On The Financial Burden Of India’s Ageing Population

India’s demographic focus is shifting from dividend to ageing, with an uneven transition across States exposing challenges in fiscal policy, social security, and elderly care.

Uneven Demographic Transition Across States

• Ageing States: Kerala and Tamil Nadu projected to have elderly populations above 22% and 20% by 2036.
• Youthful States: Bihar, Uttar Pradesh, and Jharkhand will continue to see growth in the working-age population beyond 2031.
• Intermediate States: Karnataka and Maharashtra occupy a middle position, balancing growth with emerging ageing pressures.

RBI’s Fiscal Advice and Its Limitations

• Key Recommendations:
  • Subsidy rationalisation in ageing States to manage rising pension burdens.
  • Higher investment in human capital in youthful States.
• Overlooked Realities:
  • Southern States face lower tax devolution and possible reduced parliamentary representation despite population stabilisation.
  • Youthful States show stagnant or declining education spending and continuing employability challenges.

Employment, Gender, and Social Security Concerns

• Risk of Premature Ageing: Youthful States may age before getting rich due to automation, AI, and limited labour-intensive growth.
• Gendered Impact: Ageing affects women disproportionately, as they live longer but often lack pensions due to low participation in the formal workforce.
• Social Security Gap: A workforce-centric approach overlooks elderly women reliant on family support, which is eroding due to migration and nuclear families.

Need for a Broader Policy Response

• Beyond Fiscal Tools: Demographic change cannot be managed through fiscal measures alone.
• New Industrial Policy: Focus on job creation in green energy and the care economy.
• Early Social Investment: Build healthcare and pension systems in youthful States in advance.
• Elderly Support: Expand social pensions and public-funded geriatric care to ensure ageing with dignity.

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Conclusion

Without strong state intervention, graceful ageing risks becoming a privilege of the wealthy. Managing India’s demographic transition therefore calls for greater social investment, gender-sensitive policies, and expanded public geriatric care.

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