Population (and other) divides

We’ll soon need fewer schools and more hospitals, the north-south divide and urban-rural map will change, and more power will have to be devolved to city govts, writes T N Ninan

T N Ninan, Business Standard
28th August

Given the continuing growth and geographical spread of Covid-19 numbers, there must be doubt about whether the decennial population census can be held on schedule. Regardless, we have a good idea of what the numbers will be on March 1: about 1.36 billion, according to the technical committee of the National Commission on Population. United Nations estimates are usually about 40 million higher than India’s official census numbers. By either count, India would have added about 150 million people during the 2011-21 decade, the lowest absolute increase since 1971-81. In percentage terms, a 12.6 per cent increase (if it materialises) would be barely half the growth rates of the 1970s and 1980s, and by far the lowest since Independence. Especially with the number of childbirths per woman (the total fertility rate) having dropped below 2.2, or barely the replacement rate, India has crossed a critical population hump.

By these scenarios, the country’s population will not overtake China’s (currently 1.44 billion) for another decade, much later than earlier forecasts had said. India’s population should peak at about 1.6 billion shortly after the mid-point of the century, and decline after that. This compares with international projections of 1.72 billion by 2060, revised later to 1.65 billion after questioning by Sanjeev Sanyal (now of the finance ministry) and others. Further downward revisions are likely.

The implications of these trends are worth considering. With a falling birth rate, the annual cohort of new school-going children has already started dropping from 25 million. At the other end, senior citizens will grow sharply in number. We will need fewer schoolrooms, but more hospitals, hospices and old age homes.

Next comes the urban challenge. Half the population in the south and west will be urban in 16 years. Devolution of more power to city governments cannot therefore be avoided for much longer. If the system of directly-elected mayors is introduced, as exists sensibly in major western cities, some heads of urban administrations will become as important as chief ministers. State governments will resist change, naturally. The birth of city-centric political parties (as the Shiv Sena once was) could create pressure from below. The Centre must push for change from above. Accompanying that, fundamental notions of how cities are to be planned and managed must change: Density rather than sprawl to facilitate mass (rather than personal) transport, mixed-use areas instead of zoning to reduce commuting distances, sensible property taxation to finance development, the provision of public spaces and institutions while taming builders’ lobbies, abandoning building setback rules that waste land, and so on. Manufacturing industries larger than household enterprises will have to move out in order to clean up the air. Inefficient metro-based ports like Kolkata’s must shut down and release valuable real estate for city-centre renewal.

Then there is the north-south divide. In the quarter-century from 2011 to 2036, according to the technical committee, Bihar alone will add 50 per cent more people than all of the southern states put together. The share of Uttar Pradesh and Bihar in the total population will grow from 25 per cent to 30 per cent. But while population numbers move in one direction, incomes will move the other way. The south and west already enjoy per capita incomes that are three times the levels in the heartland. This multiple is bound to rise, and migration cannot bridge this income-population divide. Two specific challenges will arise. The minefield of fiscal transfers (which state should get how much) already confronts the current Finance Commission. In the future, changes in parliamentary representation will have to be addressed. If there is also a north-south political divide (the Bharatiya Janata Party dominant in the former, and regional parties in the latter), the risks of a rift are obvious, as interests diverge.

Action to avert this denouement must begin immediately. Governance standards must improve in the heartland, and caste must become less preponderant. That can happen only with urbanisation. New cities, industrial clusters and centres of excellence must emerge. Uttar Pradesh probably needs to be trifurcated. All-round connectivity to hinterland states has to improve. Convergence, so far a chimera, must be made reality.

Disclaimer: This information is from a third party—Business Standard—offered through a tie-up to Kotak Securities customers for free for life. The third party content is not created or endorsed by any business offering products or services through it. The provision of this third party content is for general informational purposes only and does not constitute a research call, recommendation or solicitation to purchase or sell any security or make any other type of investment or investment decision. Also, the views and opinions stated in the content belong to Business Standard. Kotak Securities does not uphold nor promote any of the views. These reports do not, in any way, qualify as a Kotak Securities research report.

A few links for further reading

Not quite flying: Why Modi govt's UDAN scheme is struggling

At least two airlines that won UDAN contracts have folded up; scores of airports and airstrips cannot accommodate flights, and policy changes make business difficult.

Are Indian banks out of the woods?

Earnings season is over at most Indian banks. Looking at the September-quarter results, one might be tempted to say the worst is behind for the India banking industry.

Fix the holes in your investments and insurance plans ahead of the new year

Make changes where required so that your investment and insurance portfolio are equipped to meet the rigours that 2020 may have to offer. With the year drawing to a close, your thoughts may have turned to taking a holiday and visiting a new destination. Or you may want to just curl up in a blanket and laze around by a bonfire. While you do deserve some rest after toiling for the entire year, one essential task you must not overlook is to check your financial portfolio and ensure it is in good shape.

Want to get this in your email?