Context

Recently, Asian Development Policy released a report for the year 2024 titled as ‘Aging well in Asia’.

• The report highlighted aging trends and showed its far-reaching effects on various socioeconomic aspects, including poverty, health, and social services. 

What is the Demographic Dividend?

Demographic dividend refers to the economic boost that can happen when a country’s population has more working-age people (between 15 and 64 years old) compared to dependents (those younger than 14 and older than 65).

• It’s related to having more working people who can actively contribute to the economy.
• Demographic gift: Some experts call this situation a “demographic gift.”
• To fully benefit from it, young people need access to good education, proper nutrition, and healthcare, including sexual and reproductive health services.

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Key findings of the ADB Report

• Rising Old Age Dependency Ratio: The ADB report has predicted a significant increase in the ratio of people aged 60 and above (old age dependency ratio) across developing Asia, including India, by 2050.
  • India’s Specific Situation: In India, the old age dependency ratio is expected to climb from less than 20% in 2022 to over 30% by 2050. 
    • This data is based on an analysis of United Nations data by the ADB.
• Diminishing Demographic Dividend: The report acknowledges that younger economies like India and Indonesia will still benefit from a demographic dividend, though it will be less significant than before.
• India’s GDP growth per capita: The rising old-age dependency ratio is predicted to slow down economic growth. An analysis shows a reduction in India’s GDP growth per capita by 0.053 percentage points between 2031-2040.
• Shifting Demographic Winds: The report has confirmed the expectation that favorable demographics that boosted past economic growth in developing Asia will become a challenge in the coming decades.
• The Silver Dividend Potential: The report also shed light on ways such as improving the well-being and health of older adults for significantly increasing their ability to work, creating a “silver dividend.”
  • The Silver Dividend in Action: Kikkawa estimates that India’s GDP growth rate could see a 1.5 percentage point increase if this “silver dividend” of underutilized senior work capacity is used. 
• Unlocking Growth Through Senior Participation: A report co-authored by ADB economist Aiko Kikkawa suggests that economic growth can be boosted by utilizing the untapped potential of people aged 60-69.