Scholars, Officials Discuss Effect of India Demographics on Economy

For additional background and photos, visit the conference website.

India’s demographic bulge was the subject of much debate and discussion at a recently concluded conference on Indian economic policies held at SIPA.

A high-powered panel that included three parliamentarians from India and Britain, as well as leading economic experts on India, debated whether India’s large working-age population would be a demographic benefit or drawback in the next 15 years.

“The demographic dividend may or may not bear benefit unless there is a massive policy of investment in education, both in terms of changing the culture as well as quality of educational institutions,” said Lord Meghnad Desai, economist and Labor politician.

Rakesh Mohan of Yale School of Management agreed, noting that India’s citizens were educated for fewer years, on average, than most Asian nations. “You can’t get the growth that you want unless there is a massive campaign for education and training of the poor human capital stock,” he said.

Indian parliamentarian N.K. Singh underscored the large market that India’s growing numbers will create. “Whether the population is well-trained or not, skilled or not, the fact remains that there will be huge unsaturated consumption.” This, he said, would be driven irrespective of what happens in the rest of the world.

The three-day conference was organized by Columbia University’s Program on Indian Economic Policies — co-directed by professors Arvind Panagariya  and Jagdish Bhagwati — and the Confederation of Indian Industry. “The speakers focused on how the post-1991 reforms in India have helped bring poverty down within every social group and led to a decline in inequalities between the socially disadvantaged and other groups,” Panagariya said.

The conference made a push for labor and land market reforms for the rapid growth of labor-intensive manufacturing in India. An absence of these reforms, said Panagariya, have led to a situation in which the decline in poverty per percentage point of growth has been less in India than in other fast-growing countries like China.

Bhagwati set the tone of the conference with insights into the working of the Indian economy — peppering his remarks with his ready wit, anecdotes of his interaction with Indian premiers, and insight regarding what drives politicians to make economic decisions.

Successive speakers followed suit with their analysis of how the Indian political system affects its economic growth. “The character of politics in India is such that there is no political party which openly stands for economic efficiency. The rhetoric of all political parties’ rhetoric is populism and governmentalism,” said Desai.

Asked about the quality of young Parliamentarians in India joining the political system, Arun Jaitley, opposition leader of the Upper House of Parliament, said: “In terms of parliamentary interventions, a very large number of them have still to make a mark. Most of them came because of families and surnames. They didn’t come on account of having worked in the constituency.”

Conference participants praised the fiscal responsibility displayed by states. “The gravity of the Indian growth story has decisively shifted from the center to better managed states. When you look to India’s growth story, you cannot only look at New Delhi anymore,” said Singh.

- Neha Tara Mehta, September 27, 2012