Old dependency ratio

Every country has people who earn and people who depend on those earnings. The old dependency ratio counts one specific kind of dependant: the elderly, measured against the working-age population.

When the ratio is low, a large working population supports a small elderly one. Taxes stretch. Families cope. When the ratio rises, the same burden falls on fewer earners.

India's ratio is rising. The workbook expects it to settle near 23 percent by 2036, and says it will increasingly be shaped by the elderly rather than the young.

That single number is why this paper exists. A rising old dependency ratio puts pressure on public finances, healthcare, social protection and geriatric care all at once. It also means an individual can no longer assume the next generation will be there to fund their old age.

The workbook builds the ratio out of four projections, and all four are examinable figures.

Two separate forces push it up.

Fewer births. India's fertility rate has fallen below the replacement level of 2.1, to about 2.0 in the latest NFHS data. The base of the population pyramid is narrowing, so the working-age share of the population is set to decline gradually in the coming decades.

Longer lives. Life expectancy at birth in India has risen from 58 years in 1990 to 72 years in 2024 (World Bank). More people reach 60, and those who do live longer after it.

The workbook draws a policy conclusion from the timing. India's total population is expected to peak at about 1.67 billion by the mid-2060s before it begins to fall. The years until then, while the working-age share is still high, are a narrow and valuable policy window to consolidate the pension system, improve financial literacy and encourage old-age saving — before the population ages in earnest.

It also names the four pillars a pension ecosystem has to stand on: accessibility, adequacy, sustainability and efficiency.

Take the workbook's own numbers and read them as a household would.

In 2011, roughly 101.5 million Indians were 60 or above — about 8.4 percent of the population. By 2036 that becomes roughly 227.4 million, or 14.9 percent. The elderly population more than doubles while the total population grows far more slowly.

Increase in elderly citizens, 2011 to 2036 = 227.4 - 101.5 = about 126 million

One hundred and twenty-six million additional elderly citizens in twenty-five years, against a working-age population that peaks at about 988.5 million in the same year and declines after it. That is the arithmetic behind a 23 percent old dependency ratio.

Now the family view. The Rao household in 1985 had four working adults and one grandparent to support. Their grandchildren's household in 2036 is more likely to have two working adults, both in nuclear families in different cities, and two surviving parents living into their eighties. The obligation has not changed. The number of shoulders carrying it has.

This is exactly the shift the workbook describes when it says joint families were once the norm, mobility created nuclear families, and both generations now expect independence — so an independent source of retirement income is no longer optional.

Chapter 1, section 1.1 (Need for Retirement Planning), opens the paper with this demography and is a straight recall block. Every figure above is printed there.

Expect direct number questions: the share of citizens aged 60 and above is expected to rise from 8.4 percent in 2011 to ______ by 2036 (14.9 percent), the old dependency ratio is projected to settle near (23 percent), the working-age population is projected to peak at about (988.5 million by 2036), India's fertility rate has fallen below the replacement level of (2.1). The conceptual question asks why a rising old dependency ratio makes individual retirement provision more urgent.

• 23 percent is the old dependency ratio; 14.9 percent is the share of the population aged 60 and above. Two different percentages for 2036, and they are easy to swap.
• 2.1 is the replacement level; 2.0 is India's actual fertility rate. The point is that the actual figure has fallen below the replacement level.
• 988.5 million is the working-age peak, 227.4 million the elderly count, and 1.67 billion the total population peak — and the total population peaks in the mid-2060s, not in 2036.
• The ratio is shaped by the elderly rather than the young. A dependency ratio can be driven by children too; the workbook is specific that in India's case the driver shifts to the old.
• A rising ratio is a consequence of good news. Longer life expectancy is a positive indicator for a population, and the workbook says so — it simply brings longevity risk with it.
• Do not confuse this with coverage. The workbook separately notes that pension coverage remains limited, especially in the informal sector, despite the Atal Pension Yojana, the NPS and the EPF. Coverage and dependency are different problems.