Topic: Greying India must delay retirement
Topic in Syllabus: GS Paper 3: Indian Economy
Why in news:
- India may have to raise the retirement age as the country sees a rapid increase in the size of the elderly population over the next two decades due to the slowing down of the population growth rate, according to the Economic Survey 2018-19.
- It is forecast that the population rate will grow less than 1% from 2021 to 2031 and under 0.5% from 2031 to 2041.
- This is primarily due to the fall in the total fertility rate (TFR).
- TFR is projected to decline between 2021-2041 and fall below replacement level fertility at 1.8 as early as 2021.
Replacement level fertility rate
The total fertility rate of 2.1 is called the replacement level fertility below which populations begin to decline.
Replacement level fertility rate for India
- For India, the effective replacement level fertility is slightly higher than the normal benchmark due to the skewed gender ratio and is at 2.15-2.2.
- The current TFR in 14 out of the 22 major States is already below the effective replacement level fertility.
- At the State level, southern States as well as West Bengal, Punjab, Maharashtra and Himachal Pradesh have below replacement level fertility and will see TFR decline to 1.5-1.6 by 2021.
- By 2031, all States are likely to see below replacement level fertility.
Change in demography
- The working-age population is expected to see a large increase leading to India’s demographic dividend peaking around 2041, when the share of those in the age group of 20-59 is expected to hit 59%.
- The size of the elderly population, 60 years and above, is expected to nearly double from 8.6% in 2011 to 16% by 2041.
- The population size of those between 0-19 years, which is on the decline, is likely to drop from as high as 41% in 2011 to 25% by 2041.
New policy Challenges
- Provisions for health and old-age care
- Access to retirement-related financial services
- Public pension funding
- Retirement age, etc.
- Increasing the retirement age for both men and women going forward could be considered in line with the experience of other countries.
- It would also help increase female labour force participation in the older age-groups.
- Many countries such as the U.S., Germany and France have already raised the retirement age to reduce the burden on pension funding.
- Additional jobs will have to be created to keep pace with annual increase in working-age population of 9.7 million during 2021-31 and 4.2 million during 2031-41.
Should India consider raising the retirement age as the country sees a rapid increase in the size of the elderly population due to the slowing down of the population growth rate?