Building a “new silver economy” and positioning Kerala as a destination for graceful ageing, as noted in Governor Rajendra Vishwanath Arlekar’s recent policy address to the State Legislative Assembly, may not be optional for the State anymore, but an imperative.
By 2036, Kerala will continue to be at the forefront of ageing States in India, with more than 22% of its population aged above 60, indicates a new Reserve Bank of India (RBI) report. By then, says the report, Kerala will also see a decline in its share of the working age population.
Kerala has topped this list for State-wise share of population aged above 60 for some years now. From 16.5% of its population aged above 60 in 2021, Kerala will have 18.7% in the category in 2026 and 22.8% by 2036, notes the report State Finances: A Study of Budgets 2025-26: Demographic Transition in India – Implications for State Finances released by the RBI.
Tamil Nadu is expected to enter the ageing category in 2026, with 15.8% of the State’s population over 60 years. “By 2036, more than half of the States are projected to transition into the ageing category, with Kerala at the forefront, with more than 22% of its population as elderly, an indication of advanced ageing. In these regions, the demographic dividend is likely to close earlier than the national average, primarily on account of rapid and sustained decline in fertility levels. For these States, policy imperatives would gradually shift from employment generation towards old-age support systems,” the report says.
The report uses a modified version of the International Labour Organisation classification to assess the demographic profile of States. A State is classified as ageing if the share of population aged 60 years and above is 15% or more, intermediate if it is 10% to below 15%and youthful if it is below 10%.
Over the next decade, Kerala’s share of working age population (15-64 years) will shrink from 62% to 60.8% in 2031 and 59.5% in 2036. The national average, in this case, will go up from 64.8% in 2026 to 65.1% in 2031, before dropping to 64.9% in 2036.
Policy changes
For ageing States like Kerala, these demographic changes will have grave implications in public finances, with policy imperatives gradually shifting from employment generation towards old-age support systems. Ageing States should prioritise healthcare financing reforms, preventive health systems, and public–private partnerships, while rationalising subsidies and non-merit spending to create fiscal space, the report suggests.
It also notes that healthier ageing could continue to boost labour supply by extending working lives and enhancing older workers’ productivity, offering a bright spot amid the rise of the silver economy. “This will require a change in workforce policy of the States such as increasing the retirement ages beyond 60 years in alignment with the improved life expectancy. Employers may also adopt phased retirement plans, flexible work arrangements, and re-skilling programmes tailored for older workers,” it says.
Published – January 24, 2026 08:43 pm IST
