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India’s Demographic Challenges With Implications For Livelihoods, Pension And The Health Sector – IMPRI Impact And Policy Research Institute

India's Demographic Challenges With Implications for Livelihoods, Pension and the Health Sector

Session Report
Aasthaba Jadeja

“A One Month Online Intermediate Certificate Training Course on Contours of the Public Policy in India in the Amrit Kaal was organized by the Center for the Study of Finance and Economics (CSFE) at the IMPRI Impact and Policy Research Institute, New Delhi from September 1st 2023 to September 30th, 2023. On Day 6, Prof Mukul AsherVisiting Distinguished Professor, IMPRI; Former Professor, Lee Kuan Yew School of Public Policy, National University of Singapore (NUS) delivered an insightful session on India’s Demographic Challenges With Implications for Livelihoods, Pension and the Health Sector.

Understanding India’s Demographic Challenges: An Overview

Professor Mukul Asher delved into the complex landscape of India’s demographic challenges and how they hold profound implications for various facets of the country, including livelihoods, pensions, and the healthcare sector. These demographic dynamics are of paramount significance, given the sheer magnitude of the global population, which has reached 8 billion people, and the fact that this population is not evenly distributed across the world. Professor Asher emphasised that two Asian giants, India and China, jointly harbour almost 35.6% of the world’s population, and when you encompass all Asian nations, they collectively host a staggering 58.9% of the global population.

India’s Changing Demographic Trends

To comprehend the gravity of India’s demographic challenges, Professor Asher unveiled a detailed analysis of age groups within the country. He pointed out that in the year 2000, the population aged between 21 and 64 constituted 48.4% of India’s total population. This figure is projected to ascend to 59.2% by the year 2050, effectively illustrating that India is poised to retain its demographic advantage as a young country well into 2050. Simultaneously, he highlighted an equally significant trend—India’s ageing population. The number of individuals aged 65 and above, which stood at around 48 million in 2000, is forecasted to burgeon to a remarkable 256 million by 2050. This staggering demographic shift necessitates a paradigm shift in how the nation perceives and addresses the needs and challenges of its elderly citizens.

Median Age and Regional Variations

In 2021, India’s median age was pegged at 28 years, and official data projections indicate that this figure is expected to rise to 34.7 years by 2036. This shift in the median age of the population bears significant implications for various regions across India. It’s crucial to note that different states within the country exhibit variations in median age, with western and southern states boasting higher median ages compared to the national average. In contrast, northern and most eastern states tend to have lower median ages. This demographic diversity necessitates the formulation of region-specific strategies to address the associated demographic challenges effectively.

Total Fertility Rate (TFR)

The Total Fertility Rate (TFR), a key demographic indicator, quantifies the average number of children a woman is expected to have over her lifetime. This metric plays a pivotal role in understanding population growth dynamics. A TFR of 2.15 is typically considered the replacement rate, indicating that once this rate is achieved and sustained over a few decades, a population can stabilise assuming no net immigration. Conversely, if the TFR remains persistently below 2.15, a population is likely to experience a decline, again assuming no net immigration. This concept becomes especially relevant when discussing the trajectory of aging populations. In Asia, for instance, this decline is anticipated in countries like China, Japan, South Korea, Thailand, Vietnam, and others.

India’s TFR, as revealed by the data, exhibits a remarkable decline. Starting from an exceptionally high rate of nearly 6, the TFR has steadily declined to a level below the replacement rate of 2.15 and is stabilising around this threshold. A noteworthy observation is that India’s TFR has been trailing behind that of Southern Asia since the 1950s. Looking ahead, it is anticipated that India’s TFR will approximate that of the broader Asian context and remain within that range before the year 2025.

Infant Mortality Rate and Poverty Alleviation

Professor Asher provided insights into India’s Female Infant Mortality Rate (IMR), highlighting a significant development. The IMR for females in India has progressively decreased to reach parity with or fall below the IMR for males in 13 states. This positive shift underscores the ongoing progress in women’s healthcare and the potential for gender equity in terms of infant survival. In addition to this, Professor Asher emphasised the need to address multidimensional poverty within India. While the nation has made strides in eradicating absolute poverty, a more nuanced and multifaceted approach is now required. He specifically drew attention to the Ganga River region, where reform is imperative to complete India’s poverty alleviation efforts.

Policy Implications for India’s Aging Population

The demographic transitions in India indicate a rapid process of ageing, a phenomenon with profound policy implications. First and foremost, India, like any society undergoing the ageing process, must place a heavy emphasis on improving total factor productivity and embracing the widespread application of scientific advancements, which are universally adaptable to local technology. Mere increases in labour and capital are insufficient to sustain high growth in ageing societies. Second, India’s elderly population, particularly those aged 65 and 80 and above, is set to grow at a remarkable pace, albeit unevenly distributed across the nation. This holds substantial policy implications for the healthcare sector. Long-term healthcare arrangements will become an imperative necessity, along with addressing the impacts of uneven ageing on cross-state labour migration. Policy initiatives for the ageing population must acknowledge that the elderly require accessible and affordable services of reasonable quality, and the focus should not be solely on monetary aspects, although they are undeniably important.

Since 2014, the government, under the leadership of Prime Minister Modi, has recognized the significance of these challenges. This recognition has manifested in various schemes and initiatives, such as the Ayushman Bharat Health insurance scheme, wellness centres spread across the country, Ujjwala Yojna (a clean cooking gas scheme), Pradhan Mantri Awas Yojna (a housing initiative), Jal Jeevan (a project for providing tap water of good quality at home), Janaushadhi stores (provision of affordable common medicines), and numerous others. These initiatives have at their core the reformation of processes in service-delivering organisations and the adoption of up-to-date technology, which are often overlooked aspects in both policy and academic research circles. Notably, most of these schemes come equipped with comprehensive and up-to-date performance dashboards, providing granular data that can support data-intensive research at all levels across India.

However, Professor Asher pointed out that the contingent liabilities associated with these schemes and their fiscal implications require more comprehensive research and documentation. Additionally, he stressed the importance of establishing a sinking fund to systematically manage these liabilities. Furthermore, the policies aimed at the elderly population should endeavour, as much as possible, to enable the elderly to age in their homes or in close proximity. It’s pertinent to note that the average number of individuals in an Indian household was estimated at 4.4 in 2022, in stark contrast to the corresponding figure for the Organisation for Economic Cooperation and Development (OECD), where household sizes were significantly smaller, typically ranging between 2 and 2.5. While institutionalised care options will continue to be necessary, wherever possible, there should be a concerted effort to encourage social enterprises and not-for-profit organisations to play a pivotal role in this sector. Furthermore, business models for institutionalised care should be explored, including the financial aspects of such models.

A significant policy implication that surfaces is the need to channel more resources toward the development of skill sets and infrastructure for the study of gerontology. This discipline delves into various dimensions of ageing, with a particular focus on non-financial aspects that can significantly impact the well-being and quality of life of the elderly population. The rapidly changing demographics necessitate a more comprehensive understanding of these dynamics and the development of strategies that cater to the holistic needs of the elderly.

The fourth major policy implication relates to the urgent need to develop long-term healthcare organisations, structures, and financing mechanisms. This is particularly crucial for individuals aged 80 and above who may require assistance for their daily functions. Options for long-term healthcare may include home-based care, community-based care, or institution-based care, with the overarching goal of allowing the elderly to lead as normal and independent lives as possible while receiving the necessary support.

Challenges and Strategies for Livelihoods

Shifting the focus towards livelihoods in the evolving demographic landscape, Professor Asher emphasised the pivotal role of life skills. These life skills encompass a wide range of competencies, including self-confidence, grit, resilience, communication, and collaboration. In an era characterised by technological advancements like artificial intelligence, which is progressively automating routine jobs, these life skills are emerging as the cornerstone that holds together academic, vocational, and technical skills. They are indispensable for effectively applying any other set of skills in the dynamic and ever-evolving workforce.

However, a critical concern that Professor Asher underscored is the significant dearth of these life skills in the current education system. He lamented that the relentless emphasis on grades, marks, and examinations has gradually diminished the importance of knowledge-based education. The dire need to inculcate these life skills in students, right from their formative years, was highlighted as a critical requirement. Professor Asher commended the National Education Policy for recognizing this need and placing considerable emphasis on promoting life skills in early childhood education. If concerted and consistent efforts are made, and if governments at various levels collaborate on this vital endeavour, India can bridge the gap in life skills education within about a decade, paving the way for a workforce that is better equipped to thrive in the fast-evolving landscape of employment.

Pradhan Mantri Mudra Yojana: Empowering Small Entrepreneurs

The Pradhan Mantri Mudra Yojana, a transformative initiative launched in 2015, deserves a special mention. This program is designed to provide credit of up to Rs. 10 lakh to small entrepreneurs, acting as a regulator for Micro-Financing Institutions (MFIs). The scheme specifically targets young, educated, or skilled individuals, including women entrepreneurs. Its overarching objective is to promote and ensure access to financial facilities for Non-Corporate Small Business Sectors (NCSBS), empowering them to become engines of economic growth and generators of employment opportunities.

The Pradhan Mantri Mudra Yojana is a notable example of a government initiative that acknowledges the vital role played by small businesses and startups in driving economic progress and fostering job creation. By offering financial support to aspiring entrepreneurs, particularly the youth and women, the scheme aligns with the broader goals of economic empowerment and self-reliance, making it an integral part of India’s strategy to address the multifaceted challenges posed by its evolving demographic landscape.

In summary, Professor Mukul Asher’s comprehensive exploration of India’s demographic challenges serves as a crucial roadmap for policymakers, researchers, and society as a whole. It underscores the critical importance of adapting to the changing demographics, both in terms of healthcare and social support for the elderly, as well as in preparing the workforce for the future through the development of essential life skills. Moreover, initiatives like the Pradhan Mantri Mudra Yojana offer a blueprint for empowering small entrepreneurs and contributing to economic growth. Recognizing the significance of these challenges and proactively addressing them is essential for India’s continued progress and prosperity.

Acknowledgement Aasthaba Jadeja is a research intern at IMPRI.

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