Please Share:: 
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Strategy
GameChanger
Census 2011: More of the same. India’s latest decennial census puts numbers to
some well-known facts—a large growing population (though the pace of growth is
slowing), rising literacy (while employability is the bigger challenge), increase in
population density (putting greater stress on infrastructure demand) and an alarming
sex ratio. As the inaugural issue of GameChanger (‘365 mn’) asked exactly a year ago:
Can India live up to its demographic dividend?
Population, composition, comprehension and location
Provisional numbers released for Census 2011 show India’s population at 1.2 bn, up from 1.0 bn
Census Year (CY) 2000—by CY2025E, it is estimated that there will be 1.4 bn Indians. The next
0.2 bn Indians will come over the next 15 years as opposed to a decade for the last 0.2 bn, led by
a decline in fertility. India scores poorly (940 females for 1,000 males) on the sex ratio and even
more poorly in the youngest age bracket. Three in four Indians are now literate—their aspirations
for a better life will propel them to cities, adding to the already high density of Indian cities.
Population: Demographic dividend over the next two decades
As the pace of growth of population slows, India’s ‘baby boomer’ generation (those born in the
decades of 1990 and 2000) will start to come into the work force. As we pointed out in our
GameChanger report titled 365 mn, the increase in the number of people in the working age
range (15-59 years) will make the dependency ratio shrink dramatically. We calculate that 11 mn
to 13 mn people will actively look for employment opportunities every year for the next 15 years.
Composition: India’s shame
A marginal improvement in the sex ratio to 940 in CY2011 from 933 in CY2001 masks the fact
that the sex ratio in the 0-6 years range has fallen dramatically to 914 from 927 in CY2001 and
945 in CY1991. A fall in the sex ratio in the 0-6 age range can create significant social problems a
couple of decades down the line: India will have its own ‘bare-branches’ as in China, an army of
young men who find no women to marry them.
Comprehension: Three in four are literate – are they employable?
The Government’s focus on initiatives like Sarva Shiksha Abhiyaan (Universal Education Movement)
and mid-day meal schemes are resulting in a significant rise in literacy in India. It is doubtless a
noble goal in itself, but India’s newly educated face the challenge of employability. India’s big
focus needs to be on creating vocational skills. This will not only make the upcoming lot
employable but also upgrade the composition of India’s labor force, 85% of which works as
unorganized labor.
Location: Population density increasing
India in general and its cities in particular are witnessing a surge in population density, which is
only set to increase. India’s average of 382 people per sq. km hides regional variations, with Delhi
registering a population density of 11,297 people per sq km. An increase in urbanization is only to
be expected as the educated population moves to cities. The challenge will be to provide upgraded
infrastructure to meet their aspirations, we expect significant government investments in urban
infrastructure, even as the JNNURM scheme draws to a close.
Can India live up to its demographic dividend?
Sustained emphasis on vocational training and promoting large-scale mass manufacturing can lead
India to realize its demographic dividend. We will look for triggers there, rather than find deep
meaning in the numbers that reiterate the well-known story.
Understanding the broad numbers
Provisional numbers released for Census 2011 show India’s population at 1.2 bn, up from
1.0 bn Census Year (CY) 200—by CY2025E, it is estimated that there will be 1.4 bn Indians.
The next 0.2 bn Indians will come over the next 15 years as opposed to a decade for the last
0.2 bn led by a decline in fertility.
India scores poorly (940 females for 1,000 males) on sex ratio, especially in the youngest age
bracket. We note that there has been a marginal improvement in the sex ratio, which has
recovered from 933 in CY2001.
Three in four Indians are now literate, four in five males and two in three women are now
literate. Their aspirations for a better life will propel them to cities, adding to the alreadyhigh
density of Indian cities.
Extended de facto canvasser method
The Census of India is conducted once in a decade, following an extended de facto
canvasser method. Under this approach, data is collected from every individual by visiting
the household and canvassing the same questionnaire all over the country, over a period of
three weeks. The count is then updated to the reference date and time, by conducting a
Revision Round. In the Revision Round, any changes in the entries that arise on account of
births, deaths and migration between the time of the enumerators visit and the reference
date/time is noted down and the record updated.
In Censuses until 1931, a synchronous de facto method was adopted wherein the Census
was conducted throughout the country on a single night. This method, besides being costly,
required the deployment of an extremely large force of Census takers. This method was
given up in the 1941 Census and the present method adopted. In Census 2011, the
canvassing of the questionnaire was done from February 9, 2011 to February 28, 2011. A
Revision Round was then conducted from March 1 to March 5, 2011 and the count updated
to the Reference Moment of 00:00 hours on the March 1, 2011.
The rate of growth of India’s population has declined for the first time in more than half a
century. The decadal growth in the decade ending CY2011 has fallen to 17.7% from 21.5%
in the previous decade. Given the larger population base, though, the overall increase in the
population remains at 182 mn for both these decades.
India’s population is projected to increase to 1.4 bn by CY2025E. This will be led by
increasing life expectancy (more people will start living longer adding to the population).
This will be countered by a sharp drop in the fertility ratio which is expected to fall to 2.0 by
the end of the forecasting period from 2.9 at the turn of the century.
The United Nations has estimated that the world population grew at an annual rate of
1.23% during 2000-2010. China registered a much lower annual growth rate of population
(0.53%) during 2000-2010, as compared to India (1.64% during 2001-2011). In fact, the
growth rate of China is now the third lowest among the 10 most populous countries,
behind the Russian Federation and Japan and it is substantially lower than the US’s 0.7%.
With a definite slowing down of population growth in China, it is now estimated that by
2030, India will most likely overtake China to become the most populous country on the
earth with 17.9% of the world’s population. We note that population projections in India
have been reasonably accurate, with only a small margin of error.
Given the surge in the birth rate over the two decades of 1990s and 2000s (which is now
expected to slow down), India’s population pyramid is expected to change significantly over
the next two decades and India is expected to reap a demographic dividend.
We note that India’s dependency ratio is expected to fall to 0.56X in CY2026E from an
already low 0.66 in CY2006. This large change in the ratio will result from the coming-intoworking-
age of the millions born in the last two decades. The composition of the
dependency ratio will also change; as the birth rate begins to cool off and life expectancy
increases, the ratio will have more ‘old-dependents’ rather than ‘young-dependents’ by
CY2026E.
Composition: India’s shame
Nature has a preference for boys, reflected in the marginally higher number of boys being
born than girls in any society. As Dr Amartya Sen noted in his famous article “More Than
100 Million Women Are Missing”, at birth, boys outnumber girls by a ratio of around 1.05.
Converting that to the sex ratio used in India (which defines the number of females per
1,000 males), this number comes to around 952.
Countries like India, Pakistan and China are well-known to have a preference for boys. It is
known that there is wide-spread female infanticide in these countries, which skews their sex
ratio significantly from the nature-given average. We note that the significantly high
averages in countries like Russia and Japan reflect the longer life expectancy of women: the
sex ratio is skewed at the other end of the population pyramid.
India’s sex ratio improving marginally to 940 in CY2011 from 933 in CY2001 masks the fact
that the sex ratio in the age range of 0-6 years has deteriorated to 914 girls for 1,000 boys
in the current census, down from the already low 927 in the previous census. These
numbers will impact India’s demographic dividend over the next couple of decades as India’s
boys will not find enough girls to marry! China faces a similar problem (a one-child policy
with a preference for boys has been considered to be a death-knell for many female fetuses)
and this now shows up in its ‘bare branches’.
Comprehension: Three in four are literate but are they employable?
The government’s focus on initiatives like Sarva Shiksha Abhiyaan (Universal Education
Movement) and mid-day meal schemes are resulting in significant rise in literacy in India.
Four out of five males and two out of three females are now literate, taking India’s literacy
rate to three in four, a marked improvement from less than one in three Indians being
literate around the time of Independence
State-wise statistics: Several India within India
India, as is well-known, is not homogenous. As discussed in the section on population
density there are wide inter-state differences. In the next exhibit, we list the challenges for
India: we order the states by total population and look at the various parameters of sex ratio,
population growth rate, population density and literacy. We highlight states which are
worse off than the national averages on these parameters.
Larger states like Uttar Pradesh, Bihar, Madhya Pradesh and Rajasthan are struggling to get
their sex ratio and literacy right, even as they see higher-than-average population growth.
The states of Haryana, Jammu and Kashmir, Maharashtra and Punjab, along with the abovementioned
states face a serious shortfall in the female population. Interestingly, the
southern states of Andhra Pradesh, Karnataka, Kerala and Tamil Nadu score highly on these
parameters (except Andhra struggling on literacy).
We note that the demographic dividend will come from the northern and the eastern states
of the country (the more impoverished a place, the higher the fertility ratio there so as to
give more children a chance to survive into adulthood).
Can India live up to its demographic dividend?
With more Indians than the total current population of the United States poised to enter the
workforce over the next 25 years, India faces the daunting prospect of proving employment
to these job-seekers. The northern and eastern belt—Uttar Pradesh, Bihar, Rajasthan,
Madhya Pradesh and West Bengal—will produce more than half of this ‘new’ population.
In the absence of a significant overhaul of the employment infrastructure, India’s historical
pace and profile of employment generation is unlikely to absorb the demanding dividend.
This gap is likely to be exacerbated by the demands of an increasingly literate work force
with rising aspirations. India has created ~6.5-7.0 mn employment opportunities per year
over the past quarter century, starting now, it will need to create 11-13 mn employment
opportunities every year.
We see a dearth of employment opportunities for a newly educated India as a key risk to
India’s demographic dividend. Investors awaiting the demographic dividend would do well
to track trends in organized job creation—these need to be of the right type, at the right
time and in the right place given that migration and wealth disparity are big concerns
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Strategy
GameChanger
Census 2011: More of the same. India’s latest decennial census puts numbers to
some well-known facts—a large growing population (though the pace of growth is
slowing), rising literacy (while employability is the bigger challenge), increase in
population density (putting greater stress on infrastructure demand) and an alarming
sex ratio. As the inaugural issue of GameChanger (‘365 mn’) asked exactly a year ago:
Can India live up to its demographic dividend?
Population, composition, comprehension and location
Provisional numbers released for Census 2011 show India’s population at 1.2 bn, up from 1.0 bn
Census Year (CY) 2000—by CY2025E, it is estimated that there will be 1.4 bn Indians. The next
0.2 bn Indians will come over the next 15 years as opposed to a decade for the last 0.2 bn, led by
a decline in fertility. India scores poorly (940 females for 1,000 males) on the sex ratio and even
more poorly in the youngest age bracket. Three in four Indians are now literate—their aspirations
for a better life will propel them to cities, adding to the already high density of Indian cities.
Population: Demographic dividend over the next two decades
As the pace of growth of population slows, India’s ‘baby boomer’ generation (those born in the
decades of 1990 and 2000) will start to come into the work force. As we pointed out in our
GameChanger report titled 365 mn, the increase in the number of people in the working age
range (15-59 years) will make the dependency ratio shrink dramatically. We calculate that 11 mn
to 13 mn people will actively look for employment opportunities every year for the next 15 years.
Composition: India’s shame
A marginal improvement in the sex ratio to 940 in CY2011 from 933 in CY2001 masks the fact
that the sex ratio in the 0-6 years range has fallen dramatically to 914 from 927 in CY2001 and
945 in CY1991. A fall in the sex ratio in the 0-6 age range can create significant social problems a
couple of decades down the line: India will have its own ‘bare-branches’ as in China, an army of
young men who find no women to marry them.
Comprehension: Three in four are literate – are they employable?
The Government’s focus on initiatives like Sarva Shiksha Abhiyaan (Universal Education Movement)
and mid-day meal schemes are resulting in a significant rise in literacy in India. It is doubtless a
noble goal in itself, but India’s newly educated face the challenge of employability. India’s big
focus needs to be on creating vocational skills. This will not only make the upcoming lot
employable but also upgrade the composition of India’s labor force, 85% of which works as
unorganized labor.
Location: Population density increasing
India in general and its cities in particular are witnessing a surge in population density, which is
only set to increase. India’s average of 382 people per sq. km hides regional variations, with Delhi
registering a population density of 11,297 people per sq km. An increase in urbanization is only to
be expected as the educated population moves to cities. The challenge will be to provide upgraded
infrastructure to meet their aspirations, we expect significant government investments in urban
infrastructure, even as the JNNURM scheme draws to a close.
Can India live up to its demographic dividend?
Sustained emphasis on vocational training and promoting large-scale mass manufacturing can lead
India to realize its demographic dividend. We will look for triggers there, rather than find deep
meaning in the numbers that reiterate the well-known story.
Understanding the broad numbers
Provisional numbers released for Census 2011 show India’s population at 1.2 bn, up from
1.0 bn Census Year (CY) 200—by CY2025E, it is estimated that there will be 1.4 bn Indians.
The next 0.2 bn Indians will come over the next 15 years as opposed to a decade for the last
0.2 bn led by a decline in fertility.
India scores poorly (940 females for 1,000 males) on sex ratio, especially in the youngest age
bracket. We note that there has been a marginal improvement in the sex ratio, which has
recovered from 933 in CY2001.
Three in four Indians are now literate, four in five males and two in three women are now
literate. Their aspirations for a better life will propel them to cities, adding to the alreadyhigh
density of Indian cities.
Extended de facto canvasser method
The Census of India is conducted once in a decade, following an extended de facto
canvasser method. Under this approach, data is collected from every individual by visiting
the household and canvassing the same questionnaire all over the country, over a period of
three weeks. The count is then updated to the reference date and time, by conducting a
Revision Round. In the Revision Round, any changes in the entries that arise on account of
births, deaths and migration between the time of the enumerators visit and the reference
date/time is noted down and the record updated.
In Censuses until 1931, a synchronous de facto method was adopted wherein the Census
was conducted throughout the country on a single night. This method, besides being costly,
required the deployment of an extremely large force of Census takers. This method was
given up in the 1941 Census and the present method adopted. In Census 2011, the
canvassing of the questionnaire was done from February 9, 2011 to February 28, 2011. A
Revision Round was then conducted from March 1 to March 5, 2011 and the count updated
to the Reference Moment of 00:00 hours on the March 1, 2011.
The rate of growth of India’s population has declined for the first time in more than half a
century. The decadal growth in the decade ending CY2011 has fallen to 17.7% from 21.5%
in the previous decade. Given the larger population base, though, the overall increase in the
population remains at 182 mn for both these decades.
India’s population is projected to increase to 1.4 bn by CY2025E. This will be led by
increasing life expectancy (more people will start living longer adding to the population).
This will be countered by a sharp drop in the fertility ratio which is expected to fall to 2.0 by
the end of the forecasting period from 2.9 at the turn of the century.
The United Nations has estimated that the world population grew at an annual rate of
1.23% during 2000-2010. China registered a much lower annual growth rate of population
(0.53%) during 2000-2010, as compared to India (1.64% during 2001-2011). In fact, the
growth rate of China is now the third lowest among the 10 most populous countries,
behind the Russian Federation and Japan and it is substantially lower than the US’s 0.7%.
With a definite slowing down of population growth in China, it is now estimated that by
2030, India will most likely overtake China to become the most populous country on the
earth with 17.9% of the world’s population. We note that population projections in India
have been reasonably accurate, with only a small margin of error.
Given the surge in the birth rate over the two decades of 1990s and 2000s (which is now
expected to slow down), India’s population pyramid is expected to change significantly over
the next two decades and India is expected to reap a demographic dividend.
We note that India’s dependency ratio is expected to fall to 0.56X in CY2026E from an
already low 0.66 in CY2006. This large change in the ratio will result from the coming-intoworking-
age of the millions born in the last two decades. The composition of the
dependency ratio will also change; as the birth rate begins to cool off and life expectancy
increases, the ratio will have more ‘old-dependents’ rather than ‘young-dependents’ by
CY2026E.
Composition: India’s shame
Nature has a preference for boys, reflected in the marginally higher number of boys being
born than girls in any society. As Dr Amartya Sen noted in his famous article “More Than
100 Million Women Are Missing”, at birth, boys outnumber girls by a ratio of around 1.05.
Converting that to the sex ratio used in India (which defines the number of females per
1,000 males), this number comes to around 952.
Countries like India, Pakistan and China are well-known to have a preference for boys. It is
known that there is wide-spread female infanticide in these countries, which skews their sex
ratio significantly from the nature-given average. We note that the significantly high
averages in countries like Russia and Japan reflect the longer life expectancy of women: the
sex ratio is skewed at the other end of the population pyramid.
India’s sex ratio improving marginally to 940 in CY2011 from 933 in CY2001 masks the fact
that the sex ratio in the age range of 0-6 years has deteriorated to 914 girls for 1,000 boys
in the current census, down from the already low 927 in the previous census. These
numbers will impact India’s demographic dividend over the next couple of decades as India’s
boys will not find enough girls to marry! China faces a similar problem (a one-child policy
with a preference for boys has been considered to be a death-knell for many female fetuses)
and this now shows up in its ‘bare branches’.
Comprehension: Three in four are literate but are they employable?
The government’s focus on initiatives like Sarva Shiksha Abhiyaan (Universal Education
Movement) and mid-day meal schemes are resulting in significant rise in literacy in India.
Four out of five males and two out of three females are now literate, taking India’s literacy
rate to three in four, a marked improvement from less than one in three Indians being
literate around the time of Independence
State-wise statistics: Several India within India
India, as is well-known, is not homogenous. As discussed in the section on population
density there are wide inter-state differences. In the next exhibit, we list the challenges for
India: we order the states by total population and look at the various parameters of sex ratio,
population growth rate, population density and literacy. We highlight states which are
worse off than the national averages on these parameters.
Larger states like Uttar Pradesh, Bihar, Madhya Pradesh and Rajasthan are struggling to get
their sex ratio and literacy right, even as they see higher-than-average population growth.
The states of Haryana, Jammu and Kashmir, Maharashtra and Punjab, along with the abovementioned
states face a serious shortfall in the female population. Interestingly, the
southern states of Andhra Pradesh, Karnataka, Kerala and Tamil Nadu score highly on these
parameters (except Andhra struggling on literacy).
We note that the demographic dividend will come from the northern and the eastern states
of the country (the more impoverished a place, the higher the fertility ratio there so as to
give more children a chance to survive into adulthood).
Can India live up to its demographic dividend?
With more Indians than the total current population of the United States poised to enter the
workforce over the next 25 years, India faces the daunting prospect of proving employment
to these job-seekers. The northern and eastern belt—Uttar Pradesh, Bihar, Rajasthan,
Madhya Pradesh and West Bengal—will produce more than half of this ‘new’ population.
In the absence of a significant overhaul of the employment infrastructure, India’s historical
pace and profile of employment generation is unlikely to absorb the demanding dividend.
This gap is likely to be exacerbated by the demands of an increasingly literate work force
with rising aspirations. India has created ~6.5-7.0 mn employment opportunities per year
over the past quarter century, starting now, it will need to create 11-13 mn employment
opportunities every year.
We see a dearth of employment opportunities for a newly educated India as a key risk to
India’s demographic dividend. Investors awaiting the demographic dividend would do well
to track trends in organized job creation—these need to be of the right type, at the right
time and in the right place given that migration and wealth disparity are big concerns
No comments:
Post a Comment