writingonblog uncensored: Tamil Nadu's elderly population to nearly double b...

writingonblog uncensored: Tamil Nadu's elderly population to nearly double b...: Expert suggests  strengthening revenues, improve expenditure efficiency C Shivakumar @ CHENNAI: Tamil Nadu's rapid demographic transiti...

Tamil Nadu's elderly population to nearly double by 2031, raising fiscal concerns

Expert suggests strengthening revenues, improve expenditure efficiency

C Shivakumar @ CHENNAI:
Tamil Nadu's rapid demographic transition is emerging as one of the state's biggest long-term fiscal challenges, with the share of elderly citizens projected to nearly double over the next decade even as public finances remain under pressure, according to a government white paper released by the state.

The population aged 60 and above is expected to rise from 10.6 per cent in 2011 to 18.2 per cent by 2031 — a 71.7 percent increase, the steepest among comparable large states. Kerala, long regarded as India's demographic frontrunner, is projected to record a slower increase of 64.6 per cent, while the national average stands at 56 per cent.

The figures point to what economists describe as a "scissors effect". As the working-age population begins to shrink, growth in tax revenues slows. The two trends move in opposite directions, steadily widening the gap between revenue growth and expenditure commitments.

The white paper states that Tamil Nadu's challenge is, in many ways, the consequence of its own developmental success. Fertility rates fell faster than in most Indian states, life expectancy rose sharply, and the state enjoyed decades of economic gains from a large working-age population. Tamil Nadu's median age has now reached 34.25 years, nearly a decade higher than that of Uttar Pradesh.

The state's working-age population peaked at around 66.4 per cent in 2021 and is projected to decline to 63.6 per cent by 2036. Over the same period, the old-age dependency ratio — the number of elderly people for every 100 working-age adults — is expected to rise from 20.6 to 32.7, one of the sharpest increases among Indian states.

"Ageing is a cause for concern," said K Shanmugham, economist and former director of the Madras School of Economics. This would result in the state spending a lot of money on welfare measures for elderly and the funds need to be increased. He also highlighted the lack of updated data since the 2011 census.

"For decades, Tamil Nadu benefited from a demographic dividend, with a large and expanding workforce supporting economic growth, tax revenues and consumption," said former bureaucrat Chandra Kant Kamble. "As populations age, fiscal priorities inevitably shift. Pension obligations rise, healthcare spending increases, and governments must invest more in chronic disease management, geriatric care and long-term social support. At the same time, the growth of the working-age population slows, limiting the expansion of the tax base."

The white paper cites international experience, including that of Japan and Canada, to illustrate how healthcare and social security costs accelerate as populations age. What makes Tamil Nadu vulnerable is the speed of this demographic transition against a backdrop of already strained public finances.

While the white paper does not prescribe specific remedies, Kamble said the fiscal impact of ageing will emerge gradually, giving Tamil Nadu a limited opportunity to act before demographic pressures intensify. The state's economic dynamism, industrial strength and relatively robust revenue mobilisation provide a foundation for undertaking structural reforms from a position of strength.

He stressed that the challenge is not welfare spending itself, but ensuring that expanding commitments remain sustainable. As the elderly population grows, the government will need to strengthen revenues, improve expenditure efficiency and periodically assess the effectiveness of welfare programmes. Such measures, he said, can help bridge the gap between rising age-related spending and mounting debt obligations.

EOM