An impending demographic shift in the country is taking place, accompanied by a potential economic crisis, because of an ageing population and declining total fertility rate. The replacement rate of population in the country is currently 1.9, below the ideal replacement rate for a stable population at 2.1, because of which the country is looking at a significant demographic shift by the year 2050 towards a more older population.
Experts estimate that this shift will result in an increased pressure on the healthcare systems, family structures, as well as social security and employment opportunities.
India at the tail end of its demographic dividend
“By 2050, the elderly will make up over 20% of our population, compared to about 10% today. The working-age population will plateau. We are now at the tail end of our demographic dividend, and must make smart investments in health, skills, education, and livelihoods,” said Poonam Muttreja, executive director of Population Foundation of India, quoting data from a United Nations Population Fund (UNFPA) report.
Speaking of the fallout of a reduction in the working population as a consequence of declining fertility, Anish Gupta, population expert at Delhi School of Economics, said, “One major consequence could be a shift in the structure of economic activity. As the proportion of elderly individuals rises, there will likely be greater demand for age-related services such as elderly care, home healthcare, assisted living facilities, and other support services, accompanied by a decline in demand for child-related services.”
China and India currently have and are also projected to have the highest working age populations (between 16 and 59 years of age) in the world, but both will see a projected decline by 2050, with India potentially surpassing China’s at the same time. According to the latest Asia Power Index, as of 2024, China and India lead by a wide margin with approximately 70% (990 million) and 67% (983 million) working age population, respectively. The index also reports that by 2050, the working age population of India will drop to around 65% and China’s will see a harsher dip to around 58% of their projected population of the time.
As per the Sample Registration Survey (SRS) conducted by the office of the Registrar General of India, the total fertility rate (TFR) of India was 2.3 in 2015, 2.1 in 2019, and 1.9 in 2025 (1.6 in urban India and 2.1 in rural India as per National Family Health Survey), which is lower than the 2.1 required for a stable population. The ministry of statistics and programme implementation (MoSPI) released a report in 2020, bearing population projections from 2011 till the year 2036. In the report, a gradual increase in the population aged 45-49 years and 50-54 years and upwards is evident, and simultaneously, a comparative decrease in the lower age groups.
Countries like China, Japan and South Korea are also looking at a fertility rate lower than the replacement rate.
“If population growth rate declines or becomes stagnant, the onus is on the productivity rate to make up for that slack in the growth momentum,” said Ravi Srivastava, director at the Centre for Employment Studies at the Institute of Human Development.
The economic opportunity of the ‘silver dividend’
Conversely, Muttreja speaks about the financial burden this will create for the elderly population. A larger aged population will need more geriatric services, financial protection, and social inclusion, she said. Without this, the burden of care will fall largely on women in households, deepening gender inequality. “But if we plan smartly, this can be a moment of social renewal. Older citizens have immense experience and value,” said Muttreja, adding, “If we support their well-being financially and emotionally, we can build a society that is not only youthful, but also wise and inclusive.” Gupta pointed out that for a long time, the ageing population has been largely ignored, mainly because they formed a small minority. “However, as their numbers rise, they will become a significant vote bank, making it harder for political parties to overlook their needs and concerns,” Gupta of DSE added.
To counteract the impending demographic divide and the concerning dependent-earner ratio, “We need to provide decent and gainful employment to the working age population”. Srivastava pointed out that India has a population where 90% of the working age people are employed in the informal sector, and are living with income below the minimum wages. “To simplify, the onus is on the central and state governments to provide infrastructure, both social and through policies, to provide gainful employment in order to bolster the economic burden on the working population in the future.”
This substantiates a parallel theory explicated in research – that of ‘silver dividend’, which refers to the potential economic opportunities arising from an ageing population like India’s. The concept addresses how countries can leverage the growing elderly population for economic gain, much like how some countries take advantage of their youth work force to boost economic growth.
The NITI Aayog last year released a position paper titled Senior Care Reforms in India – Reimagining the Senior Care Paradigm. The paper presented the emerging health, social and financial concerns related to the growing silver population, saying that “India’s silver economy is estimated to be worth approximately Rs 73,082 crore at present and is expected to grow multifold in the coming years”.
“At the macro level, as economies mature, they must generate or retain a growth momentum,” said Srivastava. “The social security infrastructure and health support system is very low in our country and has been for a few decades, which will certainly be a concern for senior citizens, as old age pensions given by the centre are already utterly negligible in most states.”
Under the Indira Gandhi National Old Age Pension Scheme, the centre contributes Rs 200 per month for beneficiaries aged 60-79 years and Rs 500 per month for those 80 years and above. State governments may contribute additional amounts, and in some states beneficiaries may receive between Rs 200 and Rs 1000 per month.
“As the dependent-earner ratio rises, the immediate concern is of providing the geriatric population with adequate sustenance, and whether the current systems are prepared for that,” reasoned Srivastava, adding, “This is particularly important for an economy where the social security net is very weak.” Gupta for his part said while the share of working age population decreases, the burden of productivity falling on this group will increase. While it is possible that the rate of unemployment will start seeing a slow decrease as well in the next decade or so, but if incomes of the working class remain the same, it will lead to massive financial and social burdens for the demographic. Moreover, bearing children at the correct age will become even more difficult as their incomes will not be proportionate to the cost of raising a child. Gupta says that a result of this will be that more people will move to urban centres for gainful employment. “A consequence could be a shift in the structure of the economy,” he said, in terms of employment opportunities and rates in various sectors. While artificial intelligence might make a few paying jobs obsolete, sectors like geriatric services, elderly care, assisted living facilities are also expected to generate a higher volume of jobs in the near future.
One key approach is the formulation of effective population policies. Governments could consider both positive and negative incentives related to family size. For example, restrictive policies that limit certain welfare benefits to families with two children could be reconsidered or revoked. Families play a vital role in providing not just financial and physical assistance, but also emotional care to senior citizens. This emotional support has a direct impact on health outcomes, productivity, and healthcare costs, which ultimately affect the broader economy.