Representative image showing an old man.
Credit: iStock Photo
The consequences of faster ageing of societies as a result of demographic changes have been discussed seriously in most parts of the world in the last few decades, especially in countries where the populations are shrinking. The topic has also received attention in India where the population is mostly young. However, there are regions in the country where faster rates of ageing are presenting challenges. The latest ‘World Economic Outlook’ (WEO) of the International Monetary Fund (IMF) presents a new perspective on ageing. According to the report, ageing could cost India 70 basis points of its annual GDP growth between 2025 and 2050. The economic impact will be bigger in later years. The country will have to start planning its development strategies and social and economic policies now to address this emerging situation.
However, the study says there are ways in which the crisis can be mitigated in all countries, including India. The study underlines the idea of healthy ageing which it says can offset the negative consequences of ageing by increasing the number of years older individuals can contribute to the workforce. This has been suggested before but the report furthers the idea with a data-backed study that says older individuals are now physically stronger and cognitively sharper than people of the same age in the past. A study across 41 countries shows that on average, a 70-year-old person in 2022 had the same cognitive ability as a 53-year-old in 2000. This may be a reason for extending working lives and enhancing productivity which can contribute to economic growth. For India, the gains from healthy ageing could contribute about 60 basis points to its annual output growth, partially offsetting the losses from ageing.
The study suggests that investment in healthcare, providing greater job opportunities for older workers, closing gender gaps, and using modern technologies will help to address the problems that come with demographic transition. This makes a case for raising the age of retirement and improving labour force participation, especially of women. Reforms will also be needed in pension and social security schemes. The study says policies and practices based on the idea of healthy living could be useful for India in dealing with its demographic situation. However, raising the retirement age may not be an acceptable idea when there is serious unemployment among youth. Irrespective of its implications, healthy living presents a strong case because health is always wealth -- when it is expressed in GDP terms or not.