Noida, Sep 30 (APAC Media): India is set to witness a major demographic shift in the coming decades as its fertility rate has fallen below the replacement level, paving the way for an increasingly ageing population, Moody’s Ratings said in a report.
Although India continues to have a relatively young population, the changing age structure is expected to have wide-ranging implications for the labour market, public finances, consumer demand and financial markets.
Fertility decline changes the demographic outlook.
Moody’s said the trend is part of a broader global demographic transition, with more than 70 per cent of the world’s population now living in countries where fertility rates are at or below replacement level.
The global fertility rate has declined from about 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 traditional contribution of population growth to economic growth and creditworthiness.
The ratings agency said fewer workers could eventually constrain productive capacity, while fewer households and consumers could weaken demand. Economies would therefore need to depend increasingly on productivity improvements to maintain growth.
Pressure on workforce and public finances
Moody’s said ageing would affect economies through four principal 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,” the agency said.
It also warned that shortages of workers with specialised skills could result in labour shortages and wage pressures in occupations that are difficult to automate.
At the same time, governments could face increasing pressure to finance pensions, healthcare and long-term care as the number of retirees rises relative to the working population.
Consumer behaviour likely to change
The demographic transition is also expected to alter patterns of household consumption.
Moody’s said older populations generally consume differently and often less, potentially increasing demand for healthcare, retirement services, assisted living, wealth management and age-friendly housing.
At the same time, sectors dependent on household formation, education and younger consumers could face weaker demand.
China offers an emerging-market example.
The impact of ageing is already visible in China, where the share of people aged 65 and above doubled from 7 per cent to 14 per cent in about two decades, according to Moody’s.
Brazil, Thailand and Türkiye are also following similar demographic trajectories, with emerging economies facing ageing-related pressures at lower income levels than advanced economies that experienced the transition earlier.
In June 2025, Economic Advisory Council to the Prime Minister member Sanjeev Sanyal said India’s fertility decline was no longer confined to southern states and had become a nationwide trend.
Policy response faces limits.
Moody’s said pension systems, healthcare provision and fiscal frameworks would need to adapt as dependency ratios rise.
However, it cautioned that pronatalist measures such as cash incentives, tax relief, housing support, childcare and parental leave have generally failed to generate sustained increases in fertility.
The demographic shift, therefore, is expected to increasingly influence India’s economic structure and policy priorities in the decades ahead.
