Economic Survey 2019 says India needs to raise retirement age as country set to witness sharp slowdown in population growth

New Delhi: Sounding a note of caution, the Economic Survey Thursday said India is set to witness a sharp slowdown in population growth over the next two decades, and suggested raising the retirement age and merging schools as there would be fewer children. Although the country as a whole will enjoy the ‘demographic dividend’ phase, some states will start transitioning to an ageing society by the 2030s, as per the Economic Survey 2018-19, presented in Parliament by Finance Minister Nirmala Sitharaman. “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,” it said. At present, TFR of 2.1 children per woman is called the replacement level fertility, which is the average number of children a woman would need to have in order for the population to replace itself. The southern states, Himachal Pradesh, Punjab, West Bengal and Maharashtra now have fertility rates well below the replacement rate. TFR in Bihar, Uttar Pradesh, Jharkhand, Chhattisgarh, Rajasthan and Madhya Pradesh are above the replacement rate but are also experiencing significant declines. [caption id=“attachment_1615365” align=“alignleft” width=“380”] Representational image. AFP[/caption] 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). Projected values for 2021-41 suggest that TFR at the national level will continue to decline rapidly and will lie below replacement level fertility at 1.8 as early as 2021, it said. The Economic Survey said demographic projections show that India’s population growth will continue to decline over the next two decades, growing less than 1 percent during 2021-31 and under 0.5 percent during 2031-41. “The age distribution, however, implies that India’s working-age population will grow by roughly 9.7mn per year during 2021-31 and 4.2mn per year in 2031-41,” it said. The survey findings may not augur well for corporates which are eying large increase in demand for young consumers. However, companies in health care business may draw some solace. The share of India’s young – 0-19 years – in its overall population has already started to decline and is projected to drop from as high as 41 percent in 2011 to 25 percent by 2041. On the other hand, the share of elderly (60 years and above) population will continue to rise steadily, nearly doubling from 8.6 percent in 2011 to 16 percent by 2041. India’s demographic dividend will peak around 2041, when the share of working-age, i.e. 20-59 years, population is expected to hit 59 percent. “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,” said the survey prepared by a team lead by Chief Economic Adviser KV Subramanian. The survey notes that as of 2016, population in the 5-14 age-group, which roughly corresponds to the number of elementary school-going children, has already begun declining in India and across all major states except Jammu and Kashmir. In light of the projected decline in elementary school-going children, the number of schools per capita will rise significantly in India across all major states even if no more schools are added. “The time may soon come in many states to consolidate/merge elementary schools in order to keep them viable. “This would also be in line with the experience of other major economies witnessing a decline in elementary school-going population, such as Japan, China, South Korea, Singapore and Canada, which have implemented policies to merge or close down schools,” it said. However, this is not about reducing investment in elementary education, but an argument for shifting policy, it added. The survey also stressed policy makers need to prepare for ageing. “This will need investments in healthcare as well as a plan for increasing the retirement age in a phased manner,” it added. If India’s hospital facilities remain 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, the survey said.