How Bihar, UP can be economic powerhouses
How Bihar, UP can be economic powerhouses
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Population growth seems to have dropped off the public agenda these days. One reason for this is a twist in the old Malthusian argument that sees the rising proportion of persons of working age as a positive for growth.
This shift in the age-distribution, it is argued, will stimulate savings as pressure on household and public budgets for the needs of dependent children comes down. Young workers are assumed to be more willing to take chances and be ready to migrate where opportunity is available.
To the extent to which the demographic dividend also reflects the impact of reduced birth rates, women would be less weighed down by child-bearing and -rearing and more available for work.
All of these arguments are plausible and consistent with the experience of Asian countries that have gone through a similar demographic dividend phase.
The counter-example of Latin America, where this phase of demographic evolution did not lead to high growth, should warn us though that there is nothing automatic about the connection and that a lot depends on whether policies and programmes are in place to stimulate job-creating growth and provide the growing number of workers with the skills required to benefit from these opportunities.
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Image: A child selling Indian flags.
Photographs: Reuters
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The prospects for doing this successfully in India have to take into account the large regional differences in the pace of demographic transition.
This typically passes through three phases: an initial period characterised by a rising child dependency ratio, followed by a rising proportion in the working age group and a falling dependency ratio and then by a phase where the dependency ratio increases because of a rising number of older persons.
Demographic projections for states prepared by the Population Foundation of India suggest that in the decades ahead, demographic dividend will accrue mainly in five northern states -- Uttar Pradesh, Bihar, Jharkhand, Madhya Pradesh and Rajasthan. Some southern states like Kerala and Tamil Nadu will actually be in the third phase of a rising age-dependency ratio fairly soon.
One may note in passing that these differences reflect the failures in performance in women's advancement and family planning in the northern states rather than any fortunate initial condition for rapid growth.
The share of the five northern states -- UP, Bihar, Jharkhand, Rajasthan and Madhya Pradesh -- in the increase in the 15-64 age group will be about 56 per cent in the next two decades and 91 per cent in the decades after that. They probably have a higher-than-national-average share in the current backlog of surplus labour.
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Image: The Taj Mahal in Agra, UP.
Photographs: Reuters
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Realising the demographic dividend will require that up to two-thirds or so of the new quality employment will have to be generated in these five states. The rest of India may well face labour shortages as labour-force growth there drops sharply in the decades ahead to a near-zero level beyond 2031, and this may be met by migration from the North.
Quality employment for the rising workforce in the five northern states will have to be provided outside agriculture.
The numbers are quite staggering -- the need is for around 6-8 million new, non-agricultural jobs or work opportunities in these states every year for decades ahead. This will not happen simply because a lot of people happen to cross over into a working age group.
It will require a strong growth impetus from rising demand and an education-and-training system that imparts the skills needed for non-agricultural work to young (and old) workers. It will also mean very rapid urbanisation as these new work opportunities will be generated in towns and cities rather than in villages. How well prepared are the northern states for this challenge?
The recent growth record of the northern states is mixed. Bihar and Jharkhand have grown faster than the national average in the recent high-growth period but the other three states have grown at a much slower rate.
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