An ageing world

India's window of opportunity is narrowing

A new global demographics report by Moody’s Ratings underscores an ongoing structural shift. More than 70 per cent of the global population now lives in countries with fertility at or below the replacement rate. The global fertility rate has fallen from 4.9 children per woman in 1950 to about 2.2, only marginally above the replacement level of 2.1. The significance goes beyond population numbers. Fewer workers can constrain productive capacity while older households can change consumption, savings and investment patterns, and increase pressure on pensions, health care and long-term care. The shift is happening fast in several countries. Japan already has nearly 30 per cent of its population above 65, while South Korea is moving in the same direction. China’s share of people aged 65 and above has doubled from 7 per cent to 14 per cent in roughly two decades. Brazil, Thailand and Türkiye are also ageing rapidly. Moody’s warns that some of the developing economies confront the costs of ageing at income levels below those of advanced economies when they underwent the same transition. 

India has a valuable window, but it is narrowing. It entered the Moody’s “ageing” category around 2024, when the share of people aged 65 and above crossed 7 per cent. It is projected to become “aged” at 14 per cent around 2049, and “super-aged” at 21 per cent around 2065. The transition from aged to super-aged is expected to take only 16 years. However, this is not an immediate Japanese-style ageing crisis: India remains relatively young, with 68 per cent of its population aged 15-64 in 2025. But its fertility rate has already fallen to about 1.9. The immediate question is whether India can convert its remaining demographic advantage into an economic one. Research estimates that demographic change contributed 190 basis points annually to India’s growth during 1981-2021. To take full advantage of its demography, India has to employ, skill, and productively engage its large cohort of young people before the age structure becomes less favourable. In this regard, Azim Premji University’s “State of Working India 2026” notes that India is nearing the peak of its demographic dividend, with the working-age share expected to begin declining after 2030. It also highlighted a persistent mismatch between the expansion of higher education and the availability of suitable graduate employment, which needs to be quickly addressed. 

Women are central to India’s demographic story. Moody’s highlights India’s female labour-force participation at only 32 per cent in its cross-country comparison. The World Bank has estimated that raising female labour-force participation to 50 per cent could add about 100 basis points to annual growth in gross domestic product. The challenge is, therefore, not merely to bring women into the workforce, but to create formal, productive and better-paid employment. At the same time, India must prepare for the society it is becoming. The United Nations Population Fund estimates that the number of Indians aged 60 and above will rise from 153 million in 2022 to 347 million by 2050. The implications extend from pensions and health insurance to geriatric care and long-term care. Recent reporting on India’s emerging “silver economy” also points to the shortage of organised senior housing and assisted-care capacity. Technology and artificial intelligence can raise output per worker and ease labour shortages, but they cannot eliminate the fiscal costs of ageing. The challenge for India is to grow richer before growing old.