Ageing Humanity, Changing Societies: How Demographic Undercurrents Are Shifting Global Growth

The world is experiencing unprecedented demographic change and the topic occupies center-stage in many countries. Global population growth rate reduced from 2 per cent in 1970 to 1.1 per cent in 2018.

On average, the population is ageing; and rather steeply across the developed world. The fastest growth is now seen mostly in Africa due to higher fertility rates.

Japan is a classic case of an ageing country where the number of yearly births is significantly lower than the number of deaths.

World Bank data shows Japan's population growth rate deteriorated from a dismal 0.05 per cent in 2008 to a negative 0.2 per cent in 2018. Median age is around 47 years, and the ratio of older people to the working-age population is the world’s highest.

Fertility has dramatically reduced in developed regions like the United States, Europe and Russia. The US fertility rate is now 1.8 births per woman, down from 3+ in 1964, and less than the replacement rate of 2.1. Population growth decreased from 0.95 per cent in 2008 to 0.62 per cent in 2018.

Their population is ageing, with a median age at 38 years as opposed to 28 in 1970. Meanwhile, Russia's growth rate has been hovering around 0 per cent for over two decades.

The developed world is getting older and shrinking.

The biggest challenges are now in managing an ageing society with implications in social security benefits, hospices and healthcare, workforce productivity, automation, accelerated obsolescence, and many other factors.

The geopolitical repercussions of population decline in the developed world are becoming increasingly mainstage. Immigration is changing the ethnic make-up of many countries in Europe and the United States.

Different communities have different fertility rates; typically, immigrating groups produce more children than native — mostly white — populations in these regions. In the US, fertility rates amongst the white community average 1.7, while the Hispanic community averages 2.2.

The white community is estimated to dip below 50 per cent of the population by 2045, while the Hispanic community might reach 25 per cent up from 17 per cent in 2018.

Apart from other ramifications, the question of skills among communities is foremost. Historically, the immigrant Hispanic community does not have the same skill level as the white community, so this issue bleeds into economic productivity and growth of the nation.

With the steep rise in non-white politicians — especially in the neo-socialist extreme left-wing cliques in the Democratic Party exemplified by "The Squad" — demographic change is bleeding into politics as well.

Closer home, China — the world's most populous country — is witnessing a colossal shift. The population growth rate has stabilised at around 0.5 per cent over the last decade.

And the number of babies born in 2018 was only 15.23 million — the lowest since the 1961 famine. Median age is 37 years compared to 19 years in 1970. Like the developed world, China also now faces issues like a shrinking workforce and an ageing population.

India’s fertility has dropped dramatically. Data from the National Fertility and Health Survey (NFHS) shows India’s Total Fertility Rate (TFR) decreased from 3.39 in 1990-92 (NFHS-1) to 2.18 in 2013-15 (NFHS-4).

This means already in 2015, we were below the average global replacement rate at 2.3. Previous articles by authors Pai and Baid (Financial Express, Falling fertility) project that India's TFR will fall just under 2.0 in 2019.

Following the linear trend projection indicates that the TFR in India might become as low as 1.86 in 2021.

Demographics is truly a nation’s destiny.

The US took 50+ years to stabilise from a fertility rate of 3+ to 1.8. China took under two decades due to the forced enactment of the One-Child Policy. India is achieving this drop in three decades without any extreme interventions.

It is remarkable that a country the size of India is achieving this organically. Policymakers must study the effect of liberalisation on our demographics; it cannot be a coincidence that fertility dropped steeply from 3.4 in 1992 to 2.18 in 2015 after liberalisation in 1991.

To examine this trend from another angle, there is a wealth of data in the Civil Registration System (CRS). CRS maintains a database of the number of registered births and deaths in the country and state-wise.

The latest CRS report based on 2017 data marks the level of registration of births at 85 per cent and of deaths at 80 per cent. With this, we can estimate the number of births and deaths per year, and the population growth barring immigration.

Table 1 contains yearly net additional population since 2011, with actual data up to 2017 and trend projections for 2019 and 2021.

With the addition of annual net populations based on CRS data, the projection for 2021 comes close to 139 crores, as shown in Table 2. The data-backed model also predicts that decadal growth and growth rates for 2011-21 will fall steeper than the previous decades. The upcoming 2021 census will cast more light on this.

Decadal growth reached its zenith in the 1991-2001 decade, with an increase of 18.23 crores, up from 16.31 crores in 1981-91. In 2001-11, decadal growth stabilised to 18.21 crores, slightly fewer than the previous decade.

CRS data shows decadal growth is expected to reduce in the 2011-21 decade to roughly 17.8 crores.

Decadal growth rate, on the other hand, peaked back in 1961-70 at 24.8 per cent and has steadily decreased ever since; which means the population has been growing slower and slower after 1971.

Growth slowly reduced to 21.5 per cent in 1991-2001, and then rapidly dropped to 17.7 per cent in 2001-11. With the population projection based on CRS data, it looks like decadal growth rate might plummet to 14.7 per cent in this decade.

Without a doubt, India's population is ageing.

The future of all communities lies in its children. India was always pegged as the recipient of the demographic dividend but data shows we will soon lose that advantage.

Table 3 shows the number of children between the ages of 0 and 6 years in the census years 1991 to 2011. This number rose from 150 million in 1991 to 164 million in 2001, then dropped to 159 million in 2011.

Projections from the CRS data indicate in 2021, India will have around 156 million children, a drop of 3 million from 2011.

The percentage of children to the total population, however, has been steadily decreasing from 17.8 per cent in 1991 to 13 per cent in 2011. 2021 projections indicate this ratio might fall to 11 per cent soon.

Fewer children being born means fewer children entering Class 1, and ultimately fewer people entering the workforce.

At the rates fertility and population growth are dropping, India’s population may stabilise faster than expected. We can expect a peak soon, followed by a gradual decline.

With improved lifespans, we are soon going to have a large ageing population supported by a gradually shrinking workforce.

These trends indicate that many areas of our economy are going to be affected imminently and must be given special attention — from staffing primary schools and teacher training to improving workforce productivity and instituting special programmes for the 60+ age groups.

India's policymakers must commission a detailed demography study and bring together different aspects like fertility, births and deaths, school enrollment, higher education GER, workforce participation, and so on.

This study will provide a solid foundation on which to make the necessary policy changes and investments as India grows to a $5 trillion economy.

First printed in Financial Express.