Where will the Indian economy and population be by 2029?

Talking about the economy is a bit difficult because a lot depends on market forces and the foolish, obtrusive, destructive as well as unnecessary intervention by the union government. Unfortunately, the current dispensation is the worst when it comes to playing with the economic forces.

Representative image.

Anyway, I would like to first deal with the demography part. It's very essential to understand the demographic trend of a nation. In the earlier centuries, nature had its own way to keep the demography balance. The high birth rate coupled with the high death rate kept the population increases in check. However, that natural equilibrium has been disturbed by human intervention. Following is the trend of the Yearly Population Growth Rate (value in percentage)

So we can see the population growth in India has been on a declining trend. Even though we are yet to see the net effect of these declining trends in overall population size. This is for two reasons. Firstly even though the population growth percentage has gone down. but the net effect is still very large because the smaller growth percentage is effective on a larger population base. For example in 1991 with a population size of 89 crores and 2.12% a population growth percentage of 2.12%, we had a population growth of around 1.89 crores every year. In 2023, though the population growth percentage has come down to less than half to 0.81%, the net population growth has not come down to that extent. It is still at 1.13 crores per year.

Secondly arresting population growth has been negatively impacted by the increase in life expectancy. All the good work done in controlling the birth rate has been neutralized by the drastic reduction in the death rate. So long as the birth rate is higher than the death rate, the population will keep on increasing. And when the birth rate will be equal to the death rate there will be no population increase. And if the death rate takes over the birth rate then the population will decrease.

India’s effort to control population increase has been negated by the growth of elderly people. As per one Govt report, India’s elderly population is expected to rise by 41% over the next decade to touch 194 mn in 2031. India’s elderly population (aged 60 and above) is projected to touch 194 million in 2031 from 138 million in 2021, a 41 per cent increase over a decade, according to the National Statistical Office (NSO)’s Elderly in India 2021 report. Flagging concerns around an ageing population and stressing the need for India to plan for a changing population structure, the report said there will be 93 million males and 101 million females in 2031 — up from 67 million males and 71 million females in 2021.

India achieved a growth percentage of 0.68 for the year 2021–22. But unfortunately, it again shot up to 0.81 % in the year 2022–23. Anyway, this looks to be a temporary influx that will be arrested. I expect the growth percentage to go down below 0.50%, possibly in the forties by 2031, and by 2041 we may have a near-zero growth in population. Thereafter it would be a different challenge to hold the population base since the growth trajectory could be negative with more & more people facing fertility issues or people not ready to go for pregnancy.

Now these demographic changes could have a great impact on demand and consumption patterns. The economy and the government need to gear up to tackle those challenges. For example, having more people in the 60 years plus bracket could increase and expose the lack of social security.

Hope I have extensively covered the demography part. What I am more afraid of is the economic part. The present government is the worst possible in understanding macroeconomy. The Modi government is still stuck with demonetization. After demonetization 1, now it is time for demonetization 2. It is still oblivious or unmindful of the damage it is doing to the economy. When you kill a particular currency note, you don’t kill the particular currency note alone. You kill the total confidence in the monetary system. Today it is killing the 2000 rupee notes, where is the guarantee that tomorrow Modi government won’t go for the killing 500 rupee notes? This is what I call the foolish, obtrusive, destructive as well as unnecessary intervention in the market forces by the union government.

Killing public confidence in the monetary system could be very dangerous. Just imagine what would have been the impact on the world economy if the US would have demonetized the $100 currency notes. I have used the example of the $100 currency just to make people realize the magnitude of the impact. It could simply crash the world economy. What is the Indian rupee value of $100? It's roughly Rs.8000/-. Does the US government childishly keep on talking about black money hoarding, and terror funding? While 70% of the $100 denomination is held outside the US. It's high time people to start ridiculing such rubbish & childish talks of the government.