Question

The projected population and age-structure over the next 2 decades has several implications for policy. Discuss.

Answer 1

Approach:

• Start by giving facts related to India’s projected population and age structure over the next few years. If you don’t know any fact, Highlight in general about India’s demography.
• Address the main question; highlight various implications for policy due to this projections. Explain them.
• Your conclusion should include the way forward like how we can deal with the changing situation effectively. Make sure your conclusion is positive.

India is set to witness a sharp slowdown in population growth in the next two decades. Although the country as a whole will enjoy the “demographic dividend” phase, some states will start transitioning to an ageing society by the 2030s. It will surprise many readers to learn that population in the 0-19 age bracket has already peaked due to sharp declines in total fertility rates (TFR) across the country. As a result, the national TFR is expected to be below replacement level by 2021 (adjusted for the skewed gender ratio, it may already be there).
The projected population and age-structure over the next two decades has several implications for policy, inter-alia for the (i) provision of health care, (ii) provision of old-age care, (iii) provision of school facilities, (iv) access to retirement related financial services, (v) public pension funding, (vi) income tax revenues, (vii) labour force and labour participation rates, and (viii) retirement age.

Implications for Working-Age Population
Changes in the size of working-age population plays a key role in determining the size of labour force and direction of inter-state labour migration. The evolution of working-age population, moreover, will vary across states. The size of working-age population will start to decline in 11 out of the 22 major states during 2031-41, including in the southern states, Punjab, Maharashtra, West Bengal and Himachal Pradesh. On the other hand, working-age population will continue to rise through 2041 in states lagging behind in the demographic transition, particularly Bihar, Uttar Pradesh, Madhya Pradesh and Rajasthan. In principle, the latter states with rising working-age population could meet the labour deficit in many of the former ageing states.

POLICY IMPLICATIONS OF AGEING

Elementary Schools
Overall, the number of school-going children in India will decline by 18.4 per cent between 2021 and 2041. This will have very important social and economic consequences.In light of the projected decline in elementary school-going children, the number of schools per capita will rise significantly in India. The time may soon come in many states to consolidate/merge elementary schools in order to keep them viable. Note that this is not about reducing investment in elementary education, but an argument for shifting policy emphasis from quantity towards quality and efficiency of education.

Health Care Facilities
Even at current levels, rising population over the next two decades (even with slowing population growth rates) will sharply reduce the per capita availability of hospital beds in India across all major states. Hence, there is a straightforward case for expanding medical facilities in the states. For states in the advanced stage of demographic transition, however, will have to adapt towards greater provision of geriatric care. A major problem with planning for the provision of medical facilities is the paucity of specific data, especially on private hospitals.

Retirement Age
Given that life expectancy for both males and females in India is likely to continue rising, increasing the retirement age for both men and women going forward could be considered in line with the experience of other countries. This will be key to the viability of pension systems and would also help increase female labour force participation in the older age-groups.
India has entered the next stage of demographic transition with population growth set to slow markedly in the next two decades along with a significant increase in the share of working age population (the so- called “demographic dividend” phase). In light of continued urbanization, improvements in health care, increase in female education, and other socio-economic drivers of demographic change, policy makers need to prepare for ageing from today itself. This will need investments in health care as well as a plan for increasing the retirement age in a phased manner.