Population growth committee: Move beyond Emergency-era fears

The population dialogue in India has been dominated by concerns about population explosion. However, it is time for us to move these fears and learn from the experiences of other countries.

In her speech, while presenting the 2024 budget, Finance Minister Nirmala Sitharaman promised a committee to study India’s population growth to ensure that the nation is on target to meet the Viksit Bharat goal by 2047. Coming nearly 50 years after the brutal implementation of the population control programme in 1976, I hope this move reflects a shift in public discourse regarding the course of India’s demographic transformation.

India is and will remain the world’s most populous nation for the foreseeable future. Nonetheless, it does not appear to be the fearsome prospect it once appeared to be. Fertility has steadily declined to a level where two parents are being replaced by two children and all segments of the society have begun to adopt family planning.

Moreover, India has learned not to let the burden of a growing population pose an obstacle to its continued economic growth. However, we have yet to adapt to the changes that population transformation brings. I hope this committee will focus on reshaping the policy agenda that rides the inevitable demographic wave and not be mired in the old discourse of population bomb. This will require focusing on several priorities.

First, we must recognise that India’s demographic destiny for 2047 has already been written. The workforce of 2047 has already been born and will look very different from the workforce of 2024. Today 33 per cent of the population is aged 20-29, while 23 per cent of the population is aged 40-59. But in 2047, the proportion of the younger population will decrease, and the proportion of older working ages will increase, with each forming about 28 per cent of the population. To ensure that this growing proportion of middle-aged workers can keep up with the changing demands of an increasingly technologically driven economy, we must invest in continued skill upgradation and on-the-job training above and beyond formal education.

Second, all of India will not undergo demographic changes at the same pace. Just as fertility decline first emerged in southern, more developed states, population aging will also be most visible in these states. Dependency burden, defined as the number of individuals ages 15-59 supporting children under 15 and older population above 60, will vary dramatically between states. For example, demographer P.M. Kulkarni estimates that in 2021, in Bihar, 151 working-age adults supported 100 dependents, while in Tamil Nadu, 189 adults supported the same population; this will flip with the worker-to-dependent ratio changing to 201 in Bihar and 132 in Tamil Nadu by 2051.

In short, the future of India’s elderly and children will rest on workers’ productivity in states we have historically considered demographic laggards, such as Bihar, Uttar Pradesh, Madhya Pradesh, and Chhattisgarh. How can we invest in the workers in these states to ensure the future welfare of all Indians? This will be the challenge that the newly formed 16th Finance Commission will face as it decides on inter-state allocations.

Third, as fertility declines, the burden of child care for women drops. My analysis of National Family Health Survey data, undertaken with sociologist Sojin Yu, shows that in 1993, an average woman spent about 14 years caring for children under age five, while that number dropped to eight years in 2021. However, time freed up from childcare has not been utilised in increased participation in the workforce.

Unless we find ways of creating a welcoming labour market for women, we will waste the opportunity of turning a demographic dividend into a gender dividend. One of the best ways of expanding women’s ability to participate in the job market may be to improve the availability of childcare, possibly through creative combinations of Anganwadi and the Mahatma Gandhi National Rural Employment Guarantee Scheme. There is no reason why permissible MGNREGA works cannot include rotational provision of childcare under the supervision of a trained early childhood educator.

Fourth, a combination of rising numbers of elderly and a declining number of children to care for them means we must increase the ability of this older population to be self-sustaining. A combination of policies will be needed, including rising retirement age, enhanced old age pension schemes, and increased ability to sell land or homes, assets in which most of the wealth of the Indian elderly resides.

Historically, the population dialogue in India has been dominated by concerns about population explosion. However, it is time for us to move beyond the Emergency era fears and learn from the experiences of other countries. In its quest for rapid population control, China implemented a strict one-child policy, bringing it to a demographic cliff where the needs of its aging population have begun to drag down its economic growth. Relaxing the one-child limitation has been unsuccessful in increasing fertility. This suggests that India should refrain from a similar panicked reaction and let fertility decline continue at a natural pace. If demography is destiny, let us adapt to it with grace.

These complex challenges require multifaceted attention from demographers, economists, sociologists, and public policy experts. The move to set up a high-powered committee to evaluate the challenges posed by demographic transformation in conjunction with the 16th Finance Commission will allow its recommendations to flow into government spending priorities, creating a virtuous cycle.

The writer is professor at the University of Maryland and the National Council of Applied Economic Research. Views are personal

Estimation of SAM for India: An Application for India’s Energy Transition Targets

The Social Accounting Matrix (SAM) for India was historically constructed based on Input-Output table (IO). But from 2011-12, Government of India, is publishing Supply-Use table, instead of input-output table. While erstwhile Input-Output Table published by Government of India had same number of products and industries, Supply-Use table provides one ‘Supply matrix’ and one ‘Use matrix’, each of which is a rectangular table with 140 products and 66 industries (for 2018-19). Converting the Supply-Use table to a square Input-Output table and subsequently extending it to Social Accounting Matrix require utilisation of various data sources, application of numerous steps and adjustments, and there are not many literatures on it, despite the usefulness of both IO and SAM matrices in macroeconomic policy design. This study aims to bridge the gap by constructing Input-Output Table and Social Accounting Matrix for India from the Supply-Use table incorporating information from many other sources, and describes the method of construction of the matrices. Our IO and SAM also focus on various energy sectors, including different sources of power generation, biomass etc. and disaggregate energy-intensive sectors like cement or aluminium, considering the immense usefulness of the energy-extended macro structure to research of energy and environment policies. The study focuses on construction of a 59×59 SAM for India, with base year of 2021-22 incorporating 3 factors of production and 10 categories of households. As an application of the newly constructed SAM, we have analysed the employment implication of India’s Nationally Determined Contribution (NDC) emission commitments.

Technology can help in enabling access to judicial services at finger tips

Nyaya Setu, being built to ensure reach of legal services till the last mile, will put together all legal knowledge in finger tips, in the language of people’s choice and it is built using GPT and AI models, says the founding chairman of UIDAI

Nandan Nilekani, the founding chairman of the Unique Identification Authority of India (UIDAI), on Friday said through use of technology, access to judicial services can be enabled at finger tips.

We have made identification simple through Aadhaar and payments easier through the Unified Payments Interface. Access to legal services could be made as simple as access to payments,” he said, delivering the 43rd Palkhivala Memorial Lecture on the topic “India’s Digital Transformation: a new path for economic growth?”, organised by the Palkhivala Foundation in Chennai.

“If I told you in 2015 that there will be 350 million people who can make payments using QR code, one would say it would be impossible. But, it happened, right,” Mr. Nilekani said, while stating that the same can be possible in judicial services.

He said the Nyaya Setu, which is being built to ensure reach of legal services till the last mile, will put together all legal knowledge in finger tips, in the language of people’s choice and it is built using GPT and AI models.

Mr. Nilekani, chairman and co-founder, Infosys said the way forward to use technology in judicial services is not trying to automate individual tasks, but to take a couple of high-volume repetitive case types and automate them fully.

Two case types that are being looked at by the judiciary and others are cheque bounce and motor vehicle disputes — these two case types constitute nearly 20 per cent of all cases that are pending, he said.

This can be rolled out in a couple of High Courts, and if proven, it can be replicated in others, Mr. Nilekani said.

He also said another mechanism is the Online Dispute Resolution (ODR) system, which is scaling up rapidly.

India has built the world’s largest ODR system. There are 110 enterprises, including 60 in the banking and financial sector alone who have embraced ODR. Over ten states are doing online Lok Adalat using the ODR system, Mr. Nilekani said.

He added, 70 million disputes have gone online in the past five years. The resolution rate is about 15 per cent but it is slowly increasing as they are getting more efficient.

“The combination of using the ODR system to take on the new, smaller cases like financial disputes and the regular judicial and legal system taking on two case types — cheque bounce and motor vehicle — we can start solving on both sides, showing the people what is possible,” Mr. Nilekani said.

Investing in Friends: The Role of Geopolitical Alignment in FDI Flows

Firms and policy makers are increasingly looking at friend-shoring to make supply chains less vulnerable to geopolitical tensions. We test whether these considerations are shaping FDI flows, using investment-level data on over 300,000 instances of greenfield FDI between 2003 and 2022. Estimates from a gravity model, which controls for standard push and pull factors, show an economically significant role for geopolitical alignment in driving the geographical footprint of bilateral investments. This result is robust to the inclusion of standard bilateral drivers of FDI—such as geographic distance and trade flows—and the strength of the effect has increased since 2018, with the resurgence of trade tensions between the U.S. and China. Moreover, our results are not limited to greenfield FDI, but hold also for M&As.

The right track to growth: Infrastructure is key driving force for realising India’s vision of $40 trillion economy by 2047

Infrastructure is the key driving force for realising India’s vision of a $40 trillion economy by 2047.

Infrastructure is the key driving force for realising India’s vision of a $40 trillion economy by 2047. The Railways has been one of the most crucial partners in infrastructure development, gearing up for a high-speed network both for the passenger segment as well as for freight movement.

Consequent to the growing GDP, the Indian Railways (IR) network will have to handle a large increase in freight traffic in the short and longer-term. IR’s dedicated freight corridors (DFCs) along with feeder routes are aimed at ensuring the availability of sufficient capacity in the face of rising demand for transport. The two DFCs—Eastern (EDFC) and Western (WDFC) —have 3,381 km of track commissioned with an approved expenditure of Rs 81,459 crore that connect manufacturing hubs like Ludhiana and Mumbai with important ports, allowing exclusive freight movement, decongestion, and improved on-time performance.

These corridors are level-headedly planned to lighten the burden on existing railway trunk routes of Delhi-Howrah, Howrah-Mumbai, and Mumbai-Delhi, which have a line capacity utilisation varying between 115% to 150%. These corridors are paving the way for a high-capacity rail network, capable of handling faster (about 45 kmph faster than IR), heavier (about 6,600 tonnes higher capacity per train than IR, more than double), longer (about 700-800m longer train length as compared to IR, almost double), and higher-volume (about 2.6 times higher than IR on an average) freight trains.

The Railways has historically had mixed corridors where both mail/express/passenger (MEP) trains share the track with the freight trains. Although more revenue is obtained from freight traffic, the MEP trains usually take precedence over the freight trains. As a result, the average speed of freight trains turns fairly low and over the years, freight share too has dwindled, from 88% in 1950-51 to just 26% in 2021-22.

As part of the National Rail Plan (NRP), IR is aiming at increasing the modal share of freight to 45% by 2030. This is attainable given the elasticity of the rail transport demand with GDP growth rates being in the vicinity of 1.1-1.2% . Notably, the focus is on the congested Golden Quadrilateral, where the current rail infrastructure is overburdened. In this context, Dedicated Freight Corridor Corporation of India Limited (DFCCIL) has assumed a crucial role of operating and maintaining freight corridors to ensure a smooth and uninterrupted movement of goods across the routes.

The cohesive approach of DFCCIL pledges optimal utilisation of resources by delivering operational efficiencies and economies of scale, endeavouring to benefit both the industry and consumers. Since freight lines are dedicated, DFCCIL plans an average speed of over 70 kmph, which is almost three times higher than the average speed of 25 kmph of the conventional lines.

Moreover, to augment the capacity of the container traffic, two containers are stacked on another in WDFC with surety of arrival of goods by trains for the transporters. In addition, the DFC corridors are supported by Multimodal Logistics Parks, with seamless connectivity between rail and road modes, thereby making first- and last-mile connectivity faster and integrated. Due to these factors, the DFC corridors have the capacity to substitute freight traffic from the road significantly.

DFCCIL has commissioned more than 2,000 km (73%) of the total network and the remaining sections will be commissioned by March 2024. There were certain direct benefits envisaged by DFCCIL, such as decongesting the Golden Quadrilateral and enabling higher share of railways in freight transportation. Key factors for facilitating freight transportation and reduced logistic cost of DFCs are displayed in the accompanying graphic.

Determining how a DFC compares with the Golden Quadrilateral and other modes on these parameters are important to ascertain its competitiveness in freight transportation along the Eastern and Western corridors. There are several indirect and induced benefits that arise from DFCs at the national level, reflecting ‘spillovers’ beyond the envisaged direct benefits through the multiplier effect.

An estimation of their indirect contribution is not only important for national and international perception and policy implications, but also to generate considerable investment interest for the pending North-South and Southern DFCs.

The author is Senior fellow at NCAER, views are personal.

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