3:35 pm by Akanksha Awal
As census results from the world’s two most populous countries pour in, the China India demographic transition debate rages on.
The rate of population growth in China has slowed to less than 6 per cent over the past decade, while in India it surged ahead by almost 18 per cent. India’s population is on track to become the biggest in the world by 2030.
But will India be able to transform its demographic transition into long-term sustainable economic growth?
China was home to 1.34bn people in 2010, the latest census shows. The figure is lower than analyst forecasts of 1.4bn, and the rate of population growth, at 5.8 per cent over the past decade, is little more than half the 11.7 per cent growth in the decade to 2000.
By contrast, India’s provisional census results, released in early April, suggest the country’s population grew by 17.6 per cent over the past decade to 1.2bn. Even though the rate of population growth in India also declined, from 21.5 per cent in the decade to 2000, India’s population should overtake China’s during the next two decades.
Many economics predict a promising future for India as it reaps the benefits of the ‘demographic dividend’ – a major component of its recent success.
India’s population is younger than China’s. The country will add 26 per cent to the world’s total working population over the next ten years. These young workers will drive the economy, adding to the savings rate and fuelling investment.
In contrast, China’s population will reach an inflection point during the next decade. The share of elderly people in its population will grow more quickly than that of young workers, adding to strains on labour costs and producing a decline in household savings.
China, the argument goes, has already reaped the benefits of a large working-age population and within the next two decades will be weighed down by the burden of an ageing population, much like the advanced economies of today.
China’s dependency ratio (the number of working-age people supporting children and the elderly) declined 2.9 per cent in the five years from 2005 to 2010, while India’s dependency ratio in 2010 declined 7.7 per cent – almost double that of China – according to calculations by the Population Foundation of India based on UN data.
The UN expects India’s age dependency ratio to go on improving, from 55.6 per cent in 2010 to 47.2 per cent in 2025, as CNN Money reports. Meanwhile, an increasing number of Chinese working-age people will support dependents, with the ratio rising from 39.1 per cent in 2010 to 45.8 per cent in 2025.
But in spite of the figures, many questions remain over whether India will be able to successfully integrate its younger population in a growing economy.
“India is theoretically expected to benefit from a young population, but if the country is unable to train its people then a very large young untrained population can become a liability for the country,” Dr Amitendu Palit, head of development and programmes at the National University of Singapore, told beyondbrics.
According to Palit’s research from 2009, although India is adding 12.8m people to its workforce every year, the total capacity to train in the country is a quarter of the requirement, at 3.1m places.
“China has shown more foresight in handling its challenges. It has done well in training its people to moderate levels and has brought most of its urban populations under social security programmes, unlike India,” he added.
Sona Sharma of the Population Foundation of India agrees, up to a point: “India faces a huge challenge in terms of training its people, but the challenge is not impossible to overcome. There is an awareness amongst the policymakers and business leaders alike about the extent of the challenge, and I am positive about it,” she said.
India’s business leaders and policy makers face a huge challenge in equipping the country’s population with the skills to integrate into the global workforce. But one thing is clear: the pressure on India in terms of the resources, land-man ratio, skills training and infrastructure will continue to be higher than those in China for the next three decades.
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