India is entering a new demographic phase. The latest Sample Registration System data puts the country’s total fertility rate at 1.9 children per woman, below both the global average of 2.2 and the replacement level of 2.1 needed to keep a population stable. For a country that has long worried about population growth, this marks an important turn.

However, the decline is not uniform. Rural fertility is still around the replacement mark, while urban fertility has fallen to 1.5. The sharper divide is geographic. Delhi’s fertility rate stands at an ultra-low of 1.2, while Kerala, Tamil Nadu and West Bengal are at 1.3. These levels are lower than those in the United States (1.6), Finland (1.4), and Japan (1.3). At the other end, Bihar remains at 2.9, followed by Uttar Pradesh (2.6), Madhya Pradesh (2.4), and Rajasthan (2.3).

The implication is that India has crossed into low fertility as a nation, but not as one demographic economy. While some States are already moving rapidly towards ageing, others still have large cohorts set to enter the labour force over the next two decades. India must create productive opportunities for young workers in poorer and younger States, while strengthening income, care, and health systems for older populations where fertility has already fallen very low.

A difficult shift

The transition could indeed be challenging. Western Europe and Japan aged after they had industrialised, brought a large share of workers into formal employment, widened their tax systems, and built welfare institutions with some capacity for risk-pooling. Even then, ageing strained public finances; Japan saw the burden push public debt above 200% of GDP.

India enters the same demographic passage on a weaker institutional and fiscal base. Its per-capita income is around $2,800. Its direct tax base remains narrow, with net direct taxpayers accounting for only about 6% of the total population. State governments, tasked with much of the social-sector response, are already fiscally stretched.

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The labour-market base is just as fragile. Since most workers spend their lives in informal or semi-formal work, old-age income security remains largely outside formal employment contracts. A contribution-based pension system works best when earnings are predictable, employment is formal, and workers can save regularly over decades. In India, that assumption holds for only a minority of the workforce.

Existing public safety nets acknowledge this vulnerability but do not provide meaningful income security. The Atal Pension Yojana assumes sustained contributions across one’s working life, which is difficult for informal workers with volatile incomes. The old-age pension under the National Social Assistance Programme remains ₹200 a month for those aged 60 to 79 and ₹500 for those above 80. Such support does not protect the elderly from dependence.

Income security, however, is only one part of the problem. For generations, India’s welfare state has been partly hidden inside the household. The joint family, co-resident children, and unpaid female care absorbed many of the costs of old age. That arrangement is weakening under the pressure of urbanisation, migration, nuclear households, and women’s educational and work aspirations. Studies of left-behind elderly parents show that while children’s migration improves monetary resources, it worsens loneliness and health vulnerability.

To be sure, India has about 150 million people aged 60 and above. By 2050, that number is projected to rise to 347 million, or nearly one-fifth of the population. Yet the income base of old age remains weak. NITI Aayog has noted that 70% of the elderly depend on others while 78% have no pension cover. These numbers explain why India needs an inflation-indexed minimum pension floor, not as a substitute for contributory pensions, but as a basic layer of public risk-pooling for old age.

Ageing will also change the nature of healthcare demand. The pressure will come from the long-term management of hypertension, diabetes, dementia, disability, and palliative dependence. India has shown that sustained public investment can alter demographic outcomes. It did so for fertility, institutional deliveries, and child survival. The same mission-mode action will now be needed for embedding geriatric care into nursing practice, district health planning, and primary care.

The question of migration

The transition also has a federal dimension. The fastest-ageing States will increasingly need workers from younger States. This could be a source of national balance, but only if younger States invest aggressively in education, health, and skills, so that their workers do not merely move into low-wage informality elsewhere. It will also require older, richer, and more urbanised States to treat migrants not as temporary labour but as citizens who help sustain their economies and therefore deserve portable protection. A national labour market cannot rest on welfare systems tied narrowly to domicile. If workers move across State borders, their entitlements must move with them. Portability of welfare benefits must be one of the foundations of an ageing economy.

International evidence shows that low fertility can accompany prosperity. The difficulty is that India is entering mass ageing before completing the transitions that made ageing manageable elsewhere. India’s low-fertility future will be sustainable only if stronger public systems gradually assume responsibilities that large families once carried quietly.

Amarendu Nandy is Associate Professor, Economics & Public Policy Area, Indian Institute of Management (IIM) Ranchi; Views are personal