Calcutta Notebook


Large numbers of scho-lars, both marxist and non-marxist believe that India's problem is population. India's resources are getting exhausted in providing basic services to the increasing numbers and it is not possible to raise the living standards of the people. These scholars need to take a look at the winds of change blowing in China. The one-child policy has been loosened and a proposal to raise the age of retirement is under consideration. It has dawned upon them that less population is a problem.

A one-child policy was implemented in the eighties. A family had to pay a hefty fine if it produced a second child. The pregnant woman was forced to undergo an abortion if the family was not able to pay the fine. As a result, the rate of population growth declined steeply from 3.6 births to 1.8 births per woman presently.

China has got immense economic benefits from the one child policy in the last two decades. Mao Zedong encouraged the Chinese people to produce more children. Large number of births took place in the three decades from the fifties to the seventies. These large numbers of persons joined the work force beginning the eighties. The availability of labour increased and production shot up. Simultaneously, a one child policy was implemented in the eighties. That led to reduced burden of childbearing and childrearing on the families and enabled them to undertake yet more productive work in farms and factories. This was a major factor that begot high economic growth rates of 10 percent-plus after the nineties.

The situation changed dramatically around 2010. The large numbers of baby-boomers born till 1980 started becoming old. As a result many working persons had two parents and four grandparents to support. On the other hand, lesser numbers of births after 1980s led to fewer persons joining the work force. The ratio of elderly dependents and working persons got highly skewed in favour of dependents. Energies of the people were directed more towards taking care of the elderly; and less toward increasing production. This has been a major factor contributing to the decline in the growth rate after 2010. The Chinese Government has learnt this hard truth and has now made the one-child policy a bit lenient in order to reverse this trend of reducing numbers of workers. Till now only couples who were both single child of their parents were allowed to have a second child. Now those where one of the two persons is a single child will be allowed to bear another child. China is slowly learning that population is not a liability but an asset!

It is also being proposed that the age of retirement may be increased. The age of retirement at present is 50 years for general female workers; 55 years for female civil servants and 60 years for male workers. It is now proposed that the retirement age may be increased for both female and male workers to 65 years. Idea is that this will improve the supply of labour and reduce the burden of taking care of the elderly. This clearly shows that population is a liability if unemployed and an asset if it is employed. The population above 50/55/60 years is a liability at present. Increase in retirement age to 65 years will enable them to work and convert them into an asset. The lesson is that the problem is not population. Population becomes a problem if there are no opportunities of undertaking productive work.

Contrary to above experiences, United Nation's agency UNFPA, as most of India’s mainstream economists, says that higher population deprives children of education, their productive capacities are not developed and they are not able to add to production. But education can be provided to the people by cutting other consumption and expenditures. The King's Palace can be used for running a school, for example. Or surplus government employees in other departments can be deployed in schools. One should also remember that the requirement of educated workers depends upon the technological makeup of the economy. A tractor driver holding an MA degree does not add more to the economy than one who has gone to high school only. The presence of large numbers of educated unemployed points to the same direction. The correct situation is that population is an asset if it is engaged in production; and a liability if unemployed. Therefore, policies to create employment along with an increase in population will beget higher economic growth.

Second argument extended by UNFPA is that standard of living declines with increasing population because it becomes difficult for the government to provide necessary infrastructure such as education and roads. The ability of the government to provide infrastructure depends upon revenues which, in turn, depends upon whether workers are productively employed. An employed person produces more than the cost of services provided to him by the government. Thus, the strategy should be to increase population, provide them with jobs, collect more taxes and provide more facilities.

Similar conclusions are obtained from a review of experiences of other countries. Professor at University of Maryland Julian Simon notes that densely populated countries like Holland, Hong Kong, Japan and Singapore have had high rates of growth while sparsely populated Africa has had low rates of growth. A report by Bloomberg says: "Singapore Prime Minister Lee Hsien Loong last November told that encouraging citizens to have more children is the city-state's biggest challenge. The government announced in January a plan to spend 25 percent more for fertility-treatment funding, paternity leave, housing assistance, and other measures to encourage families to have more children. South Korea has one of the world's fastest-aging populations, too, with a birth rate of just 1.24 children per woman in 2011, well below the minimum replacement rate of 2.1 children. South Korea's government is trying to address a shrinking workforce by opening to immigration from such places as Nepal; the number of immigrants has increased sevenfold since 2000 and immigrants as a percentage of the population could top 6 percent by 2030, compared with 2.8 percent now.

If anything population being a 'problem' has been created by the businesses to encourage women to enter the workforce and thereby reduce the cost of labour and an increase in profits. Women are preoccupied with homemaking if they have more children. This does not suit the businesses. They want profits—now. It is of little concern to them that this policy will lead to reduced numbers of workers and lesser profits in future.

Vol. 46, No. 29, Jan 26 -Feb 1, 2014

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