Development Diary
Will there be jobs for Bihar’s growing population?
By Michael Neri
In 2001, Bihar’s population was a bulging 82 million. By 2011, it had jumped toa whopping 103 million people, an addition of a massive 21 million – equal to the entire population of Haryana state in 2001. But that’s not the worst of it. If Bihar continues to grow at its current rate of 2.5 % per annum, its population will double in 30 years, to a staggering 206 million people in 2041, and probably peak at around 218 million by 2050. If it was a separate country, Bihar would rank just after Indonesia as the world’s 5th most populous country in that year. Likewise, Uttar Pradesh has 199 million people in 2011, and is also growing at 2. 6 %; it will have a staggering 405 million people in 2041, and peak at around 430 million in 2050 , at which point it would have more people than the entire population of India when the country gained independence in 1947, and possibly more than the projected population of the USA in that year. If these projections materialize, Bihar and UP, constituting India’s Hindi heartland, will make up 38 per cent of India’s projected population of 1.6 billion in 2050 compared to 25 per cent today, and thus change the demographic mix and political dynamic of India.
Should we be terrified that such massive population growth will occur in two of India’s poorest and most over-extended states, and thus imperil the security and stability of the entire country? It is worth noting that most of the additional millions will be added in rural areas, which are already at a tipping point in important respects. Extreme farm fragmentation combined with soil degradation and water scarcity, already at crisis levels, will intensify massively in the years ahead, and in conjunction with rising expectations could produce a social cataclysm the likes of which Bihar and UP have not seen as yet. The social cohesion and general buy-in to the prevailing social contract,that the middle class and the elites take for granted now, could unravel quite quickly if massive population growth occurs in a context of worsening unemployment and underemployment, which is a distinct possibility as we will argue later in this article. Given the setting, population growth is thus a major risk factor in the region’s economic growth and development process.
Fertility and Education
In painting this scenario of exploding populationand attendant social risk, we have of course assumed that the many factors that drive population growth will remain unchanged over the next 30 years, but this is an over-simplification. In the real world, predicting population growth is at best chancy, and can sometimes turn out to be wholly off the mark, because underlying drivers of growth can change dramatically even within a 10 year period. For instance, Bihar’s Total Fertility Rates (TFR; see here for definition) , which is the single largest driver of growth, dropped from 4.5 to 3.7 over the last decade, and some experts believe it will keep declining to 2.7 by 2021 and to the replacement rate of 2.1 by 2026. If that happens, the total addition to Bihar’s population by 2041 would be of the order of 55-60 million, peaking around 168 million in 2050, which is still massive, but less scary than an increment of 115 million in the first extrapolation. Migration could affect the totals as well. Bihar is already India’s most migration prone state, and that trend could intensify in the future especially if rapid urbanization in the rest of India accelerates, as some forecasters expect, and this trend could lop off some 5-10 million from the final count.
However, a sharp drop in TFR in Bihar from 3.7 currently to 2.1 by 2026 is fundamentally dependent on the education of girls. Dozens of studies have confirmed that the more education a girl receives, the more sharply her TFR drops. All four southern Indian states have already reached a TFR of 2.1 and below, thanks to high levels of female literacy and schooling. Bihar and UP unfortunately have a long way to go, with current female literacy rates averaging a mere 33 per cent in Bihar and 31 per cent in UP. In Bihar, these abysmally low literacy rates have remained unchanged during the last 10 years, which are supposedly the era of good governance under the Chief Ministership of the popular Nitish Kumar. Will the dismal state of female literacy and education in Bihar change rapidly during the next 10 years? There is certainly reason for optimism now that the Right to Education Act 2009 has been enacted by Parliament, and Central government transfers to states equal to a major part of the cost –there is a suggestion that the Center will meet the entire cost, though details are still awaited – of such education has been committed. But will Bihar do its bit by way of allocating its share of the program, if that is called for, and administering it efficiently? These are uncertainties which cannot be assessed at this point in time, but we do know that without these changes, run away population growth is a certainty.
Female literacy and education are however, a necessary, but not a sufficient condition for TFR reduction. TFR drops because a more educated woman typically has a higher income earning potential, and is thus encouraged and enabled (by husbands and society at large) to opt for income earning work instead of more children. But what happens if appropriate jobs and income earing opportunities commensurate with their education and gender constraints, are unavailable? If that were to happen, TFR would not drop and population would continue to grow at previously high levels.
Jobless Growth
It is this latter possibility that is of fundamental concern in the Indian context, on account of the pattern of depressingly slow job growth in the Indian economy in recent years. Studies by left-wing Jawaharlal Nehru University (JNU) economists C P Chandrashekar and Jayati Ghosh would seem to indicate that India’s faster GDP growth in recent years has produced few jobs for unskilled people outside of the poorly paying informal sector, even though sections of the middle class have seen salaries rise dramatically and opportunities expand. Indeed, they show that employment in organized sector manufacturing actually declined during the last decade, even as the share of wages in the services sector remained stagnant, indicating static labour growth in that sector as well. Economists on the left, and even more centrist liberal ones such as Nobel Laureate joseph Stiglitz, have long argued that market led policies accentuate inequalities, and by making the rich richer, shift consumption demand away from labour intensive goods like food and apparel etc. to more technology intensive, labour displacing goods such as electronics, automobiles etc. The left’s solution to labour displacing, jobless growth producing market led strategies is to promote greater equality through fiscal policy, and use the tax revenues to support targeted welfare for the poor, which has the effect of increasing demand for labour intensive goods, and thus of creating more jobs.
The more right wing Columbia economist Arvind Panagariya, who has long argued that India’s recent growth has by no means been anti-poor, and in fact has pulled millions out of poverty since 1991, would nevertheless concur with the left on one point: within a broader framework of market oriented policies, India needs a more labour intensive growth strategy to absorb a larger movement of people out of agriculture, which movement alone can move the country onto a faster growth trajectory resulting from higher labour productivity.
Growth vs. Equity
One issue on which the left and the right have traditionally disagreed on is whether pursuing greater equality reduces growth rates in the longer term and thus harms long term welfare for all. The conventional view has been that as countries develop, inequality increases, then levels out and eventually reverses to greater equality, though this proposition has never been backed by any substantial historical data. Abhijit Banarjee, a JNU alumnus who now teaches at MIT, has put this debate to rest with solid historical data that proves that it is quite possible to achieve high growth rates with high levels of equality, though obviously it takes considerable skill to get the exact policy mix and timing right to attain optimum results.
Thus, we can conclude that if India –and by extension states such as Bihar and UP- continues to pursue their current matrix of market oriented growth policies, they risk perpetuating a state of jobless or low job growth, which will feed back into fertility rates and keep them high, which will in turn pour fuel on the population growth fire. The solution is to move towards a more egalitarian growth path through fiscal interventions and redistribution, without encroaching on the freedom of private enterprise to generate incomes and growth.
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The author is a writer and consultant based in Fort Lauderdale, Florida.