The correlation between Population Growth and Economic Growth

So Since there is a lot of debate on more babies vs. economic growth, let's understand it in detail. While decoding the economy of a country, there are two aspects: one is the consumption side, and the other is the supply side.

1. Consumption:

In India, not everyone currently contributes to consumption; most of the country's consumption is driven by urban areas, and a significant portion of this consumption focuses on food and related items, which are often subsidized or sponsored. The theory that a declining population could harm the economy generally applies to countries where the majority of the population actively participates in consumption growth. In India, only around 30% of the population is involved in driving consumption, so a decrease in population would likely not have a significant impact on economic growth. Additionally, if simply having more people boosted consumption and thus economic growth, then Pakistan, with a higher fertility rate and faster population growth, would showcase robust economic performance—yet its economy tells a different story.

2. Supply Side:

A recent article in The Economist discussed why the UK’s economy has stagnated, citing stagnant productivity in the UK since the 2008 global recession. This lack of productivity growth has kept wages steady and economic growth nearly stagnant, even with substantial immigration to the UK during this period. This example demonstrates that even in fully industrialized societies, economic growth depends heavily on productivity and value addition. Without these, growth remains stagnant regardless of population size. Applying this to India, we see that most of the country's productivity and value addition come from urban areas, while productivity in rural areas remains low. This implies that even with a smaller population, economic growth hinges on productivity, not numbers. For example, in developed nations, older people often continue working, while in India, people often expect government pensions as early as age 45.

Please note : Views expressed in this article are strictly personal does not represent views of any organisation and isn't intended to hurt anyone sentiment, instead the article is purely a academic view point. Any suggestions and feedback are most welcome.