AP's Population Management Policy

Chief Minister N. Chandrababu Naidu recently said the state aims to finalise a population management policy by the end of this month, with implementation from April 1. Among the incentives proposed are ₹25,000 at birth for a second or third child, ₹1,000 in monthly support, free education for the third child up to 18 years, subsidised IVF services, special leave for couples, and the construction of working women’s hostels and childcare centres.

The government says the initiative responds to a “rapidly shifting demographic landscape” marked by smaller families, a growing elderly population, and a shrinking child population. According to the consultation note released by the state, the aim is to support families, improve healthcare services, and help working professionals balance work and family life.

Behind this policy discussion lies a broader economic concern. Countries with ageing populations often experience slower labour force growth, weaker consumption demand and rising public spending on healthcare and pensions. Japan is frequently cited as an example: its population peaked around 2010 and has been declining since, while the share of older citizens continues to rise.

India remains one of the world’s youngest large economies. But fertility has been falling steadily, prompting policymakers to consider what that could mean for future workers and economic growth.

The Economics Of It All

India’s fertility rate has dropped sharply over the past several decades. From nearly six children per woman in the 1950s, it fell to 2.0 according to the National Family Health Survey (2019–21). Several southern states, including Andhra Pradesh, Tamil Nadu, and Kerala, are already below the replacement level of 2.1, the point at which a population eventually stabilises.

UN projections suggest it could fall further to around 1.7–1.8 by the mid-2040s, shaping the size of India’s future workforce as the country pursues its “Viksit Bharat” goal of becoming a developed economy by 2047.

Demographic Dividend

Economists often describe India’s large working-age population as a demographic dividend. The term refers to a period when economic growth can accelerate because a larger share of the population is working while fewer depend on them.

Demographic change unfolds slowly. A child born today will typically enter the labour force around 20 years later, meaning policies that influence fertility have long timelines. Their economic effects may be felt well beyond India’s 2047 “Viksit Bharat” development target.

For some policymakers, Andhra Pradesh’s proposal reflects that long view. If fewer children are born today, fewer workers may enter the economy two decades from now.

At the same time, economists caution against assuming population size alone determines growth. Productivity, education, skills, and labour participation, particularly among women, will also shape India’s economic trajectory.

Women, Work, & The Childcare Gap

Fertility decisions are closely tied to how families balance work, childcare, and income.

The debate around pronatalist policies is closely tied to women’s workforce participation and the care economy

– Charu Malhotra, Co-Founder and Managing Director, Primus Partners

“On the one hand, we want to increase women’s participation in the workforce. On the other hand, we want higher fertility. But what are the structures that support women to do both?" she said. 

India’s female labour force participation remains relatively low compared with many economies, and childcare remains one of the major barriers.

“If you are bringing women into the workforce, they cannot think of more than one or two children unless there are systems to support working mothers,” Malhotra said.

Research suggests the gap is substantial. A UNDP–Dalberg report on childcare in urban India estimates that 6–7 million women from low-income households currently need affordable childcare, and demand could triple by 2047. Yet existing childcare services meet less than 10% of that need.

Expanding childcare access could therefore affect both workforce participation and family decisions.

For many families, practical constraints outweigh financial incentives.

A 32-year-old private school teacher in Vijayawada told The Secretariat that childcare arrangements strongly influence the decision to have another child. “After maternity leave, many women struggle to return to work because there is nobody to look after the child. Unless childcare support improves, it is difficult to think about more children.”

Are You Kidding?

Governments facing ageing populations have experimented with policies designed to encourage births. The results have been mixed.

China provides one example. After decades of the one-child policy introduced in 1979, the government shifted to a two-child policy in 2016 and later a three-child policy in 2021, alongside housing subsidies, tax incentives and expanded parental leave. Despite these measures, China’s fertility rate remains around 1.0–1.2.

Singapore has pursued financial incentives for longer. Its Baby Bonus scheme, introduced in 2001 and expanded several times since, offers cash grants, tax rebates and childcare subsidies along with parental leave support. Singapore’s fertility rate is close to 1.0, among the lowest globally.

Several Nordic countries have taken broader approaches. Sweden introduced paid parental leave in 1974 and later expanded childcare access through the 1990s and 2000s. Denmark and Norway developed similar systems combining paid parental leave, subsidised childcare and flexible work arrangements. These policies support families while maintaining high female workforce participation.

These experiences suggest that incentives alone rarely reverse demographic trends.

People who want to have more than one child will have it, irrespective of the incentive

– Nirupama Soundararajan, Co-Founder and CEO, Policy Consensus Centre

“I’m not really sure if this is enough to motivate somebody to have another child," she said. 

She also noted that raising a child involves long-term commitments that go far beyond initial incentives. “A child is a long-term responsibility. Policies like this raise questions about what happens years later. Once the child is born, the responsibility continues.”

Another working mother in Visakhapatnam told The Secretariat that financial incentives alone would not significantly influence such decisions.

“Raising one child itself is expensive today: school fees, tuition, and healthcare. If there are good childcare centres and flexible work options, then families may think about having another child,” she said.

Beyond Fertility

For much of the late 20th century, India worried about having too many people. Today, parts of the country are beginning to ask a different question — what happens when families choose to have fewer?

For Andhra Pradesh, the proposed policy may therefore be the start of a wider conversation about ageing populations, the future workforce, and the role of the care economy.

Urban lifestyles are shifting. Many younger couples are delaying marriage, focusing on careers, or opting out of parenthood altogether. For the uninitiated, there is a rise of DINK households, which stands for double income, no kids, and reflects this generational change.

The old family planning slogan “Hum do, hamare do” has also acquired a reinterpretation among some young urban couples: two adults, two pets. 

Demographic Trends

At the same time, policymakers are looking at how demographic trends interact with labour markets and regional economies. Some experts suggest that migration and workforce mobility could help address imbalances across states.

“Instead of simply increasing births, we could also think about redistributing population across the country through mobility and jobs,” Malhotra said.

Demographic planning, therefore, intersects with broader policy questions, from skills and employment to housing, childcare, and urban infrastructure. Addressing these issues will likely require coordination between state governments and the Union government, particularly in areas such as labour markets, social infrastructure, and public services.

Fertility trends also raise wider questions about development. Replacement-level fertility assumes that maintaining a stable population is the optimal outcome. But in a country already facing pressures on water, land, and urban infrastructure, some economists argue that quality of life, productivity, and environmental sustainability must also be part of the conversation.

Social Infrastructure

Against this backdrop, Andhra Pradesh’s proposal signals a shift in how governments are thinking about population policy. Its incentives alone are unlikely to determine fertility patterns. The broader challenge is to build the social infrastructure for childcare, healthcare, housing, and employment opportunities that enable families to raise children while participating fully in the economy.

If governments want more children to be born, the challenge may not be persuading families but making it easier for them to raise those children in the first place.