Project Assignment

Indian Economy: Performance & Policies

Demographic Dividend: India vs China

Group No. 40

Submitted to faculty: Prof. Sonal Yadav

Date of Submission: 2nd April 2018

Students’ Details

Roll No. Name of the Student Name of the Program

1613031 Krishna Patel Sy-IMBA
149 Bansari Patel Ty-IMBA

2017-18

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 Index
Topics Page no.
Introduction 3

Significance 3

Facts and Figures 4

Analysis 8

Conclusion 9

Appendix 10

Bibliography 15

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I

INTRODUCTION

Recently there are many debates on the relationship between population growth and development of the
economy. During the demographic transition in any economy, there comes a period of window of opportunity.
Window of opportunity is where dependency ratio decreases due to decline in fertility and increase in the
working age population. More resources are available for investment in the economy during this period as the
dependency is less. If this opportunity is used efficiently then economy can have demographic dividend and
hence economic development. If correct interventions are not made during this period then there can be
negative impact on the economy.

India and China currently have the largest population in the world. Both these countries had almost equal
population and per capita income around 40 years ago but China is having demographic dividend now
whereas India will have this opportunity after some years. Hence when India will have the opportunity of
demographic dividend, all the other economies would be aging and India would be the only young nation.
This is because of their different approaches towards population control. China did “Social Engineering” like
one child policy and India moderated its population by “Organic reasons” like increasing literacy rates as
explained by Nandan Nilekani. Hence demography is one of the factor through which India can be a
competitor of China. To study both the countries it is important to study the quality of their population and
hence in this document comparison between India and China is done by the two main factors that is Health
and Education, other factors are not considered for this study.

SIGNIFICANCE

“Demographic Dividend” is an important topic as it is capable of providing labour supply, savings, increasing
domestic demand and other such factors. Demographic dividend in India and China is much discussed as both
the countries are fast growing and have a huge market. India and China will have the biggest market in terms
of labor supply. Hence both the countries will have much influence in the international affairs in future. At the
economy level, the topic is important as population’s need changes at each stage of the transition and so for
doing from planning for each stage this study is significant. It is also seen from the study (Bloom and
Williamson (1998) of 78 Asian and non-Asian countries) that there is a positive impact of increase in working age
group on economic growth.

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 FACTS AND FIGURES
Population growth

According to the UN department of economic and social affairs, India’s population in 2017 was 1339 million
as compared to China’s population which was 1410 million in 2017. It is projected that by 2050, India will
surpass the population of China and will become the most populous country of the world. According to UN,
China will rank second in terms of population. As per the world population prospects 2017 by UN it is
projected in 2050 India’s population is expected to be 1658 million whereas in 2100 India’s population will be
1516 million. In 2030 China’s population is expected to be 1441 million but in 2100 it will reduce to 1020
million, which is less than India’s population. The percentage of youth in the total population of India is 28%
and in China is 18%. The percentage of the old age group (above 60), is seen that, in mid-2017 this population
was around 9% in India and 16% in China.

Figure 2: For China

Figure 1: For India
Source: www.esa.un.org
Source: www.esa.un.org

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Age and Age-sex Structure

According to the Figure-1 and figure-2, India will lead in having higher proportion of working age population.
This trend will decrease in both the countries but China will have faster decrease in the proportion, whereas
India will have advantage of their working group for longer time compared to China. China will have
advantage of its working age group between 2000-2035 as shown in the Figure-2 and India will have
maximum proportion of working age between 2040-2050 as in Figure-1. By 2100, China’s active population
would reach at 550 million whereas India’s working age population will still be at 900 million. Though after
years 2055-60, India’s active population will decline but this decline will be much later than the decline in the
China’s decline. Further growth of China’s working age has been more rapid, whereas even India’s working
age population grew at slower rate.In the same way, China’s decline rate will be more rapid if compared to
India’s decline in the working age.

India’s youth (0-14 age) will increase at a slow rate till 2000’s and will decrease smoothly after that, whereas
India’s old age group ( 65+ age) will increase after 2000’s. After 2060’s India’s old age population will
surpass the youth population. It is after this stage that India’s youth population will be lower than old age
population. Whereas China’s old age population ( 65+) will cross their youth population (0-14 age) by around
2025 from figure-2, further China’s youth population is decreasing from around 1975. In the population
pyramid in appendix-2, the base of the pyramid increased during the transition from 1950 to 2017, but after
that it is becoming narrow. In the year 1950, the figure is a perfect pyramid which means that there are more
youth in the population and the old age group is the least or negligent. One drawback in India’s trend is that,
we can clearly see in the all the years after 2017 that the proportion of females are lower than males. Even in
2100 the numbers of male births are more than female births. By 2100, both India’s and china’s pyramid will
be nearly straight, which means that the fertility rate will be equal to the replacement rate. Comparing India’s
Pyramid to the China’s pyramid, China has a haphazard trend of growth whereas India has a steady trend.
China’s pyramid have smaller base if compare to India’s pyramid.

Dependency Ratio

As per the appendix-1, China’s dependency ratio has been decreasing since 1970 till 2015, after 2015 the ratio
again started to increase. In this, the child dependency ratio started to increase from 2050 but the old age
dependency ratio showed a growth from 2015. In India the child dependency ration increased from 1950 to
1970 but after that it showed a decline just like china, but it is projected that this ratio will show a declining
trend till 2100. Talking about the old age dependency ratio for India, the ratio has been increasing since 1950.
With the help of U.N data we can say that the old age dependency ratio is higher in China as compared to

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India in all the years. Further, the child dependency ratio in India is higher in all the years as compared to
china’s ratio. Hence the increasing dependency ration in china is mostly because of old age group whereas in
India it is majorly because of the increase in 0-14 age group population.

Crude Birth Rate and Total Fertility

The Current Crude Birth rate in India is 18.7 per 1000 population and in China is 11.6. It is estimated that by
2100, crude birth rate of India will reduce to 9.7 per 1000 population and china’s rate will reduce to 8.9. As
per the figure-3 and figure-4 Total fertility i.e live births per 1000 population, of china suddenly decreased in
1985-1990 from 6.25 to 2.73. India’s current fertility is around 2.30 and 2.44 and in China it is around 1.60 to
1.63. In china fertility started decreasing after 1970 and with this their crude birth rate also started to decrease.
In India, the fertility started to decrease in around 1990 with a similar effect in the crude birth rate.

Figure-3 Total Fertility of India Figure-4 Total Fertility of China

Source: https://esa.un.org/unpd/wpp/Download/Standard/Population/

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Death Rates

From Appendix-1, we can see that the crude death rate per 1000 population for India decreased from 1950 to
2017 but it is projected that after 2020 this rate will have a growth. It will increase from 7.4 in 2020 to 13.4 in
2100 as estimated by the U.N. reports (world population prospects 2017). This trend is quite similar to the
trend in China, in China the rate has been decreasing since 1950 till 2005-2006 after this the rate again started
to increase. It is estimated that this rate will go up to 13.7 by 2100 which is quite near to India’s rate during
the same year. Talking about the infant mortality rate (IMR), then in China they have managed to decrease
this rate very effectively. China’s IMR in 1950-55 was 129 and current rate is 10, so we can say that China
have improved their rates. It is estimated that by 2100, China’s rate will reduce to 2. As Shown in Appendix
1,. India’s infant mortality rate reduced from 186 in 1950-55 to around 35 in 2018. Further it is projected that
India’s IMR will reduce to 6 in 2100.

Other important rates and ranks

As per the UNESCO data in appendix 3, we can see that the literacy rate in India among the age 15-24 years
has increased from around 55% in 1981 to approximately 85% in 2011. Literacy rate of the age group of
65and above of India in 1981 was about 20% which increased to around 40% in 2011.It can be observed that
the female literacy rate was much lower than the male literacy rate in India. Decreasing difference is seen in
the age group of 15-24 years, but in the age group 65 years and above there is no major decrease.

China is enjoying high literacy rate in the age group of 15-24 years since 1990, which is around 95%. After
2000 china has 100% literacy in this age group. China has managed to keep the literacy rates of male and
female almost equal if we see in the age group of 15-24 years. China’s above 65 age group have literacy rate
of around 70% which is much better as compared to India’s position in the year 2011. In 1980, both the
countries had similar situation like they had low literacy rates and wide difference in the rates of male and
female in the age group of65+ years. But China increased their rates at much faster rates than India in this age
group.

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 ANALYSIS

An increasing population in both the countries provides an opportunity to have advantage of demographic
dividend. But any country do not get a demographic dividend just because of increasing population, there are
many factors which affect this. Bloom et al.(2009) stated that the economic growth in China and India
between 1980 and 2000 was mainly due to increasing productivity and because of the large proportion of
shift from agriculture to industry and service sector, further the proportion of working age population also
contribute.

Education

Both the countries will have larger proportion of working age in 2020-2025, which means that there will be a
need of proper education system to educate and provide proper skills. Currently the population of china is
more educated as showed above in the literacy rates. In china the age group of 15-24 has nearly 100% literacy
which means that they will have better workforce than in India. Whereas in India, literacy rates for the same
group in the same year is still much lower. According to Goldman, Kumar and Liu, 2008, china had higher
rates of enrolment and even a higher adult literacy rate. UNDP data shows that China has maintained low
students per teacher number in primary school which is 16, whereas India has a high average of 32 in 2014.

China has managed to perform well in the education element because of their education focused 12 year plan
in 2008. India failed to implement their strategies well and so though China will have lesser population but
they will be more educated than India’s population. Both the countries will face the problem of brain drain. In
the 12th plan of India, it had targets like to increase the efficiency of education sector. For these targets India’s
government have taken many steps like “Right of children to Free and Compulsory Education Act, 2009,
implementation of SARVA SHIKSHA ABHIYAN, Mid-Day meal Scheme, Teacher Education Scheme. India
even started Teacher Eligibility Test so that students get a standard quality of teachers. All these targets and
strategies help India to improve their quality of workforce. In India, education sector have many concerns like
the higher number of illiterates, loopholes in the system, lower number of female literates compared to male
literates, brain drain.

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Health

From the UNDP data, we can say that the number of people dying from infection is more in India than China.
India have a higher crude birth rate from since 1950 to 2100 and so India will have more population but the
Infant mortality in India is much higher, further life expectancy at the age of 15 in India is lower than China in
all the year from 1950 and is estimated to be lower till 2100, which means that the health care system is not
efficient. Even though the population of China is getting older but they are healthier than India. India has an
advantage of more number of youth but if proper care is not taken of the health than they may become the
liability of the nation. On the other side though china’s population is healthier but they will be a burden on the
nation as they will not contribute toward the nation.

Conclusion
By this Study we can say that China has Better conditions to take advantage of the demographic dividend
whereas India will have to take many steps in order to take advantage of its increasing population. China
seems to have better conditions as they have better infrastructure, more female participation, higher female
and male literacy, higher urbanization etc. china have an advantage as they took proper steps at proper time.
Though India have better demographics if compared to China, but whether India will have an opportunity to
reap demographic dividend will depend on the steps they take in future about infrastructure, education, health,
improving sex ratio, women empowerment, HDI etc. China’s example shows that the nation has to prepare
itself for demographic dividend and just increasing population will not recent into growth.

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Appendix-1

Source: WPP2017_Volume-II-Demographic-Profiles

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Appendix-2 For India

For China

Source: WPP2017_Volume-II-Demographic-Profiles

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Appendix-3
For China

Source: http://uis.unesco.org/en/country/cn

For India

Source: http://uis.unesco.org/en/country/cn
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Appendix-4

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Appendix-5

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U.N.D.P, Human Development Report.2016

UNESCO, UIS data

UNESCO, UN Educational, Scientific and Cultural Organization

UNECWA, Impact of Economic Variables on Social Dimension Of Development: Education and Health.2005

U.N., World Population Prospects.2017

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