Today, India is entering a new demographic phase. Fertility rates are declining, families are becoming smaller, and the country is gradually moving towards a future in which population ageing will become an increasingly important economic and social concern. India’s total fertility rate—the average number of children a woman is expected to have during her reproductive years—has fallen to 2.0, as per the National Family Health Survey-5 (2019–21), which means that the country has moved into a phase of below-replacement fertility. While some are giving pessimistic thoughts on this, we at the Indian Chamber of Commerce think that this can create significant economic opportunities, but only if India prepares adequately for the demographic transitions that lie ahead.
Smaller families can enable households to devote more resources to each child’s education, nutrition, healthcare and overall development. Parents may be better positioned to invest in quality schooling, digital skills, higher education and professional training. For a country seeking to move up the global value chain, this shift is significant. Economic competitiveness increasingly depends not merely on the number of workers available but on their productivity, adaptability and technical capabilities. Lower childbearing can expand the opportunities available to women to pursue education, build careers, undertake entrepreneurship and participate in the formal economy. But this outcome is not automatic. India cannot fully realise its demographic dividend if a substantial proportion of its educated women remain outside the workforce. A declining birth rate, along with implementation of a supportive policy for women’s employment, could help unlock a significant pool of talent and enterprise. Smaller families may have greater capacity to save and invest in housing, healthcare, education, retirement and financial assets. At the national level, higher productive investment can support capital formation, entrepreneurship and long-term economic growth. But there is a catch. As societies age, healthcare expenditure and retirement needs rise, potentially reducing household savings. India must therefore encourage long-term financial planning and develop robust pension and social-security systems like NPS before population ageing accelerates.
India’s Corporate Sector has a particularly important role to play in responding to the demographic transition. They are investing in Automation and Digital Technologies for more worker productivity and profitability. But, at the same time, technology adoption must be accompanied by reskilling so that workers can move into higher-value jobs. As the workforce shrinks over time, plans must be made to absorb them fully, so that the much-talked-about demographic dividend becomes a reality. Industry can also help create a more family-friendly employment environment through childcare support, parental leave, flexible working arrangements and stronger career pathways for women. These are not merely social benefits; they can improve talent retention, employee engagement and organisational competitiveness. New economic opportunities will emerge as well. An ageing population will increase demand for healthcare services, medical technology, assisted living, insurance, retirement planning and accessible housing. Indian enterprises can develop innovative and affordable solutions for these markets, creating jobs while addressing a growing social need. We must adapt to this demographic transition so that the benefits of higher GDP growth percolate down to one and all, and we become Viksit Bharat.
Do you agree?