India’s ageing population set to reshape economy as fertility falls below replacement: Moody’s

New Delhi: India is likely to have a much older population later this century as its age structure begins to shift after fertility fell below the replacement level, Moody’s Ratings said in a report on Tuesday.

Although India’s population remains relatively young, the country’s fertility rate has fallen below replacement, and its age structure is beginning to change, setting the stage for a much older population in the coming decades, Moody’s said. Countries experiencing the steepest fertility declines are likely to age most rapidly, it added.

The shift is part of a broader global demographic transition. More than 70% of the world’s population now lives in countries with fertility rates at or below the replacement level, Moody’s said. The global fertility rate has fallen from 4.9 children per woman in 1950 to around 2.2 currently, only slightly above the replacement rate of 2.1.

“Falling fertility is now changing that picture,” Moody’s said, referring to the long-standing contribution of population growth to economic growth and creditworthiness. Fewer workers will limit productive capacity, while fewer households and consumers will weaken demand, requiring countries to rely more heavily on productivity to sustain growth.

For India, the demographic transition could have implications well beyond population growth. Moody’s said ageing affects labour supply, consumer demand, public finances and financial markets. As societies age, fewer workers have to support growing numbers of retirees, increasing pressure on labour markets, government finances and healthcare systems even before populations begin to decline.

Following a demographic path

The rating agency said India is following a demographic path already visible in parts of Europe and East Asia. Population pyramids in countries such as India and Brazil are gradually shifting from structures dominated by younger cohorts towards more ageing populations.

Moody’s said ageing will affect the economy through four channels: labour supply, public finances, consumer demand, and savings, wealth and capital markets.

Slower labour-force growth could reduce potential economic growth unless it is offset by higher productivity, while skill shortages could create labour shortages and wage pressures in occupations that are difficult to automate. At the same time, ageing would increase pressure on pensions, healthcare and long-term care.

Consumer demand is also likely to change as populations age. Moody’s said older populations tend to consume differently and often less, increasing demand for healthcare, retirement services, assisted living, wealth management and age-friendly housing, while creating headwinds for sectors linked to household formation, education and younger consumers.

Already visible in China

The demographic transition is already visible in China, where the share of people aged 65 and above has doubled from 7% to 14% in about 20 years, Moody’s said. Brazil, Thailand and Türkiye are also on similar trajectories, with emerging markets facing the costs of ageing at lower income levels than advanced economies that aged earlier.

In June 2025, Sanjeev Sanyal, member of the Economic Advisory Council to the Prime Minister, in an interview with Mint warned that India’s fertility decline was no longer confined to southern states and had become a nationwide trend. Sanyal said India was entering a demographic transition similar to that experienced by China, Japan and South Korea.

Moody’s also said pension systems, healthcare provision and fiscal frameworks would need to adapt as dependency ratios rise.

However, the rating agency cautioned that these measures cannot reverse the underlying demographic arithmetic. Pronatalist policies—including cash bonuses, recurring allowances, tax relief, housing and mortgage subsidies, childcare and parental leave—have generally failed to produce sustained increases in fertility, it said.

About the Author

Harsh Kumar is a policy reporter at Mint (HT Media Group), where he covers the Ministry of Commerce and Industry along with key departments of the Ministry of Finance, including the Department of Economic Affairs (DEA) and the Department of Financial Services (DFS). With over five years of experience in business and economic journalism, he has developed strong expertise in tracking policy developments and their wider economic impact.<br><br>He has previously worked with Business Standard, Moneycontrol, and Outlook Money, where he reported extensively on banking, financial services, and the broader economy. Over the years, he has built a reputation for delivering accurate, insightful, and impactful stories, supported by a keen eye for detail and a consistent track record of breaking exclusive news.<br><br>An alumnus of Jamia Millia Islamia, Harsh closely follows regulatory changes and key economic trends shaping India’s financial and industrial landscape. His reporting aims to simplify complex policy issues for a wider audience while maintaining depth and credibility.<br><br>Outside of work, he enjoys tracking policy developments, finding scoops, and travelling, reflecting his curiosity about how economic decisions shape everyday life.

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