Date: 19/09/2022

Relevance: GS-2: Effect of policies and politics of developed and developing countries on India’s interests; Indian diaspora. Issues relating to development and management of Social Sector/Services relating to Health, Education, Human Resources

Key Phrases: Replacement level fertility, World Population Prospects (WPP), Impact of declining fertility rates, Demographic Dividend, Population projections

Context:

• According to the World Population Prospects (WPP) report 2022 the world's population will cross 8 billion on November 15, 2022 but the low fertility rates across the world will pose many challenges in the future.

Background:

• Despite reports suggesting the global population to grow to around 8.5 billion in 2030; average global fertility has been consistently declining over the past 70 years.
• The WPP report reveals that the average number of children per woman in the reproductive age group has declined by 50% globally, from an average of five children per woman in 1951 to 2.4 children in 2020.

Faster than expected demographic transition across the globe

• The sharp decline in births per woman is attributed to demographic transition taking place rapidly in poorer countries compared to richer ones.
• The WPP Report notes that the global fertility rate fell from three in 1990 to 2.3 in 2021.
• Britain took 130 years to transition from a fertility rate of five per woman in 1800 to two in 1930 whereas South Korea took 20 years to achieve the same.
• Today, most advanced economies have their fertility rate below the replacement rate of 2.1, with South Korea reporting the lowest at 1.05 children per woman.
• It is estimated that Sub-Saharan African countries are expected to contribute more than half the population growth after 2050 and grow through 2100.

What is the Indian scenario?

• The latest National Family Health Survey (NFHS-5) reveals that fertility rate in India has fallen to 2.0 in 2021 which dropped by 10% in just five years.
• Despite the government launching the first ever family planning programme in the world in 1952 it took 25 years to reach a fertility rate to 5.0 from 6.0 at the time of independence.
• It further declined to four in the 1990s when Kerala became the first State in India to have a fertility rate below replacement level.
• Today most of the states have achieved a fertility rate below 2.1 and as reported by the NFHS 2021, only five States have a fertility rate above the replacement rate: Bihar (3), Meghalaya (2.9), Uttar Pradesh (2.4), Jharkhand (2.3), and Manipur (2.2).
• The steady dip in fertility rates can be attributed to
  • Increased use of contraception
  • More years of average schooling
  • Better health care facilities
  • An increase in the mean marriage age of women.

Economic benefits of declining fertility

• Lower fertility rates can be viewed as both a cause and consequence of economic development.
  • Lower fertility impacts women’s education positively, which in turn lowers the fertility of the next generations.
  • With better infrastructure development, better health care, and education, fertility drops and income rises.
• In the initial years of low fertility, the ratio of the working-age population is higher than the dependent population, resulting in increased income, investment, and savings in the economy.
• Lower pressure on land, water and other resources is beneficial to the environment.

Economic challenges of declining fertility

• Japan, and South Korea were pioneers of falling fertility rates in earlier 2000s which now are facing a crunch of working age population.
  • Increasing dependency ratio has led to near zero GDP growth since the 1990s.
  • They are also facing fiscal challenges to meet rising social security costs.
• An influx of immigrants from countries with higher population growth to compensate for the falling working population may pose other challenges such as class and social conflicts.
• A paper, “The End of Economic Growth? Unintended Consequences of a Declining Population”, by a Stanford economist argues that falling fertility could diminish the creative capacity of humankind.
  • The rationale behind this is the need for ideas in technological advancement and productivity boost which is possible by humans and not by Machines or AI.
• It is estimated that by 2100 nearly 40% of the population will be of old age
  • A book The Great Demographic Reversal: Aging Societies, Waning Inequality and an Inflation Revival points out that lack of labour supply will increase wages and inflation.
• A high dependency ratio will increase pressure on government finances and thus public finance will be affected badly.

Other implications of declining fertility

• Decline in military strength
  • Population decline will also lower the military age population, and therefore military power
• Decline in innovation
  • A falling population also lowers the rate of innovation, since change tends to come from younger workers and entrepreneurs.
• Difficulties in funding entitlement programs
  • Less working age population may cause less tax collections to the governments and dearth of social security programs for elderly.
• Crisis in end of life care for the elderly will emerge because of insufficient caregivers for them.

How to deal with fertility decline?

• Using scientific and sustainable policies for mitigation can diminish its negative effects.
• Reforms to induce more flexibility in the labour market
  • It would encourage working women to have more children and non-working mothers to enter the labour market.
• Boosting fertility through various policy decisions such as
  • Germany has boosted births through liberal labour laws, allowing more parental leave and benefits.
  • Denmark offers state-funded In-Vitro Fertilization (IVF) for women below 40 years, and Hungary recently nationalized IVF clinics.
  • Poland and Russia have provisions of monthly payments and other monetary benefits.

Way forward

• The benefits of demographic dividend are being reaped across countries at the same time the below replacement level fertility rate would mean a smaller dividend window than expected.
• Although India’s working-age population will continue to grow for a few more decades, it would need to keep an eye on fertility dips.
• India can ensure sustained labour supply and output despite lower fertility through
  • Liberal labour reforms.
  • Encouraging higher female labour force participation rate.
  • A higher focus on nutrition and health.

Source: The Hindu

Mains Question:

Q. Declining fertility rates will lead to immigration which will inevitably change the existing structure of family and society, Discuss. Also suggest measures to tackle the rapid decline in fertility rates. (250 words).