The consequences of declining fertility are many

Source: The post is based on an article “The consequences of declining fertility are many” published in The Hindu on 17^th September 2022.

Syllabus: GS 1 – Population and Associated issues

News: According to the World Population Prospects 2022, the average number of children per woman in the reproductive age group has declined by 50%.

This has changed from an average of five children per woman in 1951 to 2.4 children in 2020.

What has led to decline of in the global fertility rate?

Poorer countries have speeded the reduction in fertility rate faster than the richer countries.

According to the World Population Prospectus, the global fertility rate fell from three in 1990 to 2.3 in 2021.

Most advanced economies have their fertility rate below the replacement rate of 2.1 with South Korea has the lowest at 1.05 children per woman.

What is the situation of India in the fertility rate?

India’s fertility rate was 6 per woman at the time of independence.

It further declined to 4 in the 1990s. Kerala became the first State in India to have a fertility rate below replacement level.

According to the latest National Family Health Survey (NFHS) of 2021 –

2. Fertility rate has fallen below the replacement level for the first time to 2.0 in 2021.
3. Only five States have a fertility rate above the replacement rate. They are Bihar, Meghalaya, Uttar Pradesh, Jharkhand, and Manipur.

The fall in the fertility rate has been caused due to increased use of contraception, more years of average schooling, better health care, and an increase in the mean marriage age of women.

However, there are many positive and negative aspects of the declining fertility rate on the nation’s economy.

What are the advantages and disadvantages of the declining fertility rate on the nation’s economy?

Advantages

Income: Lower fertility rate improves the employment rate of the workforce which increases their income. Lower fertility helps in the increase in the ratio of the working-age population.

This high ratio of workforce boosts income, investment and savings due to lower dependence.

Education: Lower fertility rate improves women’s education and lowers the fertility rate of future generations.

Resources: Lower fertility rate will also lead to lower pressure on land, water and other resources and would also contribute to achieving environmental goals.

Public finance: A lower fertility rate will also have a positive impact on public finance. It will lead to a fall in government debt due to lower savings of households and corporates with the increase in the higher dependency.

This will lead the government to have surplus than going in to the deficit.

Inflation: A falling fertility rate will have a positive effect on inflation. There will be lower labour supply with increase in the salary. This will lead to the change in unemployment inflation trade-off.

However, there are other problems associated with the declining fertility rate.

Disadvantages

Japan became the first country to experience the consequences of declining fertility rate.

For example, there has been increase in the dependency ratio in the Japan. This has led to near zero GDP growth since the 1990s and Japan is facing fiscal challenges to meet rising social security costs.

It will have a negative effect on the proportion of the working population. This will affect output in the economy.

An ageing population will also affect global interest rates negatively as the share of people over 50 years will be almost 40% of the population by 2100.

It could also diminish the creative capacity of humankind.

What can be the further course of action?

The labour laws should be reformed with flexibility for workers. This would encourage working women to have more children and non-working mothers to enter the labour market.

For example –

1. Germany found success in boosting births through liberal labour laws, allowing more parental leave and benefits.
2. Denmark offers state-funded IVF for women below 40 years, and Hungary recently nationalised IVF clinics.

Further, with labour reforms focus should also be on nutrition and health of the workers. This would ensure sustained labour supply and output despite lower fertility.