Wednesday, November 20, 2013

Demographic Dividend - more people means more jobs

This post is going to be short - because the point is simple, and other people have made it before me.

The idea of Demographic Dividend assumes that more people in a certain age group will mean more jobs and more income for the country.

However, this assumption has another underlying assumption - that the more people entering the workforce are all "employable" - i.e., they have the skills, attitude and infrastructure to enter the workforce and be productive.

There is global skill shortage. This report indicates that India has a skill shortage. But the skill shortage is way more than what is here. According to another research paper read elsewhere, the gap between skill requirements and skill training - esp in vocational skills, is very high.

30% of the population lives in urban areas. An even smaller population in metros. The share of GDP from urban areas is 52%. This means that at least 70% of India's "Demographic dividend" lives in a place where it cannot be optimally employed because the infrastructure is not suited to high productivity employment. If we take away the non metro cities (Realistically, the non metro cities do not have  very conducive infrastructure) , then this gap surges even more.

aka the Indian Work Ethic. Perhaps its a matter of global concern, but the Indian Work ethic just keeps getting worse among knowledge workers and students looking to land knowledge jobs.
This report has some key figures for us. This and this deserves to be read too.

So, the short point is, that the Indian worker may be looking for employment, but that does not automatically make him/her employable.

And therefore, the Demographic Dividend tempo must be tempered to be closer to reality. The reality may not be bleak, but if we dont stop bursting at the seams, we are very likely to burst right down the middle.

End of story. 


Saturday, November 16, 2013

Demographic Dividend or Population Problem - Keeping them safe...

The third thing we spoke about in managing 14% of the world's population on 2% of area, was their physical safety.
Luckily for us, the National Crime Records Bureau has put all the statistics online - from 1953 onwards!

In addition to the numbers we see on this site, and their relevant correlations with the population, economic disparity and other factors, there is one more variable that we need to consider - the incidence of reporting. We know that the state of crime is bad in India. We know that the number of undertrial cases pending in our courts is staggering. We dont even need to see the numbers to know that in spite of trying our best, we as a country do NOT have the infrastructure required to :
  1. Proactively predict and prevent crime
  2. Find the guilty after the crime has been committed
  3. Take the accused through a fair judicial process within "reasonable time" (Please note, we are not using the word "quickly" here. Just reasonable time, and even that is too much to ask for)
  4. Once there is a verdict, one way or another, there is an administration system - ensuring that prisons are places that humans can inhabit, ensuring the parole system and where relevant, the rehabilitation system.
We simply have failed on each one of these necessary and vital actions of the state.

Irrespective of what we might think is the "ideal" population for a country like India, we do know that the current population levels are far, far above that "ideal" number.

At current numbers, we are unable to provide basic citizenship amenities. Governance, though an important part of the equation, is NOT the sole culprit.

What we have here is a classic situation of too few resources and too many claimaints to those resources. Any government can only try to optimise the allocation of resources, but the challenges we put to our governments are huge. And our ask is quite simply, impossible. At these numbers, we are tearing at the seams and about to burst.

In the next post, we will discuss nother assumption that one often hears in the Demographic Dividend context - more people mean more jobs and higher income.  

Demographic Dividend or Population Problem - Incomes

In the previous post, I spoke about the second factor required to maintain population in a country -per capita income. aka, enough money to keep body and soul together.

In that piece, we spoke about the impact of individual choices on family incomes and standards of living. These individual choices aggregate as national poverty statistics. The worst part of these wrong choices is that they lead to actual child abuse meted out by parents. But there is very little punitive action against parents who are responsible for abuse and child labour by their children.

In this piece, lets look at the per capita income and population from a different perspective. I googled to find out if a study has happened on the impact of family size on per head income in the family.

Here is a chart taken from a book called Human Development in India:

Image Courtesy - book Human Development in India

Lets break down this total income into per capita income by family size.

If the family has:
1 member : per capita income i likely to be 13435

At 2 members, however, that number is not 26870, it is 24000. Per capita income - 12000

3 members : per capita income - 10067 INR

4 member : per capita income - 9863 INR

5 member: per capita income - 10510 INR

we cannot calculate per capita income because the report says 6+, so the number could be for 6 member households or 11 member households.

So, with every member that we add to the family, our average per capita income diminishes almost uniformly, except for one spike at family size of 5.

Ceveat: The book mentions that because of economies of scale, a large family living together will spend less and so their total net worth will be higher..

Endpoint: A bigger family by itself does not mean higher income for the family. More people do not, by definition mean higher income for the country.

Monday, November 11, 2013

Demographic Dividend or Population Problem - Impact of Individual Decisions on the country's GDP

The second thing I spoke about was Per capita income aka an ability to make enough money to make ends meet.

Every time we talk about poverty, we talk about the failure of poverty alleviation problems. But the question we also need to ask is:
Why do we need poverty alleviation programs?

It is the state's job to provide administration. Perhaps, in a welfare state, also to provide health care.

But why is the government's job to ensure that you are not a poor person? Where is the individual's responsibility?

Lets ask a question: What makes a poor person a poor person?
There are no easy answers. The favorite answers are destiny and lack of opportunity because of social bias.

But lets try to understand a story. This is the story of Manglu, a poor child from remote any-part-of-india who comes to a big city, works as a rag picker, makes a very little money, lives in barely habitable conditions. Then, Manglu gets married and has children. And more children. Because more hands to work means more money. He forgets that part of the equation which says that more children also mean more mouths to feed. Now, he has 5 mouths to feed, and maybe 4 earning members in the family, but only 1 adult earning member, since the mother has to take care of the 3 children. Even if she is employed, she is under employed. and the children make very little money, even if all 3 are put to work. In addition, there is malnutrition and frequent illness.

Contrast that with another story. This is of Pappu. Same background as Manglu. Comes to city, works as rag picker, gets married. Except, that he has only one child, and is determined to send this child to school. Now, Pappu has 2 earning members and 3 mouths to feed. And a school going child whose earning potential is way above the combined earning potential of his parents if he continues in school.

The government did not give birth to Manglu's children. Nor is it responsible for his flawed thinking. The government cannot be blamed for lack of common sense. The government is not responsible for parents who push their children into child labour. Nay, people who bring children into the world with the specific intention that they will work as soon as they can walk, or latest by the age of 5.

What the government is responsible for, however, is punishing people who are responsible for child labour - even if it is the parents themselves.

In appeasing the adults who are potential voters, the government has failed the children by not protecting them from abuse meted out by parents.

Poverty Alleviation programs are an anomaly.

It is also unfortunate for India that instead of harping on the failure of povery alleviation programs, we do not ask questions on the continued need for these programs. If they were effective cures for poverty, surely 60 years is long enough to wait. And at the end of 60 years, poverty is unmoved. Maybe we are applying the wrong combination of medicine? Perhaps it is time we made people responsible for their financial state, at least in part?

Friday, November 08, 2013

Demographic Dividend or Population Problem ?

I love these big sounding words - Demographic Dividend. And how India is all ready for greatness and all that because of this "demographic dividend" and all that.

So i did what i normally do on these occasions (meaning when one is totally lost) - google god.
It turns out, that Demographic dividend was not what i thought at all! Its not just that we have more people, but that we have more young people, who can potentially earn and add to our GDP.

See, what a lovely idea! Take a look at this if you dont believe me.

Except, i dont agree. There are some very basic flaws with the assumption that:
A. More people means more money or higher GDP
B. More people is a good idea by itself.

India is the 7th largest and the 2nd most populous country in the world. We have 2% of the world's land area. And we have 14.28% of the world's population. That is only based on the no. of Indians living in India. We support 14% of the world's population on 2% of the world's land. Does that tell you anything?

Different estimates indicate that we will overtake China anytime from 2015 to 2050. But no study anywhere indicates that we will become the 6th largest country anytime soon. Or that our land area will increase.

Why is that important?
This is why.

To sustain a population,we need some basic things:
1. Food
2. Money (aka Per Capita Income)
3. Physical Security

The average land holding in India is 1.16 hectares, down from 1.34 hectares in 2000-1. About 80% of our cultivated area is used to grow basic food items. Around 50% of our land area is used for agriculture. Though we are among the highest producers of several basic food items, our productivity is way below global numbers.

These numbers do not indicate a healthy trend towards feeding our people. Accounting for economic disparity, it is a fact that thousands of Indians are literally starving to their deaths.  There is a number to it - 7000 Indians starve to their death every day. And 25 Lakh every year. One third of the world's hungry people live in India. One third. Way above our national average of one seventh of the world's population.

This is how bad it is.

We may have the food, but we simply do not have the mechanism to feed all the mouths we give birth to. The shrinking average land holding is a reality directly caused by population.


Saturday, November 02, 2013

Everyone in Karnataka must learn Kannada...

..because they use the resources of the state.

Years ago, a colleague in Bangalore had said something along these lines to me. My response to her was: Yes, you are right. People should not need to move to Karnatka. Companies who get cheap labour that migrates should be forced to set up offices in whatever location they want workers from.

If they want people from Delhi to work for them, they should build an office in Delhi, not force people from Delhi to move to a culture that makes them feel unwelcome and alien.

Has anyone ever written about how the migrants feel in the new culture? And since when did we become "outsiders" in our own country?

I have left 2 cities because they were nasty to people not from the state. One of those cities was Bangalore. The other was Mumbai. These are progressive cities. And yet the hidden jingoism, even among the educated, who are supposed to be "globally mobile" is unnerving.

If we have to get down to specifics, India follows a federal structure. All states get some assisstance from the centre and are NOT autonomous. Which means their "resources" belong to the country and not themselves alone.

Karnatka will get 10,000 crores of central funds during 2013-14. Out of a total of 47,500 crore in the Karnatka budget, 10,000 crore will come from "India". So the minister's statement was factually incorrect.

The minister was talking about keeping Kannada medium schools alive, and revitalising them to increase enrolment. That is a lofty idea, but is entirely separate from forcing other people to learn a language.

This whole jingoism just has to end. It rears its ugly head far too often. In Tamil Nadu, Karnataka, Maharashtra, now Vidarbha, tomorrow Gorkhaland. The number of intolerant states is very low - we just counted them. But these few states go on to create a murky image of India in the minds of all Indians.