[Answered] Analyze the economic implications of India’s demographic transition towards an ageing society. Evaluate the imperative of establishing a robust public-funded geriatric care ecosystem to mitigate the rising financial vulnerability of elderly households.

Introduction

India’s demographic dividend is giving way to rapid ageing: UNFPA’s India Ageing Report 2023 projects the 60+ population to exceed 20% by 2050, reshaping fiscal sustainability, labour markets, and household welfare.

Economic Implications of India’s Demographic Transition

1. Rising Old-Age Dependency and Fiscal Stress: India’s demographic transition is uneven across States. RBI estimates show Kerala and Tamil Nadu becoming ‘ageing States’ by 2036, with elderly shares crossing 20%, while Bihar and Uttar Pradesh remain youthful. A rising Old-Age Dependency Ratio shrinks the effective tax base relative to pension and healthcare obligations, intensifying fiscal stress, especially for States already constrained by Finance Commission devolution criteria.
2. Healthcare Inflation and Household Financial Vulnerability: Ageing households face a ‘double burden of disease’—persistent communicable illnesses alongside non-communicable diseases such as diabetes and cardiovascular disorders. According to the National Health Accounts, over 47% of health expenditure in India remains out-of-pocket. With medical inflation consistently exceeding CPI, elderly households increasingly experience dissaving, asset liquidation, and indebtedness, pushing many into old-age poverty.
3. Savings, Capital Formation, and Growth Trade-offs: Life-cycle hypothesis suggests ageing societies enter a dissaving phase, reducing aggregate household savings. This may constrain domestic capital formation unless offset by productivity gains or a structured ‘silver economy’. Japan’s experience illustrates that without strong public social security, ageing can depress consumption and growth.
4. Gendered Dimensions of Ageing: Ageing in India is feminised. Elderly women live longer but possess fewer assets and weaker social security, having largely remained outside the formal workforce. NSS data highlights that a majority of elderly women lack independent income, rendering family-based care assumptions increasingly untenable amid migration and nuclearisation.

The Imperative for Public-Funded Geriatric Care

1. Market Failure in Insurance and Care Provision: Private health insurance largely excludes or overprices senior citizens, particularly those with pre-existing conditions. This classic case of market failure necessitates state intervention, positioning public-funded geriatric care as an ‘insurer of last resort’, similar to the NHS model in the UK.
2. Care Economy as Productive Investment: Public investment in geriatric care generates employment in the ‘care economy’—nurses, caregivers, physiotherapists, and community health workers. ILO estimates suggest care-sector expansion can yield high employment multipliers, especially for women, aligning social protection with growth.
3. Inter-State and Inter-Generational Equity: Ageing States face a double penalty: rising pension costs alongside declining fiscal space due to demographic-based devolution. A nationally funded geriatric framework can smooth regional disparities and institutionalise an inter-generational social contract.

Challenges in Building the Ecosystem

1. Fiscal Constraints and Competing Priorities: Expanding geriatric care competes with infrastructure and education spending amid fiscal consolidation pressures emphasised by the RBI.
2. Institutional and Infrastructure Gaps: Primary Health Centres lack geriatric specialisation, and district hospitals rarely have dedicated geriatric wards. The National Programme for Health Care of the Elderly (NPHCE) remains underfunded and unevenly implemented.

Way Forward: Converting Ageing into a ‘Silver Dividend’

1. Universalising Social Pensions: Enhancing old-age pensions under NSAP to dignified, inflation-indexed levels can prevent destitution.
2. Expanding Ayushman Bharat: Extending coverage beyond hospitalisation to include long-term, palliative, and home-based geriatric care.
3. Public–Private and CSR Partnerships: Leveraging CSR and PPPs for senior living infrastructure while ensuring state subsidies protect equity.

Conclusion

Justice V.R. Krishna Iyer called welfare a constitutional duty. Echoing President Droupadi Murmu, dignified ageing demands public care—transforming longevity from fiscal burden into a humane, inter-generational commitment.