India's Population: Liability or Asset?

Written by Amit Walkay (BSc International Relations and Chinese)

 Summary

• In April 2023, India surpassed China as the world’s most populous nation, with a population of 1.42 billion. This growth presents challenges, including pressure on infrastructure and the need for better human capital investment, despite significant poverty reduction over the past decades.

• The rise in India’s young population (with a median age of 28) offers economic potential through increased labour supply and innovation, but requires major improvements in education and vocational training to fully exploit the demographic dividend.

• Rapid population growth raises environmental and infrastructural concerns, with urban areas facing significant strain. Proper policy implementation and investment in sustainable infrastructure are needed to address challenges like resource overexploitation and urban congestion.

Overview

In April 2023, India managed to overtake its neighbour China as the world’s most populous nation. Standing at approximately 1.42 billion people, India’s population has more than quadrupled since its first census as an independent nation in 1951 and is expected to increase to a projected peak of approximately 1.7 billion people by 2064, according to UN population projection studies. In contrast, China – previously the nation with the highest population – has started experiencing gradual population decline, with an estimated population projection of 1.3 billion people by 2050. As China's overall population growth and fertility rates continue to gradually decline due to the demographic effects of its family planning policies, most notably its “One-Child Policy”, the world’s attention now turns towards India and the effects its gigantic population will have on its functioning. 

Freed from the shackles of British colonialism and having endured the bloody partition of India, which saw death tolls reach as high as 2 million, population was just one of the many challenges facing the newly independent India with a life expectancy of 32 years and a shocking literacy rate of only 12%. Widespread poverty and malnutrition were rife. In contrast, India in 2024 ranks 5th in the world GDP rankings and has managed to eliminate extreme poverty in the past 5-6 years due to utilising innovative initiatives such as mass digitalisation and UPI payments. Nevertheless, despite India passing major hurdles to achieve important economic successes, population growth is still  a key area of contention and debate. Critics of India’s increasing population have pointed to strains on infrastructure and an overall lack of investment in human capital as a result of difficulties in catering to a large number of people, while others point to the importance of a robust population of Indian youth. Therefore, it becomes evident that a multitude of factors and considerations influence whether India’s rapid population growth serves as an asset for greater progress, or a liability that leaves it to lag behind the rest of the world.

The Role of India’s Youth – Boon or Burden?

India’s population rise has unveiled sheer increases in the proportion of young people within the country. It is estimated that the median age of India’s population is 28 years old, with approximately 65% of the country’s young people being under the age of 35 years old. This age structure provides benefits in terms of providing a growing class of young skilled professionals that can accelerate growth within various economic and industrial sectors. Indeed, from 2023 to 2024, India has seen an increase of 2 million students enrolled in tertiary education and now boasts the world’s 2nd largest higher education system, with 58,000 institutions, highlighting the increasing engagement of the Indian youth with tertiary schooling and skill development. Therefore, it is not unreasonable to expect India to see huge surpluses in labour supply, in addition to increased innovation in the private and technology sectors. This can be seen in India’s rapidly accelerating start-up ecosystem, which has made  India the world’s third-largest start-up hub, valued at $349.67 Billion. In 2021, Indian start-ups managed to raise a spectacular $36.1 Billion through 1,376 deals, as a result of angel investors and emerging venture capital funds; start-ups within the fintech, and healthtech industry saw the most impact due to increased investor confidence and engagement. Consequently, the growing interest of India’s working-age population in developing entrepreneurship and private industry will ultimately reap benefits, through increased employment opportunities and higher rates of investment within India’s important business hubs, further expanding the Indian market. Indeed, over 65% of India’s start-up activity occurs within its Tier-1 cities such as Delhi, Mumbai and Bengaluru, with Bengaluru alone attracting investments of over $70.4 Billion since late 2023. 

However, while an increased proportion of Indian youth can lead to immense economic and societal contributions, these contributions and their benefits need to be nurtured and actively accessed by India’s government. To exploit this demographic dividend, it is essential that India rapidly improve its investment in human capital. Currently, less than 10% of the Indian workforce has acquired formal skill training, in contrast to 68% of the UK’s workforce and 80% of Japanese professionals. Moreover, according to analysis of data sourced from the 2019-2020 Periodic Labour Force Survey (PLFS), only 2.06% of the total Indian population is formally trained in vocational skills, with the vast majority of the workforce acquiring skills via self-learning and informal, on-the-job training. Thus, the true potential of India’s youth is currently not translating into generating maximum output as a result of limited avenues for young Indians to take up knowledge of different skills and industries, effectively providing many Indians with fewer chances for meaningful employment. Consequently, limited investment in India’s youth risks transforming the country’s demographic dividend into a demographic nightmare, with a large segment of the population lacking proper employment and relying heavily on state services. The existing mismatch between a small number of specialised jobs and a surplus of relatively underqualified candidates can serve as a prediction for the negative aspects of an increasingly unskilled population. In addressing skill deficits among its youth, India faces huge structural and systemic challenges that tie into the need for broader changes. These challenges include inadequate government funding towards education programmes and skilling schemes, disparities in access to government support in rural and marginalised areas, and the absence of clear frameworks for evaluating policy success.

Under Prime Minister Narendra Modi, the Indian government has actively sought to address these challenges through enacting systematic programmes aimed at imparting young Indians with professional skills to aid them in various fields. Launched in July 2015 by the Ministry of Skill Development and Entrepreneurship, the Pradhan Mantri Kaushal Vikas Yojana (PMKVY) educational development scheme has been particularly successful in launching free-of-cost training to many Indians from different social and professional backgrounds, with over 1.2 million Indians in the state of Maharashtra alone having been trained under this scheme in 2024. Additionally, NITI Aayog, a government public policy think tank, discovered through evaluations in October 2020 that 94% of surveyed employers preferred hiring employees trained under the PMKVY scheme. Moreover, various domestic and central government schemes, such as Rajasthan’s Bhamashah scheme, have provided support for rural and tribal community members in pursuing tertiary education. Therefore, active state involvement in promoting educational and professional competency is beginning to equip a large proportion of youth with knowledge that positively impacts the Indian economy.

Does India Have the Necessary Structures to Handle a High Population?

In addition to debates around population composition, the overexploitation of natural resources to meet the needs of India's growing population is raising major environmental concerns. As per a study conducted by Nature Journal, India has approximately 35 billion trees spread across 2,261 km2. With a population of approx. 1.42 billion, this translates to just 24 trees per person. This ultimately results in adverse effects on air quality and the overall well-being of India’s populace, particularly in a rapidly industrialising nation. These challenges are exacerbated by increased traffic congestion in many Indian metropolitan cities, such as Delhi and Mumbai, which has led to a rise in respiratory diseases such as asthma and bronchitis.

Moreover, it is clear that the areas most affected by the continuing increase in population are urban centres. According to a World Bank Report, by 2036, more than 600 million people will be living in India’s cities, driven by increased migration from rural areas in search of  jobs. This could lead to huge strains on urban infrastructure and services due to a sheer number of users. As stated by the World Bank’s director for India, Auguste Tano Kouamé, India will need to invest $840 Billion in infrastructure by 2036 to accommodate urban population increases in the near future. Consequently, the country must implement key policies to address infrastructural constraints, including the prevalence of slums and inadequate sanitation systems in cities.

Forecast/Risk analysis 

India’s rapid population increase has gifted it with a demographic dividend in the form of a large population of young people with enormous potential. This opportunity, however, needs to be harnessed urgently, as India’s fertility rate is projected to gradually decline to 1.29 by 2050, with more Indians opting to settle down and  have children later in life. Thus, to fully capitalise on this manpower asset, India needs well-defined policies that continue to promote workforce and vocational participation among its most marginalised populations, while simultaneously fostering systems that enhance the quality of life for its youth.