The Indian Economy Blog

November 15, 2005

Young North, Old South

Filed under: Miscellaneous — Amit Varma @ 5:41 pm

In an article in the Wall Street Journal on Asia’s graying populations, Nicholas Eberstadt writes on India:

The overall population profile [of India] will remain relatively youthful, with a median age projected at just over 30 in 2025. But this is an arithmetic expression averaging diverse components of a vast nation. Closer examination reveals two demographically distinct Indias: a North that stays remarkably young over the next 20 years, and a South already graying rapidly due to low fertility.

It may surprise some readers to learn that sub-replacement fertility already prevails in most of India’s huge urban centers–New Delhi, Mumbai (Bombay), Kolkata (Calcutta), Chennai (Madras) among them. Even more surprising, sub-replacement fertility prevails today throughout much of rural India, especially in the rural South. There, graying now proceeds apace. By 2025, South India’s population structure will be aging unmistakably. In places like Kerala, Tamil Nadu and Karnataka, median age will be approaching a level comparable to Europe’s in the late 1980s–and around 9% of population will be 65 or older (Japan’s level in 1980).

Read the full piece here.

And feel free to comment on how this will impact the Indian economy, and that of the world.

(Link via email from Vivek Ghodekar.)

7 Comments »

  1. What about unskilled labor migration to other labor deficient countries? Japan prefers robots over foreign labor, will the South treat the ones from North better?

    I am surprised that the big cities are losing population, aren’t the incoming people keeping the cities healthy? Or is the attractiveness lessening?

    Will the artificial barriers for immigration come down in places which would need labor?

    Comment by Amit Kulkarni — November 16, 2005 @ 7:52 am

  2. Thanks for the post Amit. As the chart in this link shows ( http://globalis.gvu.unu.edu/indicator_detail.cfm?IndicatorID=29&Country=IN ); the overall “rate” of population growth is declining in India (and elsewhere in the world). The latter half of the 21st century may have to deal with a population implosion issue.

    Comment by Vivek G — November 16, 2005 @ 8:14 am

  3. Forget offshoring and globalization – I think it is increasingly becoming clear that global aging is probably the most serious economic challenge that will affect the world in the next two decades. Looking at it from a global perspective, India and China will have enough workers for the near future, but they are on the same track now that Japan was a decade or so earlier. Business week had this long article earlier in the year where they talk about it in depth:

    Some key themes:

    Increase the size of the labor force.:
    Through immigration – like H1B visas, by attracting young students, young and educated will attract young and educated.
    By making companies hire or retain older workers.
    Education – the article reports that “40% of Indians drop out of school by age 10″

    Pension Bombs
    Basically, address issues that will arise due to “insolvent pension systems or insufficient private nest eggs”.

    I think we need an attitude shift, where aging should not immediately correlate with retirement. Once the aged workforce starts getting integrated into the labor market, the effects will be much less severe. Especially with the knowledge economy that we have these days, I think we need smarter and more relevant policies more than anything else.

    Comment by Ram — November 16, 2005 @ 10:19 am

  4. Does it really matter if different cities or regions of India age at different rates? After all, both capital and labour are mobile within all of India. As for pension systems, Europe is more severely impacted by aging due to their “generational contract” pension systems, thereby piling on the tax burden onto the younger generations.

    Besides, although aging populations is indeed a serious issue we will have to face, I also wonder if it is not slightly overrated – aging of populations is invariably connected with increased life-expectancy and productivity. What is “old” today need not be so in 2030. I think it is time for India to raise the retirement age by 5 years. (In principle, I don’t believe in a pre-defined retirement age at all – leave it to the individual). Almost everyone I know who is 60 and “retired” is gainfully employed in some other profession….so they are not really old and unproductive.

    Comment by sumeet — November 16, 2005 @ 1:11 pm

  5. With the southern fondness for gold and the geriatric aversion to risk I foresee bright days ahead for gold in India.

    Comment by peyote — November 16, 2005 @ 6:57 pm

  6. I don’t know whether the author considers that both Urban and Hindi Belt fertility would be skewed in opposite directions by migration from the latter to the former.

    Comment by Gautam Bastian — November 16, 2005 @ 10:40 pm

  7. One thing I cannot understand is ‘pension bombs’ as ram put it. Why do people think that they have a right to social security from the state? For countless millenia, our social security has been ‘our’ kids and extended family. This is true for a lot of cultures. The state is woefully inadequate to do anything on this scale, and anyway the state represents only the most powerful actors in all countries in the world. It is a sad reality that nobody in power ***really*** thinks of lifting up the standard of living for other people. They just look at a 4-5 year timeframe and do what they want to do to get rich quick. The other tack taken by a lot of people is ‘throw it open to the market’. Sometimes this approach is impossible, and in these situations the state has ample scope to intervene. Capitalism is short term in nature, promoting greed. A well chosen mix of the two should be pursued.

    Do not expect any help from the state in the future, because they can’t (won’t is the right word) provide it. It is a ponzi scheme.

    ram & sumeet One thing everybody forgets is the state of the environment. Old people and really young kids are more prone to getting stricken with diseases due to pollution, environment etc. We will be experiencing nature’s fury in all its glory (nice rhyme huh?), so that old people would really be in a bad situation. Modern medicine cannot cope with volume, if they invent a life-advancing treatment do you think it will be available to everybody? The drug companies would want to recoup their investments.

    peyote, gold mining is so hazardous to the environment, it is unbelievable. Strip mining destroys the whole landscape, they sift through tons of soil to get a tiny speck of gold, the ratio is in the order of millions to one. I will never buy gold or jewellery and would greatly discourage my immediate family to do the same. Read Anil Dash’s post about the whole ‘Diamonds are forever’/ ‘ Diamonds are a girl’s best friend’ bull here

    The economy of the future will be based not on ‘modern knowledge’ but a lot of manual labor. A friend of mine related a anecdote which is common among Arabs: my grandfather used a camel, my father used a Rolls royce, I am using a Jet plane, my son will go back to riding a camel.

    I see Atanu as being very prescient.

    All this talk of $100 laptops is bull, this would benefit Intel, AMD, Microsoft and their ilk. What the heck would a FREE laptop do for me? Would it get me a wife when the sex ratio is so skewed already? (You guys remember Draupadi and her 5 husbands right?) Would it get me good food when over 30% of agricultural produce in India is wasted? What if tomorrow there is no oil? How the heck would you transport rice or wheat or whatever from Punjab to MP or whatever?

    The next 30 years are going to be a nightmare with the population issue being just something we would have to deal with along with other things.

    Comments?

    Comment by Amit Kulkarni — November 17, 2005 @ 7:04 am

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