India’s myriad disadvantages are not easy to overcome. But India also cannot wait any longer. India has to achieve a higher growth rate than that of China and keep at it for the next two to three decades. The good news is India has already started on the path to match China’s growth. China’s GDP growth rate has slipped to 6%, and even below, around 4% during the pandemic. India’s GDP growth rate, on the other hand, was 6.1% in the latest IMF correction and is likely to range higher in the years to come. Can India continue to beat China in the long term? The answer to that is, India has certain advantages. Among them, perhaps the most outstanding is India’s far younger demographics while China is plagued with an aging population problem. How India leverages this demographic dividend is key to its growth advantage and China’s growth woes. The Narendra Modi regime, which has been ruling India since 2014, has been criticised for being indifferent to India’s demographic advantage, but that is politics and requires a thorough diagnosis.
The Modi Government contests it, but unemployment has been at its highest in 45 years. And a large part of India’s working-age population is either unemployed, inadequately employed, or unemployable. The available jobs are also markedly low productivity jobs. Worse, 40% of India’s working-age population is not equipped with the skills required to get jobs, or hold jobs. The Modi Government started with a slew of skilling initiatives, but what happened to them since hasn’t been making news, or had become the ‘breaking news’. The root problem can be traced to a lack of primary education despite the Right to Education becoming a law more than a decade ago. India’s demographic advantage is being frittered away. That being said, China is not complacent about India’s demographic advantage and has made changes to its birth policies, essentially dumping the strict one-child policy that Mao Zedong enforced with remarkable concentration and singular cruelty.
China’s central bank acknowledged that India was narrowing the economic gap separating the two countries. In a rather candid admission, the People’s Bank of China said China was battling an aging population problem and a receding birth rate, which will become more pronounced and serious with time. India, on the other hand, with China’s fading demographic dividend, was poised to achieve higher growth rates as time flew. China’s central bank admitted that in the years to come, India would continue to have an overwhelming growth advantage over China because of the favourable demographic dividend. And India’s employable population will exceed that of China by stifling numbers. “By 2050…not only will India have a much narrower elderly population at the top, and a much wider workforce in the middle, but it will also have a wider workforce at the bottom, indicating a more abundant workforce and greater growth potential beyond 2050.” Prime Minister Narendra Modi and Union Finance minister Nirmala Sitharaman should look beyond ‘Pakoranomics’, and the ‘Mudra Scheme’. Just because Narendra Modi transitioned from ‘chaiwala’ to Prime Minister does not mean everybody should. Skillsets should be commensurate with high-productivity jobs. Beating China with demographics requires keeping the youthful dividend engaged. Only then will India be able to lift itself by the bootstraps sufficiently enough to outlast China in the Great Growth Game.
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