The world’s population, currently 8.2 billion, is projected to surge to 10.2 billion in 2080, largely on the back of an increase in South Asia and Africa. But the tide will then turn. Twenty years later, in 2100, the global population will begin to stabilise at 10.3 billion before beginning a long decline.
According to the United Nations Department of Economic and Social Affairs (UNDESA) which released these figures recently as part of its biennial World Population Report (WPP), India’s population figures in 2100 (1.50 billion) will be more than double China’s population (633 million). China’s rapidly ageing and shrinking population will by 2054 have fallen to 1.20 billion while India’s population in that year – 30 years from today – will have risen to 1.69 billion.
What are the consequences of these numbers? First, China’s steep fall in population will be accompanied by a fall in its productive workforce. These are grim tidings for China. The effects of an ageing workforce on the Chinese economy are already being felt as annual GDP growth slips to four per cent.
Second, for India, the outcome is positive provided the burgeoning population over the next 30 years is upskilled. India needs not only more jobs but more better-paid jobs. For that to occur, the millions pouring into the employment marketplace every year need better skills to be employable.
The government’s Union Budget for 2024-25 seeks to tackle this problem with several incentive-laden employment schemes. But upskilling needs to have a foundation from school level. If primary schools disgorge 16-year-olds without basic skills in reading and arithmetic, no amount of upskilling at a later stage will have a significant effect on their future employability.
The good news from the UNDESA report is that India’s demographic dividend will last through to the 2050s, giving the country leeway to fix its primary education system while focusing simultaneously on nurturing institutes of excellence.
At the ninth governing council meeting of Niti Aayog in Delhi on July 27, 2024, Prime Minister Narendra Modi stressed the objective of “Viksit Bharat”. The PM has used this theme repeatedly in recent months to emphasise the goal of making India a “developed nation” by 2047, the centenary of Indian independence.
How realistic is this ambition? According to Niti Aayog’s projections, India’s population will be 1.65 billion in 2047. This is in line with UNDESA’s projections (1.69 billion by 2054).
Crucially, Niti Aayog says, the median age in India will rise from 29 years today to 37 years in 2047. That is still lower than China’s median age that in 2024 is already nearly 40 years. The youthfulness of India’ workforce will thus drive the economy well through the next generation.
Life expectancy is projected to shoot up from 71 years today to 84 years in 2047. As the ratio of retirees increases, pension payments will rise too. The burden on younger taxpayers will grow, a phenomenon that has already caused social fissures in ageing societies in Europe.
The Niti Aayog report, however, has some good news to offer as well. It projects the working-age population in India climbing from 960 million today to 1.20 billion in 2047. Thus over two-thirds of India’s population will be of prime working age mid-century, boosting productivity and economic growth while the rest of the world slips into gentle economic decline along with its attendant social costs.
The root cause
The reason India remains “underdeveloped” today isn’t just because of low per capita income but other parameters of nutrition, healthcare, education and sanitation. Poverty is the underlying cause. Economic growth, education and employment opportunities are key factors to mitigate inequality.
As the prime minister said at Niti Aayog’s governing council meeting last month: “We need to tackle poverty on an individual basis rather than just at a programme level.”
The think tank added: “The PM directed Niti Aayog to prepare an investment-friendly charter of parameters which would include policies, programmes and processes to be put in place for attracting investments.”
When measuring poverty in India, two sets of figures collide. The first is nominal per capita income measured at current exchange rates. By that criterion, India’s per capita income of USD 2,800 is at the level of a sub-Saharan African country.
The International Monetary Fund (IMF) and the World Bank recognise that exchange rates are based on an historically artificially strong US dollar. That is because the dollar is the world’s safe haven currency and the US Federal Reserve can print an unlimited amount of dollars without triggering inflation.
The IMF’s purchasing power parity (PPP) model adjusts for differences in living costs and wages between the US and other countries. According to the IMF’s World Outlook Report (April 2024), India’s per capita income (PPP) is currently USD 10,200. The World Bank Group report places India’s per capita income (PPP) at USD 10,127 (data.worldbank.org).
The Modi government’s objective to bring poverty down to zero by 2047 rests on achieving a GDP of USD 30 trillion by that date. At the current nominal (exchange rate) GDP of just under USD 4 trillion, this would require the economy to grow 7.5 times in 23 years. In turn, that requires annual GDP growth of 8.5 per cent a year. Given India’s demographics, this is achievable with the right policy prescriptions.
With time, the gap in the measurement of nominal and PPP per capita income will close. In 2047, as India approaches developed nation or Viksit Bharat status, per capita income (nominal) at 7.5x today’s USD 2,800 will be USD 21,000 and per capita income (PPP) around USD 40,000 – roughly the average level across Europe today.
These are the figures India must keep in mind as it embarks on the long trek from penury in 1947 to prosperity in 2047.
