Demography concerns ahead

A productivity push, better social safety nets, and hedging between India’s demographically diverse regions alone can manage the challenge

The 2023 report of the Sample Registration System (SRS) marked a watershed moment in India’s demography. The total fertility rate (TFR) in rural areas has reached 2.1 for the first time; urban TFR has been less than 2.1 since 2006. TFR is the average number of children a woman has in her lifetime. A value of 2.1 is considered the replacement level fertility. Sustained over a long term, it adds just enough to compensate for deaths. An HT analysis of TFR by wealth level of households as seen in the National Family and Health Survey (NFHS), shows that TFR has been falling for not just richer households (already below 2.1) but even poorer ones. While some northern states continue to have a TFR above 2.1, the trend is unambiguous even there: Fertility — and thus — future population growth, is falling.

India must exorcise the ghosts of population control and focus on urgent management of the rapidly shrinking window to tap its demographic dividend. (HT Archive)

The latest TFR numbers from the SRS and their class-wise breakdown from NFHS is yet another reminder for India to pivot its policy of managing demography. It must exorcise the ghosts of population control and focus on urgent management of the rapidly shrinking window to tap its demographic dividend. This will require pouring more resources into things such as skilling, investment and social capital. The experience of the recent past is far from encouraging. While there has been a lot of talk and praiseworthy policy overhaul such as the New Education Policy, resource allocations in critical areas such as education and health have barely changed. A rising share of revenue spending of both the Centre and states is being diverted towards fiscal palliatives, which are compensating for the current day problem of unequal growth rather than investing in the future.

What makes the investing-in-future problem even more complicated are the regional fault lines. Southern states with lower TFRs are worried about their current and future fiscal and legislative shares. Some of their politicians are asking people to have more children. Then there are others who are trying to encourage demographic strategies based on religion. None of these nudges are likely to work. Households do not decide their fertility preferences based on politics. In an economy where work is shifting from traditional to modern sectors, where more women work, and childcare is expensive, falling fertility is pre-ordained. It will take a rise in productivity, better social safety nets, and intelligent hedging between India’s demographically diverse regions to manage this challenge. Anything else is just a harmful distraction.