Commentary: Can India perform its own economic miracle as it overtakes China as world's largest population?


SINGAPORE: The United Nations projected that India would surpass China as the world’s most populous country some time in 2023. It wouldn’t be surprising if this milestone has probably already occurred.

Official demographic data might take more time to back this up, as India’s decennial census was postponed in 2021 due to the COVID-19 pandemic. India’s population was estimated to be at 1.417 billion at the end of 2022, according to the UN World Population Prospects report.

However, in January, China reported a population decline for the first time in six decades, with 1.412 billion people at the end of 2022.

Though India’s population growth rate is also trending downwards, it is projected to continue growing for the next 30 years – with potentially 1.668 billion people in 2050. The next two populous countries, China and the United States, are expected to continue growing more slowly or even shrink.

But far more significant than the overall figures is the composition of India’s growing population.

About 43 per cent of India’s population is under age 25. It is still considered a young country, compared to the ageing populations of China and the US. According to the UN, only 7 per cent of India is aged 65 and above, compared to the rapidly ageing populations of China (14 per cent) and US (18 per cent).


A large and increasing number of individuals of prime working age will play an important role in developing India’s economy, which has global implications.

China provides an important parallel here. Its transformation into the world’s manufacturing hub was driven largely by its demographics.

When economic reforms were introduced in 1978, almost 60 per cent of its population was between the ages of 14 and 54. Favourable fertility rates ensured that this working age population continued to grow in the following decades.

But having a large young working population doesn’t automatically translate into economic benefits. China made huge investments in infrastructure, education and skills training, and also positioned itself to attract foreign investment.

India will need to similarly invest extensively to ensure jobs for its young population. According to some estimates, India will need to create more than 140 million new jobs by 2030.

Prime Minister Narendra Modi’s government announced that it will spend US$122.3 billion on capital expenditure in the 2023 fiscal year. Such expenditure, which will be spent on developing roads, schools and industries, is targeted primarily at job creation.

The government has also launched initiatives to develop the country’s manufacturing sector, which currently contributes only 14 per cent towards India’s gross domestic product. The Production Linked Initiative that offers financial incentives to companies based in India is one such scheme targeted at boosting domestic manufacturing.


But where China’s “reform and opening up” trajectory will differ from India’s path forward is in the type of skills and jobs need today. India must look beyond only creating low-skilled and manual labour jobs.

The manufacturing sector is undergoing rapid technological and digital transformations. A new generation of workers will need the skills necessary for a world that will increasingly employ digital technology, robots and artificial intelligence. Both the government and private sector will need to invest in reskilling and upskilling the workforce.

To be sure, India has invested heavily in expanding digital connectivity and financial technology. Yet, more needs to be done to ensure that the large number of graduates who will emerge in the coming years have the skills necessary to be employed in the future economy.

By building on its advantages over other countries in the IT sector, for instance, India could position itself as a major player in Industry 4.0.


The geopolitical context in which India has emerged as the most populous country is also different. Amid increasing US-China tensions, manufacturers are increasingly considering a “China plus one” strategy.

While they are not necessarily leaving China due partly to its large consumer base and robust infrastructure, manufacturers are considering diversifying their production by setting up factories in other countries as well.

With its large working population, India may stand to benefit from this and put it in good stead to emerge as an important manufacturing and technological hub.

Apple, for instance, recently announced that it was scaling up its plans to manufacture products in India. Previously, Apple only manufactured its low-end phones in India while China dominated the production of most of its products.

However, Apple is now producing its latest and high-end phones in India as well. Several other manufacturers including Samsung and Chinese brands like Haier have established manufacturing plants in India.

Whether India reaps a demographic dividend rather than suffer a demographic disaster will require strategic investments in its people and infrastructure.

Iqbal Singh Sevea is Associate Professor and Director of the Institute of South Asian Studies, National University of Singapore.

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