Economic Impact of Population Aging in India, 1991-2050: Evidence Based on Micro-Simulation Analysis

Kaustav Chakraborty , International Institute for Population Sciences (IIPS)

India, the largest populous country in the world, is currently going through a potential demographic window of opportunity period and is also projected to face rapid aging. However, older adults, being largely in the economically inactive age group, raise a concern for economic growth of India. Using a micro-simulation analysis through the Spectrum program (V 6.29), this study looks into the economic impact of population aging in India from 1991 to 2050. Here, we have considered four different assumed scenarios of life expectancies as proxies for different aging scenarios and estimated the potential economic impact of the selected scenarios keeping other factors constant. The findings suggest that although the country's economic growth is projected to continue positively for all assumed scenarios, the size of GDP per capita growth may significantly decrease for higher aging scenarios, keeping current levels of employment, education, and health conditions constant. The results show that for higher levels of life expectancy (i.e., up to 8 years higher than the normal trajectory of longevity), the growth rate in GDP per capita can shrink from 2.3% to 10.4% by the middle of this century in the absence of active and healthy aging.

Keywords: Population Ageing, Population projections, forecasts, and estimations, Mortality and Longevity, Population Policies

See paper.