India’s demographic advantage is waning rapidly

India faces a new demographic challenge as fertility rates fall below the replacement level of 2.1. While slower population growth may ease pressure on resources and public services, a sustained decline could bring serious economic consequences. An ageing population, a shrinking workforce and rising dependency ratios may strain healthcare and pension systems while weakening economic growth. Policymakers must now focus on boosting productivity, supporting families, increasing workforce participation and preparing for an older society

India’s National Family Health Survey-6, released last week, confirmed what demographers have observed for a decade: India’s total fertility rate has remained at 2.0, fractionally below the replacement level of 2.1. On the surface, this appears to be a milestone — population stabilisation, a maturing society and a demographic transition that is broadly complete. Look closer, however, and the picture is more complicated, more urgent and more consequential for policymakers than the headline suggests.

A country of two demographic realities

India is not experiencing a single demographic transition. It is experiencing several, at different speeds and in different directions, with radically different implications for planning and governance. Tamil Nadu’s total fertility rate stands at 1.7 in NFHS-6 — the only southern state to record a decline from NFHS-5. Kerala remains at 1.8. Andhra Pradesh and Karnataka each record 1.8, while Telangana stands at 1.9. These states reached replacement fertility decades ago: Kerala in 1988, when the national TFR was still 4; Tamil Nadu in 1993; and Andhra Pradesh in 2004. Meanwhile, Bihar’s fertility rate declined from 3.0 in NFHS-5 to 2.7 in NFHS-6. Uttar Pradesh and Jharkhand stand at 2.2. Rajasthan and Madhya Pradesh are at 2.1 — at or just above replacement level — and both recorded slight increases from NFHS-5.

This is not a uniform national transition. It is a southern transition that was completed two to three decades ahead of the Hindi heartland. The implications for delimitation, resource allocation, social security design and healthcare planning are profound.

The ageing South — a present challenge, not a future one

For South India, the ageing challenge is not approaching. It has arrived. Kerala’s elderly population is projected to reach 20 per cent by 2026, against India’s national average of 12 per cent — a demographic age structure that has taken developed countries decades to navigate, arriving in Kerala within this decade. A region built on a young, educated, mobile workforce now confronts rising elder dependency, and healthcare systems designed for infectious diseases are increasingly managing chronic conditions instead.

NFHS-6 makes this compounding visible in precise terms. Kerala has 46.7 per cnet of women aged 15-49 who are overweight or obese — among the highest of any major state, alongside Andhra Pradesh at 47.9 per cent and Tamil Nadu at 44.2 per cent. These are the same states with the oldest populations. An ageing demographic carrying a high NCD burden — rising diabetes, cardiovascular disease and hypertension — requires hospitals and primary care oriented towards geriatric and chronic care, not the maternal and infectious disease architecture that served the last generation. Home healthcare is emerging as a partial response, but the trained caregiver workforce required to sustain it at scale remains inadequate. This trend will not remain confined to the South. NFHS-6 shows NCD risk factors rising nationally — rural men’s high blood sugar at 19.7 per cent, and women’s obesity climbing in every region. As other states develop, the question is whether their health and social security systems will be ready.

Did social investment drive fertility decline — or vice versa?

A common assumption is that states became richer and then chose smaller families. The evidence tells a more instructive story. Kerala’s fertility transition is the counterintuitive case. The state achieved sub-replacement fertility in the late 1980s without the economic growth that typically accompanies it. Kerala’s industrial base was weak, unemployment was high, and per capita income was modest when it crossed the replacement threshold.

What drove the transition was sustained social investment — female literacy, accessible healthcare and women’s empowerment — not wealth. Social development drove fertility decline, which then reinforced economic development by expanding women’s workforce participation and reducing household dependency burdens.

The broader pattern holds: where female education is higher and healthcare access more equitable, fertility rates are lower — consistently, across all communities and regions. South India did not become more developed and then have fewer children. It invested in its people — particularly its women and girls — and that investment produced development and demographic stability.

The demographic dividend: A closing window

 India’s demographic dividend - the economic advantage of a large working-age population relative to dependants - began around 2005. The window is projected to last until around 2055, peaking near 2041. The Economic Survey 2018-19 estimated that India needs to generate 55-60 lakh jobs every year over the next decade, at a labour force participation rate of 60%, to absorb new workforce entrants. The dividend converts into a drag if those entrants are undereducated, unhealthy or unable to find productive employment.

The window is at its widest now —investment in school quality, vocational training, primary healthcare and women’s workforce participation must be the priority of this decade, not the next.

According to UNFPA’s India Ageing Report 2023, India’s elderly population will more than double by 2050 - from around 153 million to 347 million.

By 2046, the elderly will outnumber children under 14. One in five Indians will be over 60 by mid-century. The population aged 80 and above will grow by 279% between 2022 and 2050, predominantly widowed women with significant care needs. The pension, healthcare, and long-term care infrastructure does not yet exist at adequate scale. Building it requires investment now, from a productive workforce now.

Japan’s Cautionary Lesson

Japan offers the most instructive international reference. With nearly 30% of its population aged 65 and older, Japan faces acute labour shortages across key sectors. Automation, flexible work, extended retirement ages, and immigration reform have partially compensated but not reversed the demographic drag. The IMF’s assessment of Japan’s experience is unambiguous: early adjustment for pensions, healthcare, and long-term care is critical. Countries that delay until demographic pressures are fully visible in daily life have already waited too long.

India has an advantage Japan did not: time. But South India’s trajectory - Kerala’s ageing profile, Tamil Nadu’s sub-replacement fertility extending over decades - places it closer to Japan’s position than national aggregate figures suggest. What Japan experiences today, India’s southern states will face within a generation.

What the Evidence Points Toward

Several countries have experimented with financial incentives to raise birth rates. South Korea’s TFR fell to 0.72 in 2023 despite decades of sustained spending - the lowest fertility rate recorded anywhere in the world. The evidence is consistent: incentives alone have not reversed structural fertility decline. The drivers of low fertility - female education, workforce participation, urbanisation, and the rising cost of child-rearing - are structural, not addressable through cash transfers at the margin.

The more durable policy approach, grounded in India’s history, is threefold. First, invest urgently in the quality and productivity of the working-age population India has - through public health, education, and skills - to fully realise the demographic dividend while the window remains open. Second, begin building the geriatric care, pension coverage, and chronic disease management infrastructure that South India already needs and the rest of India will require within two decades. Third, address the legitimate concerns around political representation that the fertility divergence creates through considered institutional design, ensuring states are not penalised for social progress that has benefited the nation.

The fertility debate raises important questions about India’s demographic future. The answers lie in investing in the health, education, and economic security of the people already here - and in the policy architecture that converts a young, capable population into lasting national prosperity.

The writer is senior Fellow, Pahle India Foundation and Former Director, NITI Aayog; Views presented are personal.