Population | census | demographic dividend | social spending | ageing society | policy design

Designed by Dibyak Kapali
Designed by Dibyak Kapali

Economy

With a decline in younger population and rising elderly population, Nepal is ageing. What are some of the economic implications?

What are some of the demographic shifts that the recently released census reveals to us? How is Nepal moving towards an ageing society? What are its possible economic implications? A quick read:

By Shristi Thapa |

Nepal’s demography is starting to age, suggests the recently released population census 2021 which reveals a significant increase in the number of elderly individuals in contrast to the declining younger population. 

Out of the total population of 29,164,578, the total population between the 0-14 years age group now stands at 8,115,575 (27.83%) — a 12.2% reduction compared to the 2011 census when the total population in the same age group was 9,248,246.

On the other hand, 10.21% of the total population is now aged 60 years plus, which was 8.13% in 2011.

The annual population growth rate between 2011 and 2021 stood at 0.92% in contrast to the growth rate in 2011 which was 1.35% and against the 2020 global average of 1.01%. Nepal’s present annualized growth rate is also an 80-year low, suggests the latest census report.

Nonetheless, the working-age population has risen substantially — the current share of the working population is 61.96% compared to 56.96% in 2011 when the total population count was 26,494,504. 

The overall working age population has increased by 19.8% — by 2,979,837 in the population count — which suggests that Nepal still lies in the bracket of demographic dividend.

All these demographic shifts pose far-reaching economic implications. 

A rise in the working-age population means that the economy can perform better if conducive environments are created to increase decent employment. However, the continuous trend of high outbound migration presents a tough challenge to this prospect. 

On the other hand, the decrease in the younger population and rise in the elderly population raises concern over the future economic outlook of the country — as it will result in fewer people entering the workforce in the long term and likely lead to an economic slowdown. 

Although aging is not necessarily an economic problem, an increase in the old-age population is likely to increase demand for more healthcare services, including medical treatment and long-term care — mandating provisions for increased healthcare resources, including healthcare providers and facilities. Other policy concerns stem from how well the social protection allowances transfers such as elderly allowance are managed.

Earlier, the Sher Bahadur Deuba-led government adjusted the eligibility age for the elderly age allowance to 68 years from 70 effective from the present fiscal year 2022/23. The monthly elderly allowance was Rs 2000 in 2011, which was raised to Rs 4,000 in 2021. 

Based on the new census, the amended eligibility age gives benefits to an additional population of 274,667 between the ages of 68 and 70. This beneficiary pool will continue to rise annually as the preceding cohorts touch the age of 68. 

The number of the population aged 68 and above in the latest census is 1,524,763 — a 52.56% increase from the last census when there were less than a million people in the 68+ age category — which was 999,417.

All this means the state will now have to allocate more funds for the social protection of the elderly. The estimated elderly allowance fund alone that has to be allocated now hovers around Rs six billion which was just around Rs two billion in 2011.

The swell in the number of the elderly population and the resulting need to manage increased resources (healthcare services and allowances) will impose heavy stress on the state's finances — which are presently facing severe fiscal challenges. 

To ensure future economic security, the country will have to undertake proactive and urgent economic reforms to ensure the existing demographic dividend is achieved. This will require increased human capital investment and job creation, reforms on healthcare and policy designs for its financing, effective and efficient service delivery through digitization, and better management of Nepal’s economic problems that directly influence its working population behavior such as high inflation. All these need to be achieved much before the demographic dividend window starts contracting.

Shristi Thapa is a Writer and Researcher at the_farsight. She is a student of Journalism & Mass Communication.

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