India Is Getting Old Before Getting Rich

1. Recently, the World Bank released the World Development Report 2024, which states that at India’s current economic growth rate, it will take 75 years to reach a quarter of America’s per capita income.
2. India’s demographic dividend, which emerged after economic liberalization, was expected to drive significant economic growth as India is having large youthful workforce.

1. Approximately 75% of India’s population is between the ages of 15-64, offering a significant opportunity to drive economic growth.
2. However, recent trends suggest that this potential may not be as sustainable as initially hoped.

3. With concerns over a shrinking fertility rate, stagnant manufacturing growth, and inadequate job creation, India faces the risk of falling into the middle-income trap.

1. The “middle-income trap” describes a situation where countries struggle to attain high-income status. Currently, there are 108 countries stuck in the “middle-income trap”, according to the World Bank.

India’s Current Demographic Situation

1. Regional Differences in Ageing:

1. South India: States like Kerala, Tamil Nadu, and Karnataka have a high dependency ratio (ratio of those in the dependent ages of 0-14 and 65+ to those in the productive age of 15-64) of around 18-20, indicating an ageing population.
2. Other Regions: Punjab, Himachal Pradesh, and West Bengal have some of the lowest fertility rates, contributing to a higher ageing burden.

2. Declining Fertility Rate: India’s Total Fertility Rate (TFR) has fallen to 1.99, below the replacement level of 2.1. This decline is more pronounced in southern states, indicating a potential ageing population in the near future.

1. Some states, like Uttar Pradesh and Bihar, have fertility rates above the replacement level.
2. Total fertility rate (TFR) is the average number of children a woman will have during her lifetime. It's a more direct measure of fertility than birth rate because it refers to births per woman.

3. Urban vs Rural Fertility Across States: Urban areas across most states have fertility rates near or below replacement levels (2.1 children per woman), while rural areas in these states show higher fertility.

Which Factors are Influencing India’s Ageing Population?

1. Fertility Decline: The most significant factor contributing to India’s ageing population is the decline in fertility rates. As fertility declines, the proportion of children in the population decreases, leading to a higher share of older individuals.
2. Increased Life Expectancy: With rising life expectancy, the share of older individuals in the population increases, further accelerating the ageing trend.
3. Role of Migration: Migration also influences demographic shifts, but reliable data on migration patterns is limited.
4. Higher Speed of Ageing: India is ageing more rapidly than many developed countries.

1. For example, it took 120 years for France and 80 years for Sweden to double the share of their population aged 65 and above from 7% to 14%. In contrast, India is experiencing this shift much more quickly.

Demographic Dividend and the Opportunity for economic growth

1. Old-Age Dependency vs. Child Dependency: When the old-age dependency ratio exceeds the child dependency ratio, it indicates a larger older population relying on the working-age group.

1. A child dependency ratio below 30 (fewer than 30 children dependent on 100 working-age people) and an old-age dependency ratio under 15 creates a window of opportunity for economic growth.

2. Economic Dividend Window: This period, with a large working-age population and a small dependent population, allows for higher production, savings, and economic growth.

1. India entered this phase in 2005, with the window of opportunity strengthening in 2015 and expected to last until 2061, though it will be most effective until 2045.

3. Faster Ageing and Lost Opportunity: India is ageing faster than expected, potentially missing out on fully reaping the economic benefits of its demographic dividend.

1. Some states will soon fall out of this window, highlighting the urgency of addressing the issue before the opportunity passes.

What are the Key Challenges India is facing in Managing Aging?

1. Transition Issues: India’s demographic transition (declining fertility rates) has outpaced its socio-economic transition.

1. This means that the country is still dealing with high maternal and child health burdens and communicable diseases, while simultaneously dealing with an increasing rise in non-communicable diseases (NCDs).
2. This shift puts pressure on both curative and palliative care (specialized medical care that focuses on providing relief from pain and other symptoms of a serious illness) systems.

2. Lack of Social Security: A large portion of elderly people works in the informal sector and lacks social security support. This adds to the challenge of ensuring proper healthcare and financial security for aging citizens.
3. Financial Strain: India completed its fertility transition in just 45 years (from the mid-1970s to 2020), reaching replacement-level fertility.

1. This transition occurred faster than in most countries, with only China completing it sooner.
2. However, India's socio-economic transition lagged behind the fertility change, unlike China, where the economic and healthcare improvements preceded the demographic shift.

India’s Strengths

1. Stronger Family System: India's family structure plays a critical role in elderly care. Many elderly people live with their children, which provides informal caregiving support.

1. This is a significant advantage compared to Western countries, where family ties are weaker.

2. Rural Ageing and Feminisation: As urbanisation increases, more young people are migrating to cities for work, leading to a trend of rural ageing.

1. Additionally, feminisation of ageing is occurring as women’s life expectancy is, on average, five years higher than men’s which is leading to a greater proportion of elderly women in the population.

3. Elderly Female Population Growth: Since the early 1990s, the elderly female population in India has been growing faster than that of men, a trend that continues as women live longer than men.

What Impact an Urbanisation has made on Fertility and Marriage?

1. Rising Cost of Living: As urbanisation increases, the cost of living also rises. Families are hesitant to have more children due to the higher costs of education, healthcare, and housing.

1. Studies indicate that rising rents contribute to lower marriage and fertility rates.

2. Delayed Marriage and Childbearing: In many societies, unemployment is causing people to delay marriage and childbearing. Individuals are waiting longer to establish their careers and financial security before starting families.
3. Changing Attitudes Among Women: More women are pursuing higher education and career goals, leading them to delay or forgo childbirth in favour of entering the workforce.

1. They seek self-actualisation, a decent standard of living, and more personal time, often prioritising career over family.

4. Second Demographic Transition: These shifts mark the onset of the 2^nd demographic transition.

1. While India is still in the later stages of the 1^st demographic transition, future trends may lead to further declines in fertility rates, especially as the preference for sons declines, as seen in countries like South Korea (with a TFR of just 0.8).

5. Difficulty of Incentivising Fertility: Experts argue that pro-natalist policies (incentives to increase birth rates) have had limited success globally.

1. For example, the UK saw only a slight increase in fertility following such policies, but no country has seen a significant or sustained rise in birth rates through incentives alone.

Demographic Transition Demographic transition is a phenomenon that describes how a society's birth and death rates change from high to low as it develops economically, technologically, and educationally.  This transition results in a longer life expectancy and smaller family sizes. In the demographic transition model, the "1st demographic transition" refers to the initial stage where death rates decline significantly while birth rates remain high, leading to rapid population growth, usually associated with early industrialization.  The "second demographic transition" describes a later stage where birth rates also decline significantly, resulting in a stabilized population growth, often linked to increased urbanization and changing social norms about family size.

What challenges India is facing in Harnessing the Demographic Dividend?

1. Employment Sector Stagnation: A large portion of India’s workforce remains stuck in low-productivity sectors like agriculture.

1. Unlike China, which significantly reduced its agricultural workforce after liberalisation, India has seen slower progress in transitioning workers to higher-productivity sectors.

2. Manufacturing Sector Growth: India’s manufacturing sector has not grown as rapidly as the service sector, limiting job creation for a large portion of the working population.
3. Infrastructure and Policy Barriers: High costs and regulatory constraints hinder the growth of the manufacturing sector.

1. Challenges like business licensing, customs regulations, and land access make it difficult for manufacturers to operate efficiently.

4. Education and Skill Gaps: The workforce lacks the skills needed for higher-productivity jobs, particularly in manufacturing and other advanced sectors, making it harder to shift labour from agriculture to industry.

India Ageing Report 2023 The India Ageing Report 2023, prepared by the United Nations Population Fund (UNFPA) and the International Institute of Population Sciences (IIPS). Key Findings Digital Inclusion Challenges: Convincing senior citizens to embrace digital platforms and providing the necessary training and devices for daily use remains a significant challenge. Mental Health Stigma: Conditions like Dementia and Alzheimer’s disease continue to carry a social stigma, preventing many seniors from seeking help. Disability and Caregiving Burden: As India's population ages, disability among seniors is becoming a major concern, leading to an increased caregiving burden for families and society. Poverty and Lack of Social Security: Issues such as poverty, lack of social security, inadequate public health facilities, illiteracy, and digital ignorance continue to pose serious challenges for older citizens. Efforts by Corporates and NGOs: Various corporates and NGOs are making efforts to promote joyful ageing, provide social assistance, and support old age homes to improve the welfare of senior citizens.

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