Sunday, 5 May 2013

                                                      POPULATION VS ECONOMY

The debate of population and economy dates back to Malthus. According to Malthus with increasing economic growth population increases with higher fertility and lower mortality. On the other hand increasing population under constant input such as land translates into lower marginal productivities and thereby reducing economic growth. This theory created quite a stir in England in the 19th century but the population and the economy continued to increase proving the Malthus theory to be wrong.

As we have seen that the various results of the demographic transition models pertaining to mortality and birth rate are directly linked to per capita income of a nation rather than aggregate output. Here when addressing, the often asked question is the suffiency of the food grains for the population. This as the economists observe is a question of whether the people can buy rather than the whether adequate presence of food grains. When people earn money they could import food grains from various developing countries selling them.

Another question of how population increase would pressurise institutions like education and intensify the foreign exchange constraints by placing more pressure on balance of payment. Here the concerns are about how the pressure would result in the fall in standards of education which would end in fewer enrolments and drop outs are very true in a developing country like India.

But what higher working population would result is a very large labour force with less minimum wage and thus encouraging labour based industries.This larger labour force would result in economic development of country and also reduces the problem of unemployement.According to demographic transition model every country has this window of opportunity called demographic dividend.

The demographic dividend is a window of opportunity in the development of a society or nation that opens up as fertility rates decline when faster rates of economic growth and human development are possible when combined with effective policies and markets. The drop in fertility rates often follows significant reductions in child and infant mortality rates, as well as an increase in average life expectancy. As women and families realize that fewer children will die during infancy or childhood they will begin to have fewer children to reach their desired number of offspring. However, this drop in fertility rates is not immediate. The lag between produces a generational population bulge that surges through society. For a period of time this “bulge” is a burden on society and increases the dependency ratio. Eventually this group begins to enter the productive labor force. With fertility rates continuing to fall and older generations having shorter life expectancies, the dependency ratio declines dramatically. This demographic shift initiates the demographic dividend.”

India’s population is expected to cross China’s population in 2025.Most of this population is going to be in working age group resulting in the demographic dividend for India. Though this provides a window of opportunity of development,It also challenges us of how India will be able to provide basic food and water to all it’s population.

There are four stages of development in demographic dividend. First the increased labour supply. Though this is dependent on how government will be able to grasp available work force. Next the increase in savngs.As the number of dependents decrease there will be an increase in saving resulting in the economic boost. Next is the increase in the human capital. As there are less children parents invest more on each resulting in better education and health outcomes. And finally is the growth in domestic demand due to increased per capita income and less dependency ratio.

As we can see that the first mechanism is a root for a countries development during demographic divedend.So government has to come up with policies that would increase the opportunity of employment with which there could be a social chaos. The Right To Education Act is definitely one policies towards the right direction if implemented properly.

Indian Case:

he International Labour Organisation has predicted that by 2020, India will have 116 million workers in the age bracket of 20 to 24 years, as compared to China’s 94 million. This demographic fact has the potential to be the biggest competitive advantage of India in the years to come.

As we know that education is of utmost importance and since adapting adopting RTE, we have achieved a gross enrolment ratio (GER) in primary education of 104 per cent. The challenge, however, is sustaining these rates of enrolment into higher education. In that arena, we stand nowhere near the global GER of 29 per cent, with a historically low GER, currently at 18 per cent.

And so to tackle the question of employement, Government of India has proposed to create 100 million jobs by 2022 in its 12th five year plan.

Demographic transition developed by an American demographer Warren Thompson observes changes in the birth and death rates in industrialized societies over previous 200 years. But like all models the demographic transition model has its limitations.

  • It does not consider the influence of migration. Both immigration and emigration.
  • There is no time scale present. 
  • The death rates in Germany and Sweden are higher than the birth rates indicating that there might be a fifth stage present.
  • It does not consider the effect of female literacy and employment on population.
  • Based on the change in population of UK and might not be applicable for all the countries.
  • Influence between countries like war is not considered. 

Stages of Demographic Transition:

As we can see in the above figure there are four stages:

Stage 1- High Fluctuating Period:

  • Both death rates and Birth rates high.
  • Lack of disease control, famine, poor hygiene lead to very high death rates.
  • The need for more man power and many religious beliefs lead to high birth rate.
  • As both death and birth rates are high the increase in population is less in this period.
Stage 2 – Early Expanding: 

  • Various medical science advances in this period lead to decrease in Death rate with birth rate being the same.
  • This resulted in increase in population in this era. 
Stage 3 – Late expanding:

  • Birth rates are decreased due to various factors such as government policies, increasing cost to raise a child, higher literacy among females contributed to this.
  • Here the population is still increasing but the rate of increase has been reduced. 
Stage 4 – Low Fluctuating:

  • Both birth rates and death rates are low and of the same value resulting in the stabilization of the population. 

Uses of DTM:

  • It helps us to predict the future population of a country and how it would change overtime.
  • Comparison between two countries can help us find out how economic and social conditions might affect the population. 


A population pyramid, also called as age picture diagram, is a graphical illustration hat shows the distribution of various age groups in a population which forms the shape of a pyramid when the population is growing.

Above is the population pyramid of the world in 2010.The features of a population pyramid are 

  • Male figures are to the Left of the pyramid and female figures are to the Right of the pyramid. 
  • The horizontal axis may either represent the actual number or the percentage of the total population in each age category. 
  • The vertical axis is divided into various age groups known as Cohorts. 

Uses of a population Pyramid:

  • The division between the sexes can be analyzed. 
  • A wider base indicates a higher youth population as a result of high birth rates. 
  • A narrow top indicates that there are fewer people in older age group as a result of low life expectancy. 
  • Dependency can be calculated knowing the population pyramid. 
  • A Column shaped population pyramid indicates a nation in stage 4 of demographic transition with equal death and birth rates. 
  • The level of immigration can also be shown in the population pyramid.

India's Demographic Stats

Data from SRS and Census are widely used for assessing on going demographic transition in the country. Census provides data once in ten years. The Sample Registration System (SRS) was established in order to provide dependable annual, state-specific data. The SRS was initiated by the Office of the Registrar General, India on a pilot basis in a few selected states in 1964-65. It became fully operational during 1969-70.

A comparison of some demographic parameters between India and some of the neighboring countries is given in Table 2.1. China and Sri Lanka are far ahead of India in all these parameters.

Some Demographic Parameters : India and It's Neighbors 

Time trends in some of the major demographic indices are shown in the following table.

India - Selected Health Indicators

Demographic Transition in India

Population Projections

The population pyramids for 2001 and 2026 are shown in the figures below. The average age of Indians was 23 in 2001 and is expected to rise to 31 years old in 2026.

Projected population (India 2001)

Projected population (India 2026)

The substantial interstate differences in age structure and consequently population pyramid will persist even in 2026 because different states have achieved fertility and mortality transition at different rates. These have to be taken into account while planning nutrition and health interventions in these states.

Projected population (Kerala 2026)

Projected population (Uttar Pradesh 2026)

The results of the last two censuses, especially the findings of the 2011 Census, clearly indicate that the country has entered the last phase of demographic transition, usually characterized by rapidly declining fertility. The crucial question now is — how long will this phase extend and when will India achieve a stable population?
“People are realising that we cannot forever continue to multiply and subdue the earth without losing our standard of life and the natural beauty that must be part of it. These are the years of decision- the decision of men to stay the flood of man."  Ehrlich here explains the one of the most pressing problems facing man in the 20th century. The population of the world is increasing daily with a growth rate of about 1.2 % . Science and medicine have decreased the death rate exponentially while the birth rate has not decreased so. According to The United States bureau of census, the world population is presently about 7.2 billion with a potential of becoming 10 billion by the end of the century. Most contemporary estimates for the carrying capacity of the Earth under existing conditions are between 4 billion and 16 billion. In 100 years, the population could be well over the earth's carrying capacity.

Overpopulation has become one of the many concerns of any country. It is giving rise to various problems from inadequate fresh water, depletion of natural resources to increasing pollution and deforestation. Mass starvation is inevitable if population continues to increase the way it is currently. The existing grain is getting used up at the rate of knots and the rate at which the population is growing, it will be impossible to supply food and water to this increasing population. It creates unemployment; as the population keeps on increasing the job opportunities keep on diminishing. The rich-poor gap is increasing, creating the potential for large parts of the population to starve. Low level of per ca pita income reduces the purchasing power of the people making them poor and unable to educate their children resulting in lower standard of living.

Though one may argue that population matters for economic development of a country and it is, but we need to make sure that economic development does not come at a cost of our future generation’s lives. With about 1.24 billion of 7 billion population (17.7 % of the world population) it is clear that India has to take steps in reducing the growth rate of population alongside with increase in standards of living and sustainable environment. It is estimated that by 2050, India will overtake China to become the most populous country.

Fig: Population: India and the world.

For many years concern has been voiced over the seemingly unchecked rate of population growth in India. The most recent census indicates that some success is being achieved in slowing the rate of population growth.  However, the progress which has been achieved to date is still only of a modest nature. Moreover, in a country like India which has so huge a population base to begin with, a slowing of the rate of population growth may not be enough.