Telangana Heading Towards an Ageing State: Rising Elderly Population and Fiscal Challenges
Table of Contents
Relevance:
Paper–IV: Economy and Development Telangana economy: Fiscal pressure due to ageing population
Important Keywords
For Prelims:
- Ageing State, Demographic Transition, Old-Age Dependency Ratio, Working-Age Population, Social Sector Expenditure
For Mains:
- Population Ageing, Fiscal Pressure, Shrinking Tax Base, Pension and Healthcare Reforms, Labour Force Participation
Why in News?
A recent study by the Reserve Bank of India (RBI) indicates that Telangana is steadily moving towards the category of ageing States, with the proportion of people aged 60 years and above expected to approach 15% by 2031 and cross 17% by 2036. This demographic transition has significant implications for public finance, labour markets, and social sector planning.
What Is an ‘Ageing State’?
An ageing State is defined as one where 15% or more of the total population is aged 60 years and above. Such States typically face:
- Higher healthcare and pension expenditure
- Rising dependency ratios
- Slower growth in the working-age population
Rising Elderly Population in Telangana
Since the formation of the State, Telangana has witnessed a steady rise in the share of elderly population.
Share of Population Aged 60 Years and Above
Year | Percentage |
2016 | 10.1% |
2026 | 12.5% |
2031 | 14.5% (projected) |
2036 | 17.1% (projected) |
According to the RBI’s State Finances – A Study of Budgets 2025–26, Telangana is currently in an intermediate demographic stage, but is likely to join States such as Tamil Nadu and Kerala, which are already classified as ageing States, by the mid-2030s.
Shrinking Working-Age Tax Base
Population ageing places unprecedented pressure on public resources:
- The working-age population (15–59 years) grows more slowly
- The tax base shrinks, affecting revenue mobilisation
- Government expenditure rises due to pensions, healthcare, and social security
The RBI study highlights that while youthful States enjoy a demographic dividend and stronger revenue prospects, the window of opportunity narrows for ageing and intermediate States like Telangana.
Rising Dependency Ratio
Ageing is accompanied by a rising old-age dependency ratio, defined as the number of people aged 60+ per 100 working-age persons.
Old-Age Dependency Ratio in Telangana
Year
Dependency Ratio
2016
15.2%
2026
18.4%
2031
21.5% (estimated)
2036
25.7% (estimated)
A higher dependency ratio implies:
- Increased demand for healthcare and welfare services
- Greater fiscal stress on State budgets
- Reduced per capita availability of productive labour
Fiscal and Governance Challenges Ahead
The RBI underscores that divergent age structures across States create differential fiscal pressures. For Telangana, the challenge lies in managing:
- Rising committed expenditure on social sectors
- Lower growth in tax revenues
- The need to maintain economic dynamism despite a slowing labour supply
What Can States Like Telangana Do?
For intermediate States, the RBI suggests a forward-looking policy approach, including:
- Balancing growth-enhancing investments with gradual expansion of healthcare and social security systems
- Encouraging higher labour force participation, particularly among:
- Women
- Older workers
- Productivity-oriented reforms, such as:
- Technology adoption
- Innovation
- Industrial diversification
These measures can help offset the economic slowdown associated with demographic ageing and ease long-term fiscal pressures.
Conclusion
Telangana’s demographic transition signals a shift from a relatively youthful profile towards an ageing society over the next decade. While this transition brings fiscal and governance challenges, early policy preparation—focused on productivity, labour participation, and social sector readiness—can help the State manage ageing without compromising growth. The coming years will be crucial in determining how effectively Telangana navigates this demographic turning point.
CARE MCQ
Q. Consider the following statements regarding population ageing in Telangana:
- An ageing State is defined as one where 15% or more of the population is aged 60 years and above.
- The proportion of people above 60 years in Telangana has increased from 10.1% in 2016 to 12.5% in 2026.
- According to the RBI, Telangana is likely to record over 17% population above 60 years by 2036, placing it among ageing States.
- Population ageing leads to an expanding working-age tax base and reduced fiscal pressure on State finances.
Which of the above statements are correct?
- 1, 2 and 3 only
- 2 and 4 only
- 1 and 4 only
- All four
Answer: A
Explanation:
- Statement 1 – Correct
An ageing State is defined as one where 15% or more of the total population is aged 60 years and above. - Statement 2 – Correct
The share of people aged 60+ in Telangana rose from 10.1% (2016) to 12.5% (2026). - Statement 3 – Correct
As per the RBI’s “State Finances – A Study of Budgets 2025–26”, Telangana is projected to have 17.1% elderly population by 2036, similar to ageing States like Tamil Nadu and Kerala. - Statement 4 – Incorrect
Population ageing shrinks the working-age tax base and increases fiscal pressure due to higher expenditure on healthcare, pensions, and social security.
