Demographic trends across the India
Why Demography is important?
Demography is the systematic, often statistical, study of human populations, especially with reference to size density and distribution. Demography directly affects the economy. It is directly related to the size of the market and henceforth to the consumption of the good. Age structure directly contributes to the demand for education, financial services, healthcare, leisure, etc. For example more age group in a country between 60- 70 years will lead to more demand and consumption of goods related to health care.
It also affects the production. High population can lead to lower labor wages as well as redistribution of production across different regions.
Projected growth of the India’s population
Two general parameters used for measuring the population growth are as follow:-
- Total Fertility = Children per woman
- Life Expectancy
Total Fertility in India has undergone sharp decline from 3.0 children per woman in 2001 to the 2.5 in 2011. Following table and graphs represents 3 alternative and projected population of India considering the Fertility rate,
|Year||Assumption 1||Assumption 2||Assumption 3|
Thereby, from the above graph, it can be implied that India could see a population of 1.3 billion to 1.6 billion depending upon the Fertility rate. India has also seen decline in the Fertility rate which is mostly contributed to the education to women, rural sector and government policy. Following graph shows trend in the Fertility rate across the decades in India.
Kerala has been the state with lowest FR while UP being the highest. Same trends can be seen across all the developed countries. Thereby, we can see economic development contributes to lower FR. With India as developing country – same trend can be expected.
With economic development India has also seen increase in the life expectancy. Following graph shows increase in life expectancy in India. (Courtesy-http://www.ihsnet.org.in/NHA/newnhpissuesjan024.htm)
Age structure of the population: Age Pyramids:-
With economic development, education, decreased Fertility rate, increased Life expectancy – Age structure of the country is also expected to change- which in fact would be good for the country. Following pyramids shows potential change in the age structure.
As we can see that India is following trends of the developed country with higher percentage of population in the “workable” group. Higher number of people in workable group directly affects the economic growth of the country. Refer to following article
Boomer Retirement: Headwinds for U.S. Equity Markets-Zheng Liu and Mark M. Spiegel.
“Historical data indicate a strong relationship between the age distribution of the U.S. population and stock market performance. A key demographic trend is the aging of the baby boom generation. As they reach retirement age, they are likely to shift from buying stocks to selling their equity holdings to finance retirement. Statistical models suggest that this shift could be a factor holding down equity valuations over the next two decades”