Doc’s Prescription: With world’s largest population, India will wield economic muscle

On April 19, the United Nations projected that India’s population growth will surpass that of China by the middle of 2023. India’s population, driven by a combination of high fertility rates and improved health care and sanitation, will reach 1.4286 billion compared to China’s 1.4257 billion — 2.9 million fewer. Being the world’s most populous country brings economic and political power.

Ernest “Doc” Werlin
Ernest “Doc” Werlin

Over the next four decades, India’s population will peak at approximately 1.7 billion, and China’s population is expected to decline from about 1.4 to 1.2 billion. By the start of the next century, India’s population is expected to be double that of China’s population.

What factors have contributed to India’s population growth?

  • Cultural and religious factors place a high value on large families.

  • Inadequate access to family planning services in some areas.

  • Improved health care and sanitation.

  • Reduced infant mortality rates.

Families watch from a bridge as thousands of people enter the holy River Saryu in Ayodhya, India, Thursday, March 30, 2023. The United Nations says India will be the world’s most populous country by the end of April, eclipsing an aging China. (AP Photo/Manish Swarup)
Families watch from a bridge as thousands of people enter the holy River Saryu in Ayodhya, India, Thursday, March 30, 2023. The United Nations says India will be the world’s most populous country by the end of April, eclipsing an aging China. (AP Photo/Manish Swarup)

India now ranks as the world’s fifth-largest economy. In recent years, the proportion of Indians living in extreme poverty has plummeted. Unfortunately, most Indians still remain poor by global standards. One third of its children are malnourished. To enter the top 10 percent by income, an Indian needs to make only $300 a month.

India’s economy has grown rapidly since the country’s 1991 economic liberalization that aimed to reduce government intervention, encourage private investment and promote international trade. These reforms transformed the Indian economy from a low-income, agricultural-based economy to a modern, diverse and dynamic economy.

Top 10 fastest-growing industries in India are:

  1. Advanced Engineering & Manufacturing

  2. Pharmaceutical Industry

  3. Digital Marketing and Social Media

  4. Artificial Intelligence and Automation

  5. Energy Sector

  6. Construction

  7. Telecom

  8. Retail

  9. Media and Entertainment

  10. Tourism

India does not have adequate resources and services to meet the needs of its large and growing population. The country has added zero new jobs during the past decade, despite more than 100 million people entering the labor force. The country’s overall labor force participation rate in March 2023 was 39.8%, compared with 62.6% in the U.S.

Thousands of people arrive for the Ramnavi festival in Ayodhya, India, Thursday, March 30, 2023. The United Nations says India will be the world’s most populous country by the end of April, eclipsing an aging China. (AP Photo/Manish Swarup)
Thousands of people arrive for the Ramnavi festival in Ayodhya, India, Thursday, March 30, 2023. The United Nations says India will be the world’s most populous country by the end of April, eclipsing an aging China. (AP Photo/Manish Swarup)

Poonam Muttreja, executive director of the Population Foundation for India, highlighted the prohibitive discrimination against women — only one in five Indian women are in the formal work force, among the lowest rates in the world. She said, “keeping women out of formal jobs is a terrible brake on the economy. In terms of education, employment, digital access and various other parameters, women do not have equal access to life-empowering tools and means that the men have. This needs to change for India to truly reap the demographic dividend.”

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India has benefitted from a growing middle class fueled by increased education, rising incomes and urbanization. This has fueled a significant increase in consumption and demand for goods and services. The growth of the middle class has led to the growth of many industries, including retail, real estate and consumer goods.

However, income inequality remains a major challenge, with the wealth gap between the rich and the poor being one of the highest in the world.

India’s population is a selling point to companies looking to diversify production beyond China. India is the only nation with a labor force (900 million) comparable to China. With more than half of the population below the age of 25, India enjoys a significant youth population that has the potential to drive economic growth in the future.

In conclusion, India's economy has come a long way since its economic liberalization in 1991. The country has experienced significant growth and development, and its economy is now one of the fastest-growing in the world. However, India still faces several challenges, such as income inequality, infrastructure development and job creation. Addressing these challenges will be crucial to sustaining the country's economic growth and ensuring that it benefits all its citizens.

Sarasota resident Ernest “Doc” Werlin spent 35 years in fixed income as a trader and corporate bond salesman, including time as a partner at MorganStanley in charge of corporate bond trading. Send suggestions and comments to ernestwerlin@gmail.com or visit docwerlin.com.

This article originally appeared on Sarasota Herald-Tribune: Economic impact of India’s population is surpassing that of China