For the last several years, much has been said about India’s demographic dividend, in which a large fraction of the country’s massive population was young. This was thought to be a net positive for the economy, as these young people could then contribute positively towards economic growth. But these assumptions might need to be tested in the AI era.
PineLabs CEO Amrish Rau has said that having a large population could once again be a problem with the advent of AI. “25 years back, large population was a problem. 10 years back large population was a positive dividend. AI will make large population a problem again,” he posted on X.
It’s a perceptive observation. In the 1990s, India’s massive population was thought to be a serious problem, and the government took measures to control it, running ads to get people to limit the number of children they had. This seemed to bear results, and India’s Total Fertility Rate (TFR), or the number of children each woman had, came down to replacements levels of 2.1. With its population growth controlled, experts began to tout how a much larger percentage of India’s population was young, and could thus be used to generate economic growth. In contrast, economics in the West and places like South Korea and Japan were aging, putting the burden of generating value on a smaller and smaller fraction of their overall population.
AI, though, could change all this. Advancements in AI mean that computers can now write code, make illustrations, read legal briefs, diagnose diseases and write IPO paperwork much faster than humans, and for nearly free. This could lead to white-collar and knowledge jobs being severely impacted in the coming years — what earlier took a team of 10 to do can now likely be done with a team of just 1 person armed with AI. As such, at least in the short term, there could be large job cuts in such sectors, where human workers are replaced with AI.
This could hit India particularly hard. India has a young population that is anyway struggling to find jobs, and AI could wipe out many of the white-collar jobs that are still available. India has a large workforce employed in IT services, call centers, knowledge work and the like, many of these sectors could see layoffs. With AI being able to do many of the jobs that were previously done by humans, a large population could once again be a burden, and countries with large populations could grapple with the problem of how to productively employ their young citizens. These issues are already beginning to appear on India’s horizon, and it would take all the ingenuity India’s government and regulators to address them.