INDIA COULD HAVE HAD 40 CRORE LESS PEOPLE

["Dr. Sanjeev Sabhlok" <sanjeev@sabhlokcity.com>]

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folks: following is my revised write-up on population:

INDIA COULD HAVE HAD 40 CRORE LESS PEOPLE,
WITH MUCH HIGHER STANDARD OF LIVING
			Sanjeev Sabhlok

A vast majority of people, particularly policy makers in India, continue to
feel that population is bad and must be 'contained,' as viewed by Ms.
Krishna Singh, Member-Secretary, National Population Council, expressed in
a seminar on population organized by Liberty Institute on the 15th of July.
 Accordingly, the National Population Policy, 2000 states, "Stabilising
population is an essential requirement for promoting sustainable
development with more equitable distrubution." The Representative of UNFPA,
Michael Vlassoff also holds an identical view, expressed in this seminar.
This view hinges on the theoretical belief (empirically repudiated by a
vast majority of studies) that population size has a direct effect on the
incomes and quality of life of a people.

A Malthusian route is usually imagined where the diminishing capacity of
land (and resources -- the definition of which is poorly understood by
most) to sustain population is felt to be the cause of this influence of
population size on economic growth. Some even talk of the issue of social
investment being dissipated over a large population. Thinkers to whom it is
"obvious" that population size hampers economic progress, usually advocate
direct control of population through biological measures or even the
provision of economic incentives aimed at preventing poor people from
producing babies, as if bribing the poor to reduce family size were somehow
acceptable.

On the other side are some who claim that large population size enhances
economic prosperity. Long term correlations and theoretical constructs such
as Boserup's are usually used in such cases, relying on increasing returns
to scale and technological innovation. While there is intrinsic merit in
this view, empirically speaking, it has not been possible to establish any
consistent, long-term, cross-country relationship between population size
and the economic prosperity of nations. Higher population "leads to" higher
per capita income just as easily as it "leads to" lower per capita income.
These are essentially spurious relationships. Merely by looking at the size
of a population it is not possible to predict the state of the economy or
environment of a nation. In fact, population size is a non-issue in all
respects.

While a high population size per se does not pose a problem by itself, a
population that is badly managed and becomes poor -- no matter what its
size, is definitely problematic.

The 'causal' route
We need to understand why children are demanded at the household level if
we are to try to project a relationship between population and growth.
There are some people who deny the ability to choose the number of children
wanted, to illiterate rural folk. It is thought that these feeble humans
reproduce ceaselessly and unthinkingly. But such an argument is easily
refuted both theoretically and empirically and we do not dwell on it here,
and take as given that even the poorest household consciously chooses the
number of children to have, at the margin. But note that without the
assurance of long-term survival of offspring, pure rabbit-like behavior
makes eminent sense, since throughout pre-modern human history barely two
children per family have survived into adulthood despite producing an
average of seven. Limiting behavior becomes meaningful iwhen mortality of
children declines. The public health revolution then underlies limiting
behaviour.

Since children cost time and money to build, parents seek to have no more
children than they can afford in order to achieve their desired objectives.
Parents demand children not only for the joy that children give them when
young but also for the benefits (insurance, annuity) that parents might
derive from these children in their old age. Many studies show a very
close caring relationship between children and elderly parents even in the
western world. In the USA, a very "modern" society, less than 5% of the
elderly above the age 65 are institutionalized. The remaining either live
alone or get cared for by their children or friends and relatives. Given
survival, parents ask: should we have seven children, each with a low level
of education, or should we have two costly (more educated) children? The
only reason two children would be preferable is if the earnings of the two
educated children were guaranteed to be higher and/or less variable than
those of the seven ill-educated ones, and if the probability of getting
care in old age were not to decline significantly with increasing education.

It is here that past and current economic policies and environment come
into play. Economies that follow good policies have a track record of
growth which leads to stronger expectations of future returns from children
who are educated. Stagnant economies do the reverse. This is the pathway
from economic policy to population growth. Good economic policy also opens
more capital and insurance markets which leads to diversification of the
portfolio through savings, thus further reducing demand for children.

India's population
Societies such as Thailand, India, China and others, where norms of filial
care are deeply embedded in the psyche of the people, are best placed to
achieve lower population growth if child mortality is lowered and good
economic policies put into place. Indeed, Thailand is an excellent example
where good economic and family planning policies have led to rapid decline
in birth rates, which in turn has further reinforced its already strong
economic performance. Even China's population performance owes a lions'
share of population decline to low child mortality and rapid economic growth.

I now make some general predictions about  India's future population, based
on fifty years of shoddy economic and other policies. First, child
mortality is still very high. Second, barriers to trade and poor supply of
public goods leads to weak economic opportunity;  consequently our
half-educated youth are found mostly unemployed or ill-employed: therefore,
poor parents in rural areas conclude that it is a waste of effort to
educate fewer children. Third, entrepreneurship is actively discouraged  in
India and those who venture into self-employment are bogged into an
extremely corrupt and bureaucratic quagmire. Given these facts, our rural
and urban poor have no option but to have more children, each with low
levels of education, in order that they can be looked after by at least a
few surviving offspring in their old age. The prediction one can make about
India is stark: India will continue to wallow in the dual disaster of low
economic growth and high population growth. Alternatively, India could have
had upto 40 crore less people, with much higher standard of living, had we
followed good economic policies and good governance.

	The way out? There is no magic wand available. The key is to raise
expectations of parents residing in remote rural hamlets about the future
income of their children, to a much higher level. That means dismantling
our socialist system, reforming our corrupt electoral-political system,
providing better public goods, cutting subsidies while caring directly and
only for the very poor. Family planning and welfare by itself does not
possess any power to influence the decision of the number of children to
have. It comes into play only after that decision is made. Good, clean
governance is the only "remedy," since it alone deals with the underlying
cause of demand.

In the end, one must reaffirm and reiterate a key message for India's
policy makers at the highest level: high population size or rapid
population growth per se was never the cause of the bad economic outcomes
that stare in our face today. It is the consequence thereof.




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