The Unexpected Problem With India's Population Boom

0:00 this year India has overtaken China as the most populous country in the world but it doesn't seem to be happy about it from the outside India's demographic boom looks great as experts are talking about how India can benefit from a large growing and overwhelmingly young population exactly what some of the most advanced economies like Japan or South Korea are desperately missing but inside India the situation looks very different the population boom is seen as a major problem and the government has been actually trying to quietly slow it down as much as possible and while China is dealing with the consequences of its former one child policy India is thinking about repeating the same mistake in order to stop the same thing

0:45 that it's being applauded for so what's going on and why is India's biggest opportunity also its biggest threat this is the unexpected problem with India's population boom but first a short word from the sponsor of this video because whether it's India Europe or the US people are still feeling the effects of the global economy which continues to be ravaged by inflation and volatility no wonder that font managers are boring hundreds of millions into assets that may continue to climb even when other markets do not like the one asset class that climbed even past its pre-pandemic levels and that you can now access in minutes and without needing Millions thanks to Masterworks art investing platform

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2:15 demographic Trends are incredibly important if your population is increasing it means you have more workers and more consumers which drives the economy even without needing Innovation or increased Effectiveness and if you have a shrinking population the effect is the opposite you have less workers less consumers and less taxpayers and growing the economy becomes much harder in China for example the economic growth has been largely fueled by its booming population but now that the population boom has stopped getting the same results will be a lot more difficult and it's not just China almost every Advanced economy is dealing with an aging and shrinking population and that's what makes India so lucky it is a large and quickly growing economy that unlike so many others will be able

3:00 to reap what's called a demographic dividend a fortunate situation when you have a large growing and mostly young population something that's considered to be a major economic Advantage India's population is still growing at under one percent annually which means that it adds 13 million people per year and it is projected to keep growing for at least another 40 years in other words it has an enormous Competitive Edge that most countries do not have and that will keep helping India's economy for many years to come so it sounds a little surprising that India is actually deeply worried about this trend and it's actively trying to fight against it in 2019 India's Prime Minister Modi said that the quick population growth is an obstacle for India's Economic

3:47 Development and some members of modi's political party have been pushing for a law that would enforce a two-child policy and in some Indian States this is already a reality now now this would sound familiar in the 1970s back then the world was afraid of overpopulation That was supposed to cause widespread famines and a societal collapse and in China those fears led the leadership of the country to believe that its population growth was unsustainable and that they needed to introduce a radical one-child policy aimed at slowing it down but today we know that those catastrophic predictions did not turn out to be true thanks to Innovation and Technology the world was able to sustain the growing population and China's one child policy is now considered one of

4:33 its biggest mistakes and its consequences like the rapidly aging population are taking a toll on the country today so here's the Paradox today unlike in the 70s population growth is considered an asset and thanks to its quickly growing population India's economy is said to grow for decades to come and yet India is worried about its population boom even though it's exactly what so many others are missing and it's trying to repeat China's failed policies so what is the explanation of this well as it turns out the story is more complicated than it seems and it reveals a lot about why some people are incredibly optimistic about India's bright economic future While others are a lot more skeptical so let's explain while in general the

5:21 demographic dividend is excellent for the economy in India's case it's a little more complicated because turning the demographic dividend into economic growth doesn't just happen automatically in order to benefit from it you need to be able to effectively use the giant reservoir of young people in other words you need jobs for them and ideally good jobs but the problem here is that India does not have nearly enough of those in fact it has quite a high unemployment that's even higher in certain regions and that has been high for a while and it's even higher for young college-educated graduates but why doesn't it have an have jobs when it's growing so fast well let's look at China for example the way it was able to build its economic Empire was by first turning

6:06 itself into a manufacturing Hub that attracted massive foreign investments that then created enormous amounts of jobs but India is not able to do that or at least not at the same scale and while there are different reasons for that like that India still has a lot of bureaucratic restrictions for foreign companies a key reason is that surprisingly foreign and Indian companies often struggle with finding workers but how is that possible when there are so many of them looking for a job well compared to when China was opening up in the 1980s the demand today is for a more qualified Workforce and India doesn't have that because of its outdated education system according to an Indian Talent assessment firm 50 of India's graduates are not suitable for

6:53 any role in the industry sector in other words they have formal education but not the required skills and so despite India's media reputation as the next China foreign companies are hesitant to invest at scale which brings us back to the issue of population growth at this point India has a lot of young people who are struggling to find jobs and an economy that's just not able to create enough of them but in that situation having a population growth that adds 13 million people every year just makes everything even worse when China was at the height of its economic growth there was an endless demand for workers both from foreign companies coming in and from Chinese companies starting out and this demand was Satisfied by the population growth and so the economy and

7:38 demography were working together but India is in a different situation there are already too many workers for not enough jobs and the population growth keeps adding more making the disparity even bigger and so the economy and demography work against each other and while theoretically India should be enjoying its demographic dividend instead it became a massive burden now that being said is it a good idea to introduce strict population control well probably not although most predictions point to India's population peaking around 2070 newer estimates say that it could be a lot sooner in just 20 years from now that's because India's fertility rates are actually slowing down quite fast so in a way it is a problem that will take care of itself

8:23 naturally and imposing strict restrictions would cause the same long-term damage as it did in China it makes sense that the government wants to avoid having a growing base of young unemployed and dissatisfied people but the better solution might be to create jobs by investing in education and attracting more foreign investment rather than to play with population control as China found out before it tends to have unexpected consequences and it rarely ends the way you intended