The fertility of Muslims, which was about 10 per cent higher than that of Hindus before independence, is now 25 to 30 per cent higher than the Hindu rate, and the difference according to religion is larger than the difference between the forward and depressed Hindu castes and tribes. This paper subjects the micro data from the National Family Health Surveys to a multivariate analysis to assess the contribution of socio-economic factors to the fertility differential by religion. It also explores the possible reasons for the large, residual effect of religion on fertility, and causes for the religious disparities in socio-economic conditions. The paper concludes with an assessment of the implications of the current demographic trends for the future population sizes of the two religious groups.