• OUTLOOK ARENA
  • VIEWS ON NEWS
  • MARCH 27, 2001

We’re a billion!

The exclamation mark is more to represent shock than the excitement with which the politicians are likely to greet this news. Probably, with our population crossing the one billion mark, we have created the biggest ‘tehelka’. But then, who is bothered?

We are unable to provide potable water to a significant portion of our population. Housing and food shortages plague over a third of the population. Thirty five percent of our population is still illiterate. Our per capita income is just over US$ 500 approximately, as a result of which living standards are among the lowest in the world… The list is endless. Yet, there seems to be no urgency on the part of the government to control this ‘menace’.

Consider this.

  • Rs 100 compounded @ 12% for ten years yields Rs 310.6.
  • Rs 100 compounded @ 10.5% for ten years yields Rs 271.4

In other words, option b is lower by 12.6%. Well, that’s the erosion that takes place after a decade in the per capita income of a person when the population grows by just 1.5 percent per annum. Using this same methodology let’s try to compute the actual loss in per capita income. The present per capita income is US$ 500 or Rs 23,000. Assume that India grows at a nominal rate of 12% (on the lower side but the absolute value will not affect our purpose) for the next ten years. At the end of this period the per capita income would have reached Rs 71,435, assuming, ofcourse, that the population remains stagnant. But that’s not the case. Now let’s factor in a 1.5% population growth rate. The per capita income at the end of ten years now works out to Rs 62,423 i.e. 12.6% lower than our no population growth estimate. This difference of Rs 9,000 is very significant. Extending this over a larger period of time would only make the difference more sharp, and the problem more acute.

Those in authority need to realise that there are more ways than one to make India an economic powerhouse. One ofcourse is the reform process initiated by the government to encourage the private sector to take lead in most sectors of the economy. The other option involves taking initiatives in the social sector, like controlling the growth in population.

Whether our politicians, a number of whom are guilty of contributing significantly to the growth in population, will be able to take this hard step is for anyone to guess. Maybe we need something of a Gulf crisis to trigger reforms in the social sector. Or maybe, the population explosion itself will do the trick. Either ways, almost surely, the population explosion will emerge as the greatest challenge to India… ever!

Copyright © Equitymaster Agora Research Private Limited. All rights reserved.
Any act of copying, reproducing or distributing this newsletter whether wholly or in part, for any purpose without the permission of Equitymaster is strictly prohibited and shall be deemed to be copyright infringement.

LEGAL DISCLAIMER: Equitymaster Agora Research Private Limited (Research Analyst) bearing Registration No. INH000000537 (hereinafter referred as 'Equitymaster') is an independent equity research Company. Equitymaster is not an Investment Adviser. Information herein should be regarded as a resource only and should be used at one's own risk. This is not an offer to sell or solicitation to buy any securities and Equitymaster will not be liable for any losses incurred or investment(s) made or decisions taken/or not taken based on the information provided herein. Information contained herein does not constitute investment advice or a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual subscribers. Before acting on any recommendation, subscribers should consider whether it is suitable for their particular circumstances and, if necessary, seek an independent professional advice. This is not directed for access or use by anyone in a country, especially, USA, Canada or the European Union countries, where such use or access is unlawful or which may subject Equitymaster or its affiliates to any registration or licensing requirement. All content and information is provided on an 'As Is' basis by Equitymaster. Information herein is believed to be reliable but Equitymaster does not warrant its completeness or accuracy and expressly disclaims all warranties and conditions of any kind, whether express or implied. Equitymaster may hold shares in the company/ies discussed herein. As a condition to accessing Equitymaster content and website, you agree to our Terms and Conditions of Use, available here. The performance data quoted represents past performance and does not guarantee future results.

SEBI (Research Analysts) Regulations 2014, Registration No. INH000000537.

Equitymaster Agora Research Private Limited (Research Analyst)
103, Regent Chambers, Above Status Restaurant, Nariman Point, Mumbai - 400 021. India.
Telephone: +91-22-61434055. Fax: +91-22-22028550. Email: info@equitymaster.com. Website: www.equitymaster.com. CIN:U74999MH2007PTC175407