India’s Population to Surpass China’s by Midyear

The milestone highlights the dramatic demographic shifts that are reshaping the world. India’s population will continue to grow over the next four decades, peaking at nearly 1.7 billion. Meanwhile, China’s population, which fell last year for the first time in decades, is forecast to decline rapidly. By the start of the next century, India’s population is expected to be double that of China’s.

For India, the hundreds of millions of young people who will enter the labor force over the next few decades represent both an opportunity and a challenge. Economists speak of a “demographic dividend”—a one-time window, which normally spans a few decades, when a country has far more working-age people than young and elderly dependents, potentially boosting growth. That window closes when the population grays and the cost of caring for dependents climbs.

The demographic dividend helped fuel China’s economic rise, with millions of workers migrating to factories and transforming the country into the world’s manufacturing base. But there is no guarantee of success: Some countries in Latin America and elsewhere with young populations have seen growth stutter as they struggled to create enough jobs.

India has many advantages. Its pool of young people—with 610 million under age 25—is growing just as many foreign companies are looking to expand operations outside of China into countries with cheaper labor. New Delhi is upgrading India’s infrastructure by building airports and roads. The country also has a longer window of time than China did to capitalize on its youth. China’s window, now closing, was shortened by its one-child policy, which accelerated the country’s aging process.

The biggest concern is India’s potential inability to create jobs in sufficient numbers. 

The country has added zero net new jobs over the past decade, in part due to the pandemic, even as over 100 million people entered the labor force. Many Indians are discouraged from even hunting for jobs. Out of the 20 million people who grow old enough to enter the labor market every year, only about eight million look for work, according to Mahesh Vyas, chief executive of the Centre for Monitoring Indian Economy, an independent think tank in Mumbai.

The country’s overall labor-force participation rate in March was 39.8%, compared with 62.6% in the U.S.

Kunal Kundu, an India-focused economist at Société Générale, said India’s low labor-force participation rate is a key reason why he thinks the country won’t reap the full benefits of a booming working population. Countries that capitalized on demographic sweet spots, like Japan and South Korea, had labor-force participation of around 55% to 60%, he said.

But economists say India’s population is a selling point to companies looking to diversify production beyond China. Although countries like Vietnam and Mexico have wooed some U.S. firms, India is the only nation with the kind of enormous labor force like China’s at its peak. 

Inc.’s main manufacturer, , is considering a major expansion in India. Apple opened its first retail store on Tuesday in the financial capital of Mumbai.

The population forecasts were included in a U.N. report that delved into global trends in family planning and women’s reproductive rights. The report lauded big improvements in areas like infant mortality, but highlighted data collected this year from 68 countries that showed 44% of women with partners can’t make their own decisions on healthcare, contraception or sex. The result, the report said, is that nearly half of all pregnancies are unplanned.

Write to Shan Li at [email protected]