It’s time we started designing ageing policies…..Mukul G Asher & Azad Singh Bali
With fertility falling and longevity rising, the population will age rapidly from 2035; by 2050, women over 70 to be biggest age cohort
With fertility falling and longevity rising, the population will age rapidly from 2035; by 2050, women over 70 to be biggest age cohort
India is currently experiencing a favourable demographic phase during which the share of working age population in the total population increases. The favourable demographic phase contributes significantly to high savings and investment ratios, and consequently to the current high growth rates.
Consistent with international trends, India is also exhibiting lower fertility rates and increased longevity. The total fertility rate (TFR) reflects the average number of children which a woman is expected to produce during her lifetime. A TFR of 2.15, if sustained and if there is no net immigration, will lead to stationary population. A TFR of 1.30 will result in the population of a country becoming half in only 45 years.
The current trends suggest that India will reach a TFR of around 2.15 between 2016 and 2020. Indeed, several states already have a TFR of less than 2.15. As the developmental aspirations of the population manifest themselves in the political arena, as suggested by the recent elections in Bihar, the life expectancy of India’s population is expected to improve further.
Indeed, for the 2005-2010 period, average life expectancy at age 60 was already 16 years for men and 18 years for women. This is expected to grow both absolutely, and consistent with the international experience, the differential between men and women life expectancies is bound to widen further.
The projections are that the current favourable demographic period will end around 2035, and rapid ageing of the population will ensue. The chart illustrates the rapid ageing process in India, captured most vividly by the projection that by 2050, the single largest age cohort in India will be women over 70 years of age, and that they will outnumber men among the elderly.
By 2030, India is projected to have 185 million persons above 60 years of age. There is little experience globally for designing ageing policies for such a large number of elderly persons. The reversibility principle therefore assumes considerable significance. This principle suggests that in designing and implementing any retirement income security or health care scheme, the cost of reversing and shifting to a different scheme must be minimised. Locking India in a particular scheme without empirical evidence-based policies, implemented without professionalism, will have high opportunity costs for growth and social cohesion, particularly when there is severe fiscal stringency.
In this context, there is considerable urgency to ensure that current social security organisations such as the Employees Provident Fund Organisation and the Employees State Insurance Corporation adopt modern management practices, and become internationally benchmarked, professional service providers to their members, with much greater transparency and accountability.
As the number of elderly increases, and as they demand better quality services, failure to modernise the above institutions, and urgently pass the Pension Fund Regulatory and Development Authority Bill will have electoral consequences. This also applies to organisations and policies affecting the elderly at the state and municipal levels.
Unfortunately, there appears to be little recognition of the economic, social, and political challenges that such demographic transformation portends for India. As India has a relatively short window of opportunity to prepare for its rapidly ageing society, a sense of urgency by all stakeholders at national, state, community, and individual levels are needed.
A rapidly ageing India will have implications for many diverse areas. Savings and investment ratios will be dampened as older people typically save less, and also spend less on housing, and durable goods. The labour markets will need to adjust to workers whose median age will be higher, and to encourage employers to flexibly engage the elderly people. This will require changes in labour market laws, and in statutory provident fund, healthcare and other regulations. Greater emphasis on knowledge and its management with a view to improving productivity per person will be essential. India will not be able to rely on high savings and investments rates and abundant labour supply to sustain high growth. Acquiring proficiency in the application of knowledge economy is therefore a necessity for India.
The consumption of societies’ healthcare services typically increases disproportionately with ages above 65 years. For those above 80 years of age, special healthcare services become necessary. For an ageing society it is imperative that the demand for healthcare services be minimized through healthier environment and habits. India will need to invest more effectively for promoting public health and sanitation, including better quality food products and medicines.
The public infrastructure will also need to be more elderly friendly. This applies particularly to public transport, street architecture, public toilets and safety of the elderly.
High quality public debates, underpinned by sound databases and empirical evidence must replace the current populist policies, which are ineffective, inequitable and costly. Successful ageing policies involve a systemic view of economic, social and health sector policies and programmes.
These should lead to low rates of disability and illness, active social participation, livelihood participation, and physical and mental activities for the elderly. These criteria will determine the extent to which India succeeds in preparing for this new demographic phase in its history.
Mukul Asher (sppasher@nus.edu.sg) is a professor of public policy and Azad Singh Bali (bali@nus.edu.sg) a PhD student at LKY School of Public Policy, National University of Singapore. Views are personal.