Demographic dividend and poverty: India v. China

Nandan Nilekani is one of the more prominent voices that are all gung-ho about India's demographic dividend and that "it will be the only young country in an aging world."  There is no doubt that India will be one young country in an aging world, but will that deliver the economic dividend?

Consider the population projection first:

There is no doubt about China's population projection, is there?  That is a country where total fertility rate has fallen so much below the replacement level that it is looking at a potential rapid depopulation in the second half of this century.
India, on the other hand, is projected to increase by another half a billion people before its population stabilizes.  Most of this growth will happen in the northern Indian states--Southern India is a completely different demographic and economic story.
But, despite all the difference between the south and the north, the reality is that it will be one single India that will have to deal with the population increase.
Nilekani seems to be confident that this is when India's economic growth will accelerate like crazy--because of all the surplus labor.

I am not anywhere near that level of confidence that Nilekani has because of the sheer magnitude of poverty in India, which has been growing in numbers, though slightly decreasing as a percentage:

[The] number of poor people (defined as those living on less than $1.25 per capita per day at 2005 purchasing power parity) in South Asia increased from 549 million in 1981 to 595 million in 2005, and from 420 million to 455 million in India, where almost three-quarters of the region’s poor reside.
In other words, while South Asia’s economies have not underperformed on poverty reduction, merely matching global trends may not be enough for the region with the world’s largest concentration of poor people.

What ought to be done, then?

The paradox of South Asia is that growth has been instrumental in reducing poverty and improving social outcomes, but poverty rates and social outcomes have not improved fast enough to reduce the total number of people living in misery. As a result, policymakers should begin to consider direct policy interventions to accelerate social progress, with a particular focus on human development and gender inclusiveness.

And this is exactly why I fear that India will have a tough time tackling poverty while another half a billion is added: the politics in the form that is practiced in India precludes the kinds of direct policy interventions that are necessary.  Unless the politics changes, the demographic dividend cannot be realized. But, it doesn't look like politics will change there for the better.

The reality is then this:

India's failure to uplift its poor and improve the economy in rural areas—where two thirds of the country's 1.2 billion people live, mostly untouched by the boom—threatens the country's growth, economists say. India has so far relied on its services industry in cities to fuel growth. But the country is running out of skilled workers and its agricultural dwellers are ill-suited to fill the gap. India's success or failure in boosting the size of its middle class will determine the long-term attractiveness of the market to foreign investors.

I wish the demagogues in America will understand all these and stop bullshitting to Americans that we have to compete against India.  The more they engage in such demagoguery that more the typical American thinks that every other Indian attends one of those IITs and is some super-duper-scientist.  \

It ought to start with Professor Obama, who ought to know better than to convince Indiana workers that India is their competition!

Arguing that that was the reason why the U.S. had to “make sure that we win that competition,” he added, “I do not want the new breakthrough technologies and the new manufacturing taking place in China and India. I want all those new jobs right here in Indiana, right here in the U.S, with American workers, American know-how [and] American ingenuity.”

I suppose politics sucks anywhere!