Healthy ageing: Adjust policies to capture the upside through innovation

Ageing societies are frequently associated with slowing growth and increasing fiscal pressures, but the latest “World Economic Outlook” (WEO) of the International Monetary Fund offers a nuanced perspective, highlighting the potential economic dividends of healthy ageing. Globally, the narrative on ageing has largely centred on fiscal implications, including rising health care costs and pension liabilities. India is no exception. The study featured in the WEO estimates that ageing could shave 70 basis points off India’s annual gross domestic product growth between 2025 and 2050. As India moves past its demographic turning point in the second half of the century, this decline is expected to intensify.

 

However, healthy ageing offers a silver lining. The study notes that more recent cohorts of older individuals are physically stronger and cognitively sharper than earlier cohorts of the same age. A sample study of 41 countries, including emerging-market economies, shows that, on average, a 70-year-old person in 2022 had the same cognitive ability as a 53-year-old in 2000. This positive trend can potentially extend working lives, enhance productivity, and, ultimately, contribute to economic growth. In fact, counterfactual simulations suggest that ongoing increases in labour supply and improvement in the human capital of older individuals, because of healthier ageing, are expected to add about 40 basis points annually to global GDP growth by 2050. For India, the results are particularly striking. Healthy ageing gains could contribute a sizeable 60 basis points to annual output growth, partially offsetting the negative drag of ageing. Meanwhile, the rise of longevity clinics in wealthier countries underscores a cultural shift. The quest for reverse ageing is now mainstream, with Silicon Valley executives and health influencers advocating personalised health metrics and investing in plasma transfusions and cellular reprogramming. These trends, though controversial, reflect a growing public appetite for proactive health management.

 

Investing in health care, expanding job opportunities for older workers, closing gender gaps, and leveraging technology can effectively support a demographic transition. Increasing labour force participation among those aged 65 and above by aligning retirement ages with improvement in life expectancy could be considered. More importantly, India must address its longstanding gender gap in labour force participation. Though India has witnessed a sharp rise in the female labour force participation rate (LFPR) from 23.2 per cent in 2017-18 to 41.7 per cent in 2023-24, it still lags far behind the male LFPR of 77.2 per cent, and is even below the global female LFPR average of 50 per cent. Pension reform, too, plays a critical role in supporting the aged population. Switching to the National Pension System (NPS) was one of India’s biggest reforms in recent decades. However, some states have reverted to the old pension scheme, which could become difficult to manage over time.

 

Technology, particularly artificial intelligence (AI), can play an important role in scaling up preventive health practices. For instance, the study highlights how a private health care provider in India has effectively leveraged AI-based tools to screen millions of retinal images for diabetic retinopathy, serving as a model for technology-driven health care solutions in resource-constrained settings. Such innovations may be integrated into national health strategies, particularly in rural areas with limited access to health care.