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Q.Why is rising dependency ratio a cause for worry in countries that are facing ageing population ?

(OR)
Identify the reasons for different replacement levels found in the different States of India.
CBSECBSE Class XII Board 2019Subjective· 2mImportance★★★★★
✓ Free question

Part (a): A rising dependency ratio in ageing societies means fewer workers must support more elderly dependents, straining pensions, healthcare, savings and growth.

Part (b): Replacement levels differ across Indian states because higher infant/child mortality demands more births to replace a generation, while better-developed states reach replacement at lower fertility.

The dependency ratio measures the proportion of the non-working population — children (0–14) and the elderly (65+) — relative to the working-age population (15–64). As a country moves through the demographic transition, fertility falls sharply while life expectancy rises: the population pyramid inverts, with fewer young people at the base and more retirees at the top. This pushes the old-age dependency ratio up, and that is where the worry begins. Most pension and social-security schemes are pay-as-you-go, so today's workers fund today's retirees; when the ratio of workers to retirees falls, contributions must rise or benefits must be cut. Healthcare and long-term-care costs swell as chronic and age-related conditions spread, even as a shrinking tax base funds them. A smaller workforce can slow economic growth, savings may fall as the elderly draw down assets, and an older electorate may prioritise pension spending over education and infrastructure. Japan, where nearly a third of the population is over 65, shows the resulting labour shortages, slow growth and heavy public debt.

✓Final answer

A rising dependency ratio worries ageing societies because fewer workers must support more retirees, straining pension and healthcare systems, narrowing the tax base and slowing growth.

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