The United Nations Population Fund (UNFPA) report and International Institute for Population Sciences (IIPS) Mumbai recently released the 2023 Ageing Report, which reports that India's elderly population (above 60 years) will double to over 20 percent of its total population by 2050. Given the delimitation exercise (which decides the Lok Sabha constituencies) and the tax transfer devolution by the Finance Commission to the States are based on the population dynamics, the South Indian governments which controlled the population are in a state of shock regarding the socio-economic and political consequences arising out of these public policy imperatives. 

 

The Latest Data on Population Dynamics: What do the numbers say?

 

The latest data on population dynamics revealed that the elderly population in the southern states— Kerala, Karnataka, Tamil Nadu, Andhra Pradesh, and Telangana— is likely to rise by 6-7 percent of its total population between 2021 and 2036, as compared to states like Uttar Pradesh, Bihar, Rajasthan, where the rise will be around 3-4 percent. In addition to these facts, the report also highlighted the declining fertility in South Indian States.  In India, the total fertility rate is at 2.0 per woman. But the 2020 data from Sample Registration System (SRS) shows that the fertility rate in Kerala, Andhra Pradesh, and Telangana was at 1.5, while in Karnataka it was 1.6, and in 1.4 in Tamil Nadu. 

 

The Fiscal Costs of Population Dynamics

 

The fiscal costs of population dynamics include the social security measures, pensions and rising health expenditure. Also, the Finance Commission determines the intergovernmental fiscal transfers based on a scientific formula, where population is given a significant weightage. The 15th Finance Commission has designed the tax transfer formula with 45% for the income distance, 15% for the population in 2011, 15% for the area, 10% for forest and ecology, 12.5% for demographic performance, and 2.5% for tax effort. A recent by NIPFP( independent institute of Ministry of Finance, Govt of India) working paper written by Yadawendra Singh and Lekha Chakraborty calls for integrating the elderly population in the tax transfer formula to take care of the changing population dynamics. 

 

The Fear for “Fiscal Austerity” measures

 

The declining inter-State share to the States where population is relatively lower has started affecting the fiscal space of these States. The volatility in the intergovernmental fiscal transfers constrains the fiscal space of States. This can in turn lead to “fiscal austerity” measures in these States by staggering the salaries, curtailing pensions and also through public expenditure cuts in welfare programmes.  

 

The delimitation exercise 

 

There is also fear over delimitation. Since 1947, the population growth in India has not been homogeneous across States – there are populous States and non-populous States.  This uneven growth of population across different administrative units need a relook given the demographic transition. Articles 82 and 170 (3) of the Constitution stipulate that a delimitation exercise should occur every 10 years in concomitant with a decennial population census. However, as the population control has been “uneven” across India, this exercise should not harm the States which have controlled the population over the years. 

 

The Way Ahead

 

The South Indian ministers including Andhra CM Chandrababu Naidu and Tamil Nadu Minister Stalin raised concerns over this, asking “more children is the solution?” Will the women with less than two kids be incentivised to go for more children? Ofcourse not. The State through the public policies do not have any say over women’s “bodily integrity” asking to favour pro-natalist policies.  It is to be noted that there are countries with “baby boom” fiscal policies incentivising women to have more children. However, such policies can turn out to be blatantly patriarchal in the context of India, given the dual burden – both the care economy and the market economy - of women in the Indian economy.

 

If the public policies – especially the decision of fund transfer to the States – is based on population, South Indian States are bound to be mistreated as they have effectively controlled the population over time through better education and empowerment of women.  Therefore a relook into the tax transfer formula is imminent. The 16th Finance Commission has a huge role to play in deciding the criteria of tax transfers and the weights to be assigned to the identified criteria, so that South Indian States are not penalised for better performance.  

 

The delimitation exercise after the next Population Census will therefore be a matter of concern. Increasing the Lok Sabha seats proportionally and equal share of Rajya Sabha seats may be a partial solution to this, which require further debates and discussions.