WION Decodes | India's fertility rate is falling: What does it mean for the economy and society?

India's fertility rate has dropped below the replacement level for the first time, marking an important shift in the country's demographic profile and raising questions about its long-term economic and social impact.

According to the Sample Registration System (SRS) Statistical Report 2024, India's Total Fertility Rate (TFR) has fallen to 1.9. The replacement level fertility rate is estimated at 2.1, the level at which a population can replace itself from one generation to the next without migration.

The decline reflects changing social and economic trends, including improved access to education, urbanisation, rising incomes and greater participation of women in the workforce. While lower fertility can bring several benefits, it also presents new challenges for policymakers.

What are the implications of a lower fertility rate?

A fertility rate below replacement level means future generations are likely to be smaller than the ones before them. Over time, this can slow population growth and eventually lead to population stabilisation or even decline.

One of the most significant consequences is the gradual rise in the elderly population. As fewer children are born and life expectancy improves, the share of senior citizens in the population will increase. This could lead to higher spending on healthcare, pensions and elderly care services, while also increasing pressure on social security systems.

A lower birth rate may also affect the labour market in the future. With fewer young people entering the workforce, India could face labour shortages and slower economic growth unless improvements in productivity and technology help offset the decline.

It could also lead to a decline in consumption and demand for goods and services, which are primary drivers of economic activity, potentially resulting in slower economic growth.

The demographic transition may not occur evenly across the country. Southern and western states have already witnessed sharp declines in fertility and are ageing faster, while several northern states continue to record relatively higher fertility rates. These differences could influence migration patterns, resource distribution, political representation and labour availability.

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What should India do next?

Experts believe population policy will need to shift its focus from population control to managing an ageing society. This includes strengthening pension systems, expanding healthcare facilities for older citizens and improving long-term care infrastructure.

At the same time, greater investment in education, healthcare, skill development and job creation will be essential. A smaller workforce can still support economic growth if it is more productive and better skilled.

Despite the decline in fertility, India continues to have a large working-age population. Lower fertility can reduce dependency levels within households, increase savings and allow families to spend more on education and health.

This gives India an opportunity to maximise its demographic dividend in the coming years before the effects of population ageing become more pronounced.