There is a long–standing debate on how population growth affects national economies. In a seminal 2003 book, the Harvard economist and demographer David E. Bloom coined a term “Demographic Dividend” to refer to a boost in economic growth that a country with a large share of its population in the working age can expect to benefit from, provided the right policies are in operation.

The term indicates a new perspective on the economic consequence of population change. The term is now widely used in demographic, economic and public policy discussions. In the words of our Prime Minister: “Our demographic dividend is our strength”. According to the United Nations Population Fund (UNFPA), Demographic Dividend (DD) is defined as “the economic growth potential that can arise from changes in a population’s age structure, particularly when the working-age population (15 to 64) is higher than the non-working-age population (14 and younger, and 65 and older)”.

Indeed, when the proportion of the efficient working population is larger, the DD arises because more people have the capacity to be productive and contribute to economic growth. What is pertinent to mention here is that not only the size of the working population but its share in the total population is also important. In economic terms, both the younger and the elderly require welfare investments and resources, while the working-age population is the only section able to generate resources and propel growth. Even a country having a very large working–age population can set the stage for DD at the moment at which the country’s child population begins to decline.

The global status of DD is characterized by a significant divergence, with the “youth bulge” shifting from East Asia to South Asia and Africa, while the developed regions face aging populations and shrinking workforces. The DD ~ where the working population (15-64) exceeds the dependent population ~ is not uniform, and its timing varies by regions, impacting economic potential. However, the first table published alongside shows the updated regional status of DD:

India’s demographic transition from a high fertility-high mortality population structure to a low fertility-low mortality one has reshaped the age profile, expanding the share of the working population.

Once it was most common to hear in India the word “population” juxtaposed with “explosion”, like a frightful bomb that would go off in our faces. Paul Ralph Ehrlich, an American biologist, author and environmentalist, coined the term “population explosion.” The threat of the population bomb has gone for good, reflecting major shifts in demography over the last century. Of course, because of national family welfare programmes, India’s population growth began to slow down from the 1980s, driven by falling fertility rates.

India experienced steadily declining birth rates over time. The total fertility rate in India has declined from 3.4 children per woman in 1992-93 to 2.0 children per woman in 2019-21. At 2.0, the current fertility rate in India has dipped below the population replacement level of 2.1 children per woman. “Replacement fertility” means that if two adults have a notional 2.1 children between them, then, accounting for some likelihood of death during childhood or adolescence, that couple will produce two adults, and the size of the population will remain the same.

If fertility falls below that level, the population will begin to decline in absolute numbers. The number of babies born every year in India peaked at around 29 million at the turn of the millennium, following which it began to fall. Roughly around 23 million babies are born now every year, and this number is projected to continue to fall. What this has meant is a sharp decline in India’s child population, which in demographic terms is defined as the population aged 0-14 years ~ in both absolute and relative terms. Indeed, the child population in India began to steadily decline from around 2010 onwards.

There were nearly 390 million children between the ages of 0 and 14 out of 1.24 billion people at that time. If the population were to be divided into 15-year age groups, it was the child population that was the largest segment at the time. At present, India’s child population is below 354 million, lower than the number of 15-29-year-olds and nearly the same as the population of 30-44-year-olds. In relative terms as well, the share of children in India’s population is declining. In the early 1960s, over 40 per cent of Indians were under the age of 14. By 2025, less than 25 per cent of the Indian population is under the age of 14 and the number is projected to continue to decline.

Bihar is the only state that is not projected to see its child population decline in absolute terms until 2036. According to India’s demographic and labour statistics, population aged 15-60 years is considered as the working–age population. The share of Indians who are aged 15-60 years makes up over 60 per cent of total population currently. However, the working-age population in India is approaching its peak, suggesting that India’s DD is now approaching its closing date which is revealed from the second table showing the updated share of age groups in the country.

According to UN population projections, the share of the working–age Indian population will continue to peak in the next three to four years, after which it will begin to decline. In absolute numbers, the working-age is projected to reach a peak with around 1.04 billion people between the ages of 15 and 60 years by around 2040, after which it is projected to start declining. As of 2025, seniors over the age of 60 years make up 11 per cent of India’s population.

But numbers of such seniors are going up rapidly owing to improved life expectancy. In Kerala seniors over the age of 60 years already make up nearly 20 per cent of the population. In case of some other states the share of the numbers of people over 60 years may be ascertained from the last of the table above. After 2050, the only population group expected to grow continuously is that of people above the age of 60. No doubt, the growth in the elderly people will drive the rise in India’s dependency ratio. The apprehended situation signals a deepening demographic winter. Indeed, China’s demographic winter offers us a timely lesson to be learnt.

India’s DD reflects a civilizational pivot. The “youth bulge” which mirrored East Asia’s miracles is now (in the period of late-dividend stage) being extended uniquely into a “longevity dividend” which extends not just lifespan, but health-span which can produce benefits across the economy and society. India’s demographic and longevity dividends offer a unique window for growth, but require converting population into skilled, healthy human capital. Addressing challenges like NCDs, malnutrition, mental health and digital addiction through integrated healthcare and community participation is crucial for sustained prosperity. In the words of Peter F. Drucker: “The ultimate resource in economic development is people. It is people, not capital or raw materials that develop an economy.

(The writer is a retired IAS officer)

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