Nothing Lasts Forever - How will India's population decrease after the middle of this century?

In system thinking science, the system archetypes are highly effective tools for gaining insight into patterns of natural and artificial behaviours, which reflect the underlying structure of the system being studied. The archetypes can be applied in two ways - diagnostically and prospectively.

Limits to Growth Archetype states that a reinforcing process of accelerating growth (or expansion) will encounter a balancing process as the limit of that system is approached. The counter-force may

come, and most likely will come, from either (a) parts of the system not under the control or (b) from the external environment.

Regarding demographic growth, the limits and opportunities could be external factors in environmental resources. While factors connected with human behaviour or beliefs act as parts of the system, paradoxically, they are not under control.

Limits to Growth Archetype can apply to awareness of the demographic trends in a single system, such as in a country like India.

With over 1.3 billion people, India has more people than any other country. A U.N. report projected that India's population of 1.428 billion has surpassed China's 1.425 billion in 2023. After that China's National Bureau of Statistics announced that the country's total population declined by 850,000 between the end of 2021 and 2022.

Population projections for countries of the world come from the United Nations Population Division, which uses data on fertility, mortality and other demographic indicators to produce models until the year 2100.

At the peak of its size by the mid-2060s, India is projected to have nearly 1.7 billion people. It is expected to continue to be the world's most populous country until beyond 2100, the year out for which population projections have been made.

The slowing down of India's population growth

As a result of its size and the fact that it has continued to grow even after China began to decline in size, discussions around India's population have often been accompanied by talk of a "population explosion" and similar terms, which imply that the rapid growth of its population should be a matter for concern for the country, and must be stopped. In fact, population growth in India has slowed significantly, which has been the case for decades.

There was undoubtedly a time when India's population was growing very fast. In the three decades after independence, India's population doubled, affected partly by geopolitical events, including the Partition of the sub-continent in 1947, the creation of Bangladesh in 1971, and the following refugee movements. However, in the 1980s, population growth began to slow down. India's population growth rate is estimated to have fallen below the world average by the early 2020s, and the gap is expected to grow.

This slowing down of population growth is going on across the country. However, there are two distinct speeds to this slowdown. Until the 1970s, population growth rates in different states were quite similar. However, since the 1980s, India's southern states have grown far slower than the central, northern and eastern states.

Why is India's population growth slowing down?

Three processes affect population levels and trends – the number of children born, the number of people who die and the long-term movements of people. The levels of international migration – both into and out of India – are too small in relative terms to affect India's population currently. However, essential changes in the first two processes have impacted India's slowing population growth.

Falling fertility

The Total Fertility Rate (TFR) is the average number of children a woman will likely have. As countries get richer and women get better access to health and education, fertility rates begin to fall, a phenomenon seen worldwide.

When a country's TFR drops to 2.1 children per woman, demographers say that the country has reached 'replacement fertility'. This means that if two adults have a notional 2.1 children between them, accounting for some likelihood of death during childhood or adolescence, that couple will produce two adults. The size of the population will remain the same. This is a critical milestone in a country's demographic journey. If fertility falls below that level, the population will decline in absolute numbers.

After high levels in the early decades after independence, India's TFR fell rapidly. India's fertility rate is far lower than that of sub-Saharan countries (4.53 children per woman), comparable with in the 1950s, and has fallen below the world average (2.3).

So, India's fertility rate has now fallen below the replacement level. Although fertility is falling everywhere, there are substantial differences between states within India. Across the southern and western states, TFR is already below replacement level. In these states' urban areas, fertility levels are as low as those of countries in the developed world. Urban Maharashtra's fertility rate, for instance, is lower than that of Germany (1.35).

As a result, the number of children born every year in India began declining in the early 2000s.

Ageing and mortality

Population growth is affected by the number of children born yearly and the number of people who die yearly. The slowdown in India's population growth has, until now, been powered by falling fertility alone. But in the future, rising mortality – or death rates – will play a role, too.

Improvements in health outcomes, particularly for very young children, have meant that the risk of dying very young in India has been declining. As a result, India's population is beginning to live longer, driving up the age of the population.

This is still a young country – the median Indian is just over 28 years old, meaning that half of the country is under 28, while the median age of the world is over 30. However, it is now ageing rapidly.

As India grows older, mortality rates are starting to rise. Everything else being equal, an older population will have higher mortality rates than a younger population. With fewer children born every year and more people dying every year, India's slowing population growth will grind to a halt. Then, from growth, it will move into a decline. By the mid-2060s, population growth is expected to turn negative, and India will begin to have fewer people every year.

How will India's population impact the country and the rest of the world?

Overtaking China and being the most populated country in the world marks a new phase in India's development on the global stage, riddled with the challenges of managing a rising population. Still, it is also an opportunity to reimagine strategies and build on our successes to provide its people a healthy and happy life.

Becoming the world's most populous country could signal a paradigm shift in India's development. That's because the country's younger population also has a vast potential to boost the economy—what economists usually call the "demographic dividend." In 2021, the working-age population of India stood at a whopping 900 million, according to OECD data.

Almost 40 years ago, India's population boom was described in menacing terms like "population explosion" and the "brain drain", a reference to India's young, skilled labour force that migrates to the West for better rewards for their potential. However, SY Quraishi, who authored "The Population Myth: Islam, Family Planning and Politics in India," said that both concepts have changed. Today, this same labour force has instead become what he calls "human resources," or a boom to the Indian economy: "They are the CEOs of the world, and the source of an economic revolution that gives back 90 billion dollars in remittances from abroad," Quraishi said.

The most significant factor behind India's massive population is its young people: 650 million Indians—nearly half the country's population—are under 25. Experts estimate that India won't hit its population peak until 2065, which means that even if the younger demographic produces only one or two children per couple, the population size will continue to increase over time before it stabilizes, driving what PFI calls the "population momentum."

This group isn't just young. It's also dynamic: it grew up in a market economy with access to the Internet and a hunger to compete on the global stage. Two-thirds of the Indian population has access to smartphones, thanks to cheap data plans in the last decade. This generation of young Indians will be the largest consumer and labour source in the knowledge and network goods economy.

And with rising tensions between China and the West, India has become an essential player on the world stage. It will lead the charge on the G-20 this year. As a founding member of the U.N., experts suggest it eye a permanent seat on the U.N. Security Council, of which China, but not India, is a permanent member. The country also boosts production capacity by attracting international conglomerates like Apple and turning smaller cities like Pune and Chennai into manufacturing, innovation, and technology hubs.

Moreover, a decreasing skilled population across Europe and America has resulted in a human resources shortage, making India's population an asset that's "politically important and indispensable," Quraishi said. "Other countries may be hating India, but they love our market."

But India has its challenges, too.

Despite the obvious advantages of having a populous country, the Indian government has failed to prioritize the upskilling of its young people, given that India's labour force participation rate, which accounts for how much of the country's working-age population works or wants to work, is it a mere 40%.

Millions of young Indians feel discouraged by their job prospects and actively decide to opt out of working, choosing instead to continue studying, stay home or rely on their family members for financial support. India's high unemployment rate has hovered around 7 to 8% in the last year (rising from 5 to 6% in 2021), according to the Centre for Monitoring the Indian Economy (CMIE), which has led to a shrinking workforce.

To absorb the young working population, India must create at least 90 million new non-farming jobs by 2030, a report by McKinsey Global Institute states. The government must also invest in a "time-bound manner" so that young people are productive and can contribute to the national economy.

India needs to include those who have traditionally been excluded from its development agenda to harness the full potential of its young people—notably, women who continue to have more children than they wish to have and, more broadly, the vast majority of women—by removing barriers to women's agency and reproductive autonomy. India can do better by investing in women's equity and economic development.

Optimistic Scenario

Meanwhile, India's economy is growing faster than China's. India's GDP took a giant leap on Leap Day in 2024: the country's remarkable growth rate of 8.4% in the third quarter of the fiscal year 2024 surpassed all expectations, as market analysts had pencilled in a slower growth this quarter, between 6.6% and 7.2%. With substantial revisions to the data from the past three quarters of the fiscal year, India's GDP growth already touched 8.2% year over year (YoY) in these quarters.

Expectations for the near-term future remain in line with previous forecasts. GDP growth will be around 6.6% in the next fiscal year (fiscal 2025) and 6.75% in the year after (fiscal 2026) as markets learn to factor in geopolitical uncertainties in their investment and consumption decisions.

The focus is on the emerging consumer spending patterns in India, highlighting the rise of the middle-income class. Not only has growth in consumer spending post-pandemic been fluctuating, but there is also a shift in consumption patterns, with demand for luxury and high-end products and services growing faster than demand for essential goods. As the number of middle- to high-income households with increasing disposable income rises, this trend will likely get further amplified, driving overall private consumer expenditure growth.

However, the challenge of rising household debt and falling savings could weigh on long-term growth and sustainability. Controlling household debt to prevent it from crossing unsustainable levels will be essential to mitigate risks of debt overhang, maintain economic stability, and protect households against financial vulnerability.

GDP growth in the third quarter was aided by a substantial uptick in private investment spending, which grew by 10.6% YoY. Investment growth remained above 8% YoY in the last four quarters, which indicates that India is on the cusp of a solid boost to the private capital expenditure cycle. High capital expenditure spending by the government over the past few years is expected to crowd in private investments.

On the other hand, private consumption improved to 3.5% YoY from the third quarter of fiscal year 2024. The index of industrial production of consumer durables and enhanced passenger and two-wheeler sales indicated a revival in private consumption over this period. Data from the past three-quarters points to India's resilient domestic demand, which has aided its strong growth despite modest global growth and continuing geopolitical crises.