population was 1,365 billion and India's population was 1,295 billion. However, there is more to the story than total population.

India's fertility rate has been falling dramatically. Fertility rate is the average number of births per woman. The replacement fertility rate is " total fertility rate at which women give birth to enough babies to sustain population levels." The global average for this rate is roughly 2.33. As you can see from the chart, India's fertility rate has fallen from 3.3 to 2.5 and continues to fall. This is an encouraging development. This means India's population growth is slowing down and could soon reach stable levels. Thanks to the broad implementation of the 'One Child" policy, China's fertility rate is 1.66. In fact it is so low that China will not sustain its current population in the long run. This is not great news for the country because the proportion of the aging population will continue to grow and that of the working age population (15-64 years of age) will continue to fall.

If you toggle to the "Population ages 15-64, % of total" chart, you can see that in China, since 2011 this proportion has been falling. This has serious implications for a manufacturing powerhouse such as China which depends on its low cost workforce to propel its economy. This was largely why, last year China abandoned the "One Child" policy. For India, this number has been steadily increasing. This is sometimes referred to as the 'Demographic Dividend' by economists.

The throngs of people in public places in every major Indian city can be overwhelming, and may lead us to believe that India's population problem is insurmountable. On the contrary, recent data paints a hopeful picture. If current trends continue, India's population will stabilize over the coming decades and the large pool of working age population could very well power the country's growth engine.

*Chart renders best on Desktop. We publish a modified version for phone.