As fertility rates in southern India continue to fall below the national average, chief ministers like Andhra Pradesh’s Chandrababu Naidu and Tamil Nadu’s M.K. Stalin are sounding the alarm about an impending demographic crisis.
Naidu has proposed incentives for larger families, going so far as to suggest a law that would restrict local body election candidacy to those with more than two children. Stalin, concerned about the South’s potential loss of parliamentary seats due to its slower population growth, quipped sardonically, “Why not aim for 16 children?”
Despite their differing political affiliations, both leaders share growing concerns about the long-term economic and political ramifications of these population trends.
Declining fertility rates in southern states pose multiple risks: shrinking workforces, slower economic growth and reduced political representation in parliament. As northern states grow, the South may lose parliamentary seats in the 2026 delimitation exercise. Moreover, an ageing population in states like Tamil Nadu and Andhra Pradesh could strain public finances, with fewer working-age individuals supporting a growing elderly population.
Given that Union tax allocations are heavily influenced by population size, this demographic shift might lead to a redistribution of resources. Ironically, southern states – already net contributors to the central pool – could end up receiving even less in return.
Demographic divergence within India
India’s population is growing rapidly. On April 19, 2023, the United Nations announced that India (142.86 crore) overtook neighbouring China (142.57 crore) to become the world’s most populous nation. However, according to the World Population Review, this milestone was actually reached a few months earlier.
Chart 1
This growth, however, has been significantly skewed across the country. Population census data reveals that north Indian states have experienced a much higher growth rate compared to their southern counterparts.
As can be seen in Chart 1, in between the 1971 and 2011 censuses, the combined population of Rajasthan, Bihar, Uttar Pradesh, Haryana, Madhya Pradesh and Gujarat in the North grew by over 150%. In contrast, the southern states of Kerala, Tamil Nadu, Andhra Pradesh, Telangana and Karnataka saw growth below 100% during the same period.
This southern growth rate fell well below the national average of 121%.
Total fertility rate (TFR) is one metric that helps explain broader population growth dynamics. TFR refers to the average number of children a woman is expected to have over her lifetime. A TFR of 2.1 is considered the replacement level, meaning that a population will remain stable without growing or shrinking if the TFR stays here.
The Report of the Technical Group on Population Projections 2011-2036, prepared under the aegis of the National Commission on Population and the Ministry of Health and Family Welfare, provides insights into the fertility trends across Indian states, particularly highlighting the stark differences between South Indian and North Indian states.
Chart 2
As can be seen in Chart 2, the overall fertility rates in South India have consistently dropped below the replacement level of 2.1 and are projected to remain low through 2035. All southern states show fertility rates below 1.6 by 2031-35.
North Indian states, on the other hand, have significantly higher TFRs than their southern counterparts, though fertility rates are declining over time. States like Bihar and Uttar Pradesh will maintain above-replacement-level fertility for the next decade or more, contributing to continued population growth.
Median age is another metric that provides insight into the demographic ageing trends between South Indian and North Indian states. The median age is the age at which half the population is younger and the other half is older. A higher median age indicates an ageing population, while a lower median age suggests a younger, growing population.
Chart 3
As can be seen from Chart 3, all southern states are projected to have median ages above 37 years by 2036, with some (like Tamil Nadu and Kerala) crossing 40 years. This shows that southern India is ageing rapidly, largely due to lower fertility rates and longer life expectancy.
In contrast, northern Indian states like Uttar Pradesh, Bihar and Madhya Pradesh are projected to have younger populations even by 2036, with median ages between 28 and 32 years.
Economic fallout
What does all this mean?
As Naidu pointed out, there will be severe and immediate economic implications.
Southern states like Tamil Nadu, Kerala and Andhra Pradesh have TFRs well below the replacement level of 2.1, with projections showing TFRs stabilising around 1.5 by 2036. As a result, these states will experience shrinking populations and rapid ageing.
This demographic shift means fewer young people entering the workforce, leading to labour shortages, declining productivity and a higher dependency ratio as the elderly population grows.
The increased burden on social services like healthcare and pensions could strain state finances, while the shrinking consumer base may slow economic growth.
In contrast, northern states like Uttar Pradesh, Bihar and Madhya Pradesh have higher TFRs (ranging from 1.85 to 2.38), indicating continued population growth and younger populations. The projected median ages in these states will provide a potential demographic dividend with a large working-age population.
However, this also presents a challenge: northern states must create sufficient jobs and invest in education and skill development to prevent high unemployment and social unrest.
Chart 4
In fact, high dependency ratios in southern states signal an impending economic strain due to a shrinking workforce and rising social care needs. On the other hand, northern states like Uttar Pradesh and Bihar will need to focus on youth employment as their working-age population grows.
Political fallout
Going beyond the economic concern raised by Naidu, who is part of the NDA, Stalin, who is part of the opposition INDIA bloc, has taken a step further by raising serious political concerns.
The immediate political implication of this demographic challenge is electoral.
Simply put, due to divergent and uneven population growth, South Indian states stand to lose parliamentary seats in the next delimitation exercise. This issue was highlighted in Milan Vaishnav and Jamie Hinston’s 2019 report titled “India’s Emerging Crisis of Representation”.
Chart 5
According to Chart 5, India’s population is projected to grow by 31.1 crore between 2011 and 2036. Six North and West Indian states – Uttar Pradesh, Bihar, Madhya Pradesh, Maharashtra, Rajasthan and Gujarat – will account for a remarkable 63.8% of this growth.
Typically, parliamentary and legislative seats are allocated based on population. States with larger populations receive more seats, ensuring that each representative serves a constituency of roughly equal size.
Delimitation aims to create constituencies with equal or nearly equal populations. This is crucial for fair representation, as population disparities between constituencies would result in unequal voting power among citizens.
Following India’s independence, delimitation exercises were conducted regularly after each decennial census to adjust constituency boundaries according to population changes. The constitution mandates that Lok Sabha seats be allocated to each state based on their population, with these allocations revised after every census.
During the Emergency in 1976, the Indian government froze the number of Lok Sabha seats per state until 2001, based on the 1971 census figures. This freeze was implemented to protect states that had successfully reduced their population growth rates through family planning from losing seats to states with higher population growth.
In 2001, the freeze on seat allocation was extended to 2026. This ensured that no state would gain or lose parliamentary seats based on population growth until after the 2026 census, maintaining stable representation for states that had controlled population growth.
The seat freeze based on the 1971 population count has led to malapportionment in parliament. Some states, particularly in the North, have experienced significant population growth, yet their number of seats remain unchanged. Conversely, southern states, which have controlled their population growth, currently hold a larger share of seats relative to their population size.
After 2026, the seat allocation freeze will be lifted and parliamentary seats will be redistributed based on the most recent population data (likely from the 2011 census, unless the Union government conducts a census in 2025).
States with higher population growth, especially in the North (such as Uttar Pradesh, Bihar and Rajasthan), are expected to gain seats, while Southern states (like Kerala, Tamil Nadu and Andhra Pradesh) may lose seats due to their slower population growth.
The political implications of this redistribution, as raised by Stalin, are significant. The reallocation of seats post-2026 will likely shift political power from southern to northern states, as the latter gain more seats in the Lok Sabha.
The key question remains: how many seats will be affected? According to Vaishnav and Hinston, the five southern states combined stand to lose 26 parliamentary seats in the 2026 delimitation.
Chart 6
As Chart 6 reveals, in contrast, northern states, particularly Uttar Pradesh and Bihar, are projected to gain a combined 21 seats in the Lok Sabha, substantially increasing their influence. Additionally, Madhya Pradesh and Rajasthan are set to gain four and six seats respectively, further tilting the balance towards the North.
Currently, the five South Indian states have a combined total of 134 seats in the Lok Sabha, representing 24.6% of the total 543 seats. This gives these states a substantial voice in legislative matters, including constitutional amendments that require a two-thirds majority.
However, after the 2026 delimitation, their combined total could drop to approximately 108 seats or fewer.
This reduction means that if the southern states’ representation falls to around 108 MPs or less, their ability to influence constitutional amendments will be significantly diminished. Even if all southern MPs vote as a bloc, they would only have about 20% of the total seats, well short of the 33% needed to block a two-thirds majority.
Consequently, if an amendment is strongly supported by northern states – which will have gained political clout due to increased representation – the southern bloc could be overpowered in the Lok Sabha, effectively rendering them politically impotent on crucial constitutional matters.
This shift could lead to federal tensions, as southern states may feel increasingly marginalised and underrepresented in national decision-making processes. Their concerns regarding resource allocation, representation and policy priorities could be sidelined by the more populous northern states.
As Vaishnav and Hinston aptly put it, “If federalism is the glue that has kept the world’s largest democracy together, there are growing signs that this adhesive is becoming unstuck.”
Financial fallout
In India’s current economic structure, population size significantly influences the allocation of central funds, directly impacting states’ financial health. This financial dynamic can be better understood by examining the 15th Finance Commission’s recommendations, the role of cess and surcharges, and the distribution of central transfers among states.
The Finance Commission employs several criteria to allocate central tax revenues to states, with population size being a crucial factor. The 15th Finance Commission has assigned a 15% weightage to the 2011 population and an additional 12.5% to demographic performance, rewarding states that have lowered their fertility rates.
However, southern states with slower population growth receive lower allocations compared to northern states with higher population growth. Consequently, northern states with larger populations are set to receive a greater share of central tax revenues.
Cess and surcharges are Union government levies not shared with states. These levies constitute a growing portion of the government’s tax revenues, reducing the divisible pool of taxes transferable to states. Currently, 18% of all Union government taxes are in the form of cess and surcharges.
Southern states, being more developed and significant contributors to the nation’s tax base, argue that the increasing cess and surcharge collections have diminished their available funds.
Chart 7
Chart 7 reveals a stark contrast between South and North Indian states regarding their returns from the central divisible pool. The five southern states as well as Maharashtra receive significantly less than they contribute. Their returns range from a mere Rs 0.08 (Maharashtra) to Rs 0.62 (Kerala) for every Re 1 contributed.
This disparity underscores that these economically advanced states, while being net contributors to the central pool, receive disproportionately lower returns – a situation that could potentially breed discontent over resource allocation.
On the flip side, northern states like Bihar, Uttar Pradesh, Madhya Pradesh and Rajasthan are net recipients, gaining far more than they contribute. Bihar, for instance, receives a whopping Rs 7.26 for every Re 1 it contributes, while Uttar Pradesh and Madhya Pradesh receive Rs 2.49 and Rs 2.09 respectively.
These states, with their larger populations and greater developmental needs, benefit from the population-based resource allocation, securing much larger shares of central funds.
This glaring contrast highlights the growing fiscal imbalance between North and South India: southern states contribute more but receive far less in return, while northern states heavily rely on central support for their development.
Chart 8
Chart 8 reveals that southern states like Tamil Nadu (18.7%), Karnataka (17.7%) and Telangana (14.1%), and Maharashtra (17.8%) rely far less on central devolution compared to their own tax revenues. These states generate substantial tax revenue independently and receive a smaller proportion of their total tax income from the central pool, demonstrating their relative fiscal self-sufficiency.
Maharashtra, for instance, despite being the largest contributor to the central pool, receives only 17.8% of its total revenue from central funds – underscoring its role as a net contributor rather than a recipient.
In stark contrast, North Indian states such as Bihar, Madhya Pradesh and Uttar Pradesh heavily depend on the Union government’s divisible pool for their revenues. Bihar, in particular, receives a staggering 67.4% of its total revenue from central devolution, highlighting its profound reliance on federal transfers. Similarly, Madhya Pradesh (48.1%) and Uttar Pradesh (42.3%) also depend on central funds to a much greater extent than their southern counterparts.
This disparity illuminates the North-South fiscal divide: southern states exhibit greater self-sufficiency in revenue generation, while northern states significantly rely on Union government funds for their fiscal stability and development needs.
Therefore, southern India faces a multifaceted crisis due to falling fertility rates and an ageing population. Economically, a shrinking workforce may lead to labour shortages and reduced productivity, while a growing elderly population will strain healthcare and pension systems. Politically, southern states risk losing parliamentary influence during the 2026 delimitation as northern states with higher population growth gain seats.
Financially, the South’s contribution to central tax revenues far exceeds its returns – an imbalance that could worsen as resource allocations increasingly favour more populous northern states. If left unchecked, these trends may result in political marginalisation and financial strain for southern states, threatening federal harmony in India.
