‘Rethink’ Demography: Present Dividend, Future Debt
India is in demographic transition, and unprepared.
One of our greatest achievements has been a dramatic rise in life expectancy. Most of us will live much longer than our parents. Experts are predicting an average life-span of 100 years by 2040.
We will age before we become rich
Our demography ‘dividend’ will peak in 2040. The next two decades is transformational. India is harnessing demographic dividend that has triggered a virtuous cycle of growing workforce, higher disposable income, sustainable investment and rapid growth. Our large and affluent upper-middle class is driving the ‘consumption’ led growth.
However, nothing is permanent.
Let’s crunch numbers. Working-age population will grow about a crore every year this decade, but slow by half in the next. Half of India’s population is below 30, and ageing. There are other ominous signals, several validations. Population aged 0-19 has peaked, and slowing with declining fertility rates, a visible and clear indicator to demography in transition.
India’s population will grow by 30% between now and 2050. However, our ‘elder’ population will grow by 250%; those above 75 years will grow at 500%. The elders are now a tenth of the citizens. They will be a fifth by 2045.
The economic cost of aging
Increased life expectancy, coupled with lowering birth rates increases ‘dependency’ ratio. Investment in pension, welfare comes at the cost of other ‘productive’ investment. No developing country can provide for its citizens with greying demography; and grow.
Aging strains operational integrity of the health-care system, spirals costs, sparks several tangible economic concerns. It diminishes saving & investment patterns, waning productivity, creates wage inflation, supply shortage. The diminished spending power and melting of assets, takes a huge toll on demand drivers. Elderly consumption pattern is not growth centric, collapsing a fifth of consumption. Unfolding into declining economic activities, significantly hurting growth, triggering a vicious de-growth cycle.
Additionally, adverse demography has other and even larger economic imperatives. It diverts investment from more ‘productive’ and higher multipliers like education, inclusion, & infrastructure. The more serious downside is worsening fiscal balance, lowering competitiveness that manifests as deteriorating macroeconomic. Ageing undermines living standards, and diminish quality of life.
There is societal cost too. And it gets worse.
Policy makers have been basking in the glory of demographic ‘dividend’ and misled; even blinded.
Crux studies of 45000 ‘elders’ across 15 states articulates a disturbing scenario. Only a fourth of the ‘aged’ are financially independent, a fifth ‘partially’ dependent. A majority of aged are dependent entirely on children and society for economic security. Over 75% live with their sons, 10% with their daughters, leading to societal friction, which we are only beginning to experience. A majority admitted (only when coaxed) to a lack of respect, neglect, and even verbal abuse. Most live an undignified life.
The study highlights Government’s apathy has let our elders down; society’s indifference makes them bitter. Over 95% of the elders expect the state to offer free medical treatment, holistic healthcare. None, or very little has come yet. A ‘grateful’ government bestows pension to a minuscule of the deserving.
Rural India is even lonelier. That’s where 70 percent of elderly live. Impact on the elderly women is more disturbing. They live longer and vulnerable throughout their lives, even more, as they age. There is no escaping. The Crux study concludes that over 65% do not want to live this life, are praying for ‘relief’.
The Government has ‘enacted’ considerable provisions, provided basic amenities such as food shelter, clothing, medical care, to enhance the quality of life and well-being of the elderly. The Government has augmented and provides assistance for the maintenance of dementia centres, older widow care centres, nursing homes etc. The ‘Maintenance and Welfare of Parents and Senior Citizens’ act is badly implemented and inadequate.
The examples in other countries are worth emulating. China’s elderly, long used to support from the children, much like the Indian tradition; has moved to a more pragmatic, implementable framework. Japan introduced the ‘Long-term-care insurance’, amongst the most generous, incredibly comprehensive care systems worldwide. Even Nepal covers 47% of its population. Other economies have invested in skilled paramedical support.
Private sector has a role to play too. They need to anticipate, accept, and appreciate the changing lifespan ecosystem and design futuristic payroll, invest in holistic wellness programs. Focus on ‘prevention and early detection’ approach.
While there is a commonality to the challenge, the southern states, Maharashtra, West Bengal need earlier redressal. They need to act now.
Nurture to nourishing
The key is designing policies holistically that helps them ‘age’ better; make them ‘self-sufficient & more independent and actively engage with them.
India has done well in reducing the child mortality rate. It has another war at hand.
It is time our policymakers see this in the right context, appreciate the magnitude of our evolving demography. In parallel it must plan relocating of resources. And do it better. The next couple of decades will need fewer schools and more ‘nourishing’ (old- age homes) centres.
Our welfare scheme can’t keep pace. Social framework is weakening; ‘joint’ families themselves are under great demand and much strain. The elders feel abandoned. Denied.
Governments has to ‘own’ the aged
The PM must use his political capital; garner support, raise resources. State Governments must be ‘persuaded’ to invest & implement. The elderly constitute 10% of the population. We spend 0.03% of GDP on pensions; cover only one in 10. India has the resources and must ‘reallocate’ resources to nourish the aged.
The present and the future generations have a role too. They should be grateful to the contribution made by the aged and must repay both economically and socially. Social support and recognition is equally gratifying.
For the long-term Government must adopt a sustainable public-private partnership to embrace volunteering; occupation is positive economic and social driver. The government must ‘begin’ with a ‘merit based’ income support; provide housing, secure comprehensive health-care.
Can we afford it? Question should be ‘can we afford not to’.
He needs to do more.
He must resolve; ensure a ‘life of dignity’ to every aged Indian. Governments have to ‘own’ the aged.
