India's Declining Fertility Rate

The stereotype image on population growth is that only the southern states rates are declining while the rest of India is closer to the UP-Bihar end of the spectrum. Not true at all. While UP-Bihar are indeed the worst, most Indian states have low birth rates, not just the southern states. So much so that, as Raghu S Jaitley says:

“We have gone from a Total Fertility Rate (TFR) of 3 to 2 in under 12 years; possibly the fastest such transition in the past century. Most of the developed economies of today took more than half a century for a similar drop.”

 

A generation back, we were told our population was one of the big reasons why India was poor, doing badly economically. So such a reduction in TFR must be a good thing, right? Well:

“We have reached a TFR of under 2 now at a per capita of about US$3000, while such levels were reached by other economies at more than US$15,000.”

Two major exceptions to that were Japan and China. Both overcame a low TFR before they became rich by setting a “scorching pace of economic growth of above 8 per cent (in USD terms) for almost 25 years”. Not easy to repeat.

 

Based on our TFR, India’s median age will be 40 by 2050.

“That’s the threshold median age when economic growth slows down considerably, as past data has shown.”

If that pattern were to hold true, it means:

“India has about 25 years to go from a $3000 per capita “lower-middle” economy to a $15,000 per capita “upper-middle” economy.”

That’s a tough ask, not impossible, definitely not easy. Therefore, the risk that “India will grow old before it gets rich”…