Date: 26/05/2016    Platform: Economic Times

‘Demographic dividend’ is underway with collapse in fertility

Latest survey data suggest that Indian fertility has fallen sharply in recent years and is already at the ‘replacement level’ needed to keep the population stable. Urban fertility is now at levels seen in developed countries and in some places among the lowest in the world.

These readings suggest a big change in India’s demographic trajectory. It also adds to the likelihood that world population will peak a lot sooner than is widely believed.

According to recently released Sample Registration System data, the country’s total fertility rate (TFR) stood at 2.3 in 2013. TFR is the average number of children per woman if she lives to the end of her child-bearing years. In developed countries, a TFR of 2.1is required in order to keep the population stable (ignoring migration). In India, this is around 2.3 due to higher infant mortality and a skewed gender ratio. In other words, the country’s TFR is already at the ‘replacement rate’.

The TFR for rural areas stands at 2.5, but that for urban India is down at 1.8 — marginally below the readings for Britain and the US. An important implication of this is that India’s overall TFR will almost certainly fall below replacement as it rapidly urbanises over the next 20 years.

There continue to be wide variations in the fertility rates across the country. Readings for the southern states have been low for some time, but are now dropping sharply in many northern states.

Tamil Nadu has a TFR of 1.7 but so do Punjab, Himachal Pradesh and Delhi. Uttar Pradesh and Bihar continue to have the country’s highest TFR at 3.1 and 3.5 respectively, but these are also falling steadily.

Demise of the Bhadralok Interestingly, West Bengal has the lowest fertility in the country with a TFR reading of 1.6. The level for rural Bengal is 1.8 but is a shockingly low 1.2 for the cities. This is one of the lowest levels in the world and is at par with Singapore and South Korea.

One can see this even more clearly when one compares the birth rates across major Indian cities. (The birth rate is the number of live births per thousand population.) Kolkata had a birth rate of just 9.9 over 2011-13 compared to 15.1for Chennai, 17.8 for Delhi and 14.7 for Mumbai.

Separate data has not been published for Kolkata’s educated middle class — the ‘bhadralok’ class. However, fertility tends to fall with higher education across India and it is fair to presume that the number for the bhadralok class would be even lower than for the overall city.

This is in addition to large-scale outward migration of Kolkata’s educated youth in recent decades to Bengaluru, Delhi NCR and across the world. If these trends continue, the traditional Bengali bhadralok class will go almost extinct within a generation in its city of origin. Of course, anew middle class will rise to take its place but this will have important cultural and political implications. Other Indian cities too are witnessing the rise of a new middle class. But in their case, it is driven more by upward mobility and inward migration rather than the rapid demise of the old middle class.

End of Population Growth The fall in fertility below replacement levels does not mean that population growth will immediately stop. Indians are living longer.

So, for another 25-plus years, falling death rates will compensate for falling birth rates. Nonetheless, the latest survey results will hopefully change the minds of those under the impression that Indian population would remain young and keep growing forever. The ‘demographic dividend’ phase is already underway and will last just one generation.

The trends in fertility have important implications for policy. First, social policy must shift focus from birth control to other issues like infant mortality. Second, long-term schemes like pension systems must anticipate a time when the old population will be expanding much faster than the youth population.

Third, the provision of education, health and other services needs to prepare for the demographic turn. Population structure may appear to change slowly. But, as Japan and China have discovered, it is a powerful dynamic once it gathers pace. Indeed, some Indian states will need to face these issues within a decade.

The fall in Indian fertility is not unique. It is in line with what every other country has experienced at a certain economic stage. Developed countries have been below replacement rates for decades now. But fertility is now plunging across emerging markets. China, Brazil and Russia are all below replacement level. Only Africa still has very high birth rate, but this too will fall eventually.

This is why most world population forecasts are flawed. The United Nations predicts that world population will rise from the current 7.3 billion to 11.2 billion by the end of the century. However, fertility trends suggest that it will peak at a much lower level (perhaps closer to 9 billion) before declining. One could argue that this would be a good thing. But a shrinking, ageing population will bring its own challenges.