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India stands at the brink of experiencing an aging population, a consequence stemming from a significant decline in the number of births. According to the Registrar General of India's Sample Registration System (SRS) Statistical Report 2024, the Total Fertility Rate (TFR) has plummeted to 1.9 births per woman, below the replacement level of 2.1 births required for a generation to sustain itself without immigration.

This situation signifies an impending demographic shift wherein the proportion of older individuals will increase as the young populace dwindles.

India, however, finds itself confronting this demographic change with an economy considerably less prosperous compared to China's trajectory ten years prior. With a GDP per capita of around $2,700, India is substantially lower than China's GDP per capita of approximately $13,000 when China began grappling with the economic implications of an aging populace.

This stark contrast prompts a question: Could India potentially mature into an aging society before achieving the per capita income level that prompted numerous developed economies to grapple with this challenge?

Economists underscore the importance of addressing this matter proactively due to the necessity of laying groundwork for managing an aging population well before it materializes. Aging invariably brings about several challenges, including but not limited to, dwindling workforce growth, escalating healthcare expenses, mounting pension liabilities, and heightened demand for long-term care services.

Wealthier nations confronted these issues only after amassing significant wealth; thus, India may need to prepare for such pressures at a much earlier stage than its economic peers.

However, experts caution against interpreting India's dwindling fertility rate as an immediate crisis. The concept of a 'demographic dividend' refers to a period in a country's lifecycle when the working-age population outnumbers the dependent population, thereby offering the potential for accelerated economic growth. Yet, this window narrows as the population ages.

Currently, India's demographic dividend persists, but the crux of the issue lies in whether the nation can harness the potential of the next two decades of abundant labor force participation and productivity before the onset of aging begins to exert undue pressure on growth.

The demographic transformation is not a sudden phenomenon but unfolds gradually. Around 66.4% of India's population, according to the SRS Statistical Report 2024, consists of individuals aged 15–59 years, while those aged 60 and above constitute 9.7% of the population. The working-age population is projected to rise until roughly 2041, as per the Economic Survey 2018-19, thus providing policymakers with a finite window of opportunity to spur economic transformation.

While declining fertility does not likely have an immediate impact on labor supply, prioritizing employment generation, skill development, and AI-driven labor market adaptation is crucial.

Analysts from EY India, DK Srivastava, believes that India possesses ample time to capitalize on this situation, provided it utilizes it judiciously. The median age of India's population is currently around 29 years, projected to rise to 40 years by 2056. This period—from 2056 onward—marks when the share of the working-age population (aged 15-64 years) will exceed 65%.

Until then, India's demographic dividend remains intact, and the window to address the impending aging transition spans until 2059, as per UN population projections. Policymakers should, therefore, focus on education and skill development until 2056, subsequently shifting their priority to healthcare expenditure. Both economists agree that India has not run out of time, but every year lagging in job creation, education, and skill development will complicate the eventual aging transition.