Editorial 1: India’s Uneven Demographic Transition
Why in News:
A recent RBI report highlights India’s uneven demographic transition, challenging the narrative of a uniform demographic dividend across States.
Key Details:
- Kerala and Tamil Nadu are projected to become ageing States by 2036, with elderly populations exceeding 22%and 20%, respectively.
- Bihar, Uttar Pradesh, and Jharkhand will continue to see growth in their working-age populations beyond 2031.
- Karnataka and Maharashtra lie in the middle, balancing demographic growth with emerging ageing pressures.
- The RBI advises ageing States to rationalise subsidies to manage rising pension burdens, while urging younger States to invest heavily in human capital.
Key Aspects
- The RBI’s fiscal advice underplays political economy concerns. Southern States face a double disadvantage: reduced Central tax devolution due to population-based Finance Commission criteria and potential loss of parliamentary representation after delimitation.
- Although youthful States have a window of opportunity to leverage a larger workforce, education spending has stagnated or declined, and employability remains uncertain.
- These cohorts will enter labour markets amid automation and AI-driven industrial change, making the RBI’s call to expand labour-intensive sectors risky and raising the prospect of “ageing before getting rich.”
- Ageing disproportionately affects women, who live longer but possess fewer assets; many were never part of the formal workforce and lack pension coverage.
- The RBI’s emphasis on workforce policy assumes continued family support, but migration and nuclearisation of families are eroding this informal safety net.
Way Forward
- Fiscal measures alone are insufficient to manage India’s demographic shift.
- A new industrial policy is needed to generate large-scale employment in emerging sectors such as green energy and the care economy.
- Youthful States must proactively build healthcare and pension systems to cushion future fiscal shocks as fertility rates decline.
- For most elderly Indians, ageing risks becoming synonymous with financial dependency unless social pensions are significantly expanded, even though this conflicts with calls for fiscal consolidation.
- Without a major expansion of public geriatric care, the ideal of “graceful ageing” will remain accessible only to the wealthy, deepening inequality.