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With India’s demographic transition, come challenges

🔴 Sonalde Desai, Debasis Barik write: The demographic dividend is smaller, but will last longer due to regional variation in the onset of fertility decline. As southern states struggle with the growing burden of supporting the elderly, northern states will supply the workforce needed for growth.

Between 2015-16 and 2019-20, UP’s TFR has declined from 2.7 to 2.4, while Bihar’s TFR has declined from 3.4 to 3.0. (Illustration by C R Sasikumar)

Success brings its challenges. The first challenge is accepting the win, the second is to learn to live with it. Recent results from National Family Health Survey-5 (NFHS-5) suggest that we are entering an era where we will have to tackle these challenges. NFHS-5 places the total fertility rate (TFR) at 2.0. With two parents having two children, we have reached a replacement level of fertility. Due to many young people, the population will continue to grow, but the replacement level fertility is a significant milestone in India’s demographic history. This decline is spread evenly across the country, with 29 states and UTs having a TFR of 1.9 or less, with seven below 1.6. All southern states have a TFR of 1.7-1.8, similar to that of Sweden. Even states that have not reached replacement fertility — Bihar and Uttar Pradesh — seem to be headed in that direction. Between 2015-16 and 2019-20, UP’s TFR has declined from 2.7 to 2.4, while Bihar’s TFR has declined from 3.4 to 3.0. Part of the original coterie of lagging states, Madhya Pradesh and Rajasthan both have achieved TFRs of 2.0.

This success, however, brings its challenge. As fertility declines, the proportion of the older population grows, and societies face the challenge of supporting an ageing population with a shrinking workforce. This challenge is greater for leaders at the beginning of the demographic transition — Kerala and Tamil Nadu. According to the National Statistical Office, while the proportion of population greater than age 60 was 8.6 per cent for India as a whole in 2011, it was 12.6 per cent for Kerala and 10.4 per cent for Tamil Nadu, projected to increase further to 20.9 per cent and 18.2 per cent respectively by 2031. Interestingly, these are also among the more prosperous states in India, whose economic activities increasingly rely on migrant labour from other states. With a paucity of data on migration, it is not easy to estimate the dependence on migrant workers, but the Covid crisis and mass return migration of interstate workers suggest that many industries such as auto parts manufacturing and construction in southern states rely on semi-skilled migrants, often transported under contractual arrangements, from northern and eastern states, particularly Bihar, Uttar Pradesh and Odisha.

With ageing states increasingly relying on a workforce from relatively younger states to maintain their economic prosperity, it may be time for us to change our mindset about critical dimensions of India’s federalism. Concern with population growth and a desire to not reward non-performing states have shaped inter-state relations in India over the past decades, shaping the allocation of political power and central resources devolved to states.

While the Indian constitution mandates allocation of Lok Sabha seats across states in proportion to their population via the Delimitation Commission, the Emergency-era 42nd amendment froze seat allocation to the population share of states in the 1971 Census. This freeze, originally expected to end in 2001, was further extended until after the 2031 Census by the 84th amendment. This has led to a much greater population per constituency in northern states than in southern states. In 2011, Uttar Pradesh had an average of 25 lakh persons per constituency, while Tamil Nadu had 18.5 lakh.

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The division of central allocation to states is another area where population concerns have dominated equity considerations. Much of the Centre-state revenue sharing occurs through recommendations of various Finance Commissions. The sixth to fourteenth Finance Commissions allocated resources between states using the 1971 population shares of various states. The Fifteenth Finance commission used Census data from 2011, but it also added the criteria of demographic performance, rewarding states with lower TFR.

In view of sustained fertility decline in all states and the overall attainment of replacement level fertility nationally, should a focus on demographic performance continue to trump principles of equity? The answer depends on our view of India’s demographic future. Does India want to pursue China’s route of sharply lower fertility, with a large number of families stopping at one child, or are we content with moderately below replacement fertility of about 1.7-1.8? If the latter, we are well-positioned to head in this direction. Little needs to be done beyond improving the quality of family planning services for couples already desirous of small families.

In our opinion, trying to aim for a very low fertility of TFR below 1.5 will be a mistake. As China’s experience shows, while very low fertility provides a temporary demographic dividend with a reduced number of dependents to workers, the increased burden of caring for the elderly may become overwhelming over the long term. India is fortunate that its demographic dividend may be smaller, but is likely to last for a more extended period due to regional variation in the onset of the fertility decline. As southern states struggle with the growing burden of supporting the elderly, northern states will supply the workforce needed for economic growth. The increasing pace of migration may help shore up economic expansion in the south with its shrinking workforce augmented by workers from other states.

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If we choose to follow this path of moderate fertility decline coupled with inter-state sharing of demographic dividend, there is little justification for continuing to punish states that entered the demographic transition later. The Sixteenth Finance Commission and the next Delimitation Commission must be freed from the burden of managing the demographic transition, focused on carrying out their tasks in the best interests of Indian federalism.

This column first appeared in the print edition on December 1, 2021 under the title ‘The demographic twist’. Desai is professor, University of Maryland, and professor and centre director, NCAER-National Data Innovation Centre. Barik is a fellow at NCAER-National Data Innovation Centre. Views are personal

First published on: 01-12-2021 at 03:45:58 am
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