India needs to focus on its senior care economy

In the Viksit Bharat 2047 timeline, India would have transitioned from the demographic dividend phase to an ageing society. So, it is imperative to plan on building an ecosystem for senior care to address all the challenges of an ageing society in the coming decades

In the Union Budget, the finance minister laid out nine priorities focused on productivity, job creation, and infrastructure, among others, to realise the goal of Viksit Bharat by 2047. While the Budget received a mixed response in its substance and approach, it missed out on a crucial segment that will impact India's growth trajectory in the near future — the senior care sector. In the Viksit Bharat 2047 timeline, India would have transitioned from the demographic dividend phase to an ageing society. Within a few days after the Budget presentation, Niti Aayog called for an urgent need for financial and legal reforms for elderly care in India, thus reiterating the challenges ahead.

According to the India Aging Report 2023 from UNFPA (United Nations Population Fund), the elderly population in India is projected to increase from 10.1 per cent in 2021 to 20.8 per cent by 2050. The projection coincides with declining fertility rates from 6.2 in 1950 to 2 in 2021, and higher life expectancy from 36.9 years in 1950 to an anticipated 75 years by 2050 (CBRE, 2024).

As the dependency ratio increases with the number of elderly requiring care, it becomes crucial to raise critical questions about the quality of life of the 60+ years population and how states can assist them in a manner that would benefit them and the economy. If timely attention and investments are not introduced now, India will have a burgeoning care crisis.

Ageing accompanies a decline in physical function, cognitive abilities, and increased susceptibility to age-related diseases. This necessitates a comprehensive support system and specialised senior care facilities. All ageing societies are experimenting with diverse and new innovative models depending on the various needs and preferences of the population, ranging from assisted living services, shared community facilities with care staff, and serviced apartments, among others. Even so, for such a development to occur in India, there needs to be active participation from three key players: government, private sector, and civil society organisations.

Government plays an important role in developing policies and facilitating the growth of senior care investments. This sets the stage for private investors, including healthcare institutions, home care agencies, and assisted living facilities, to deliver specialised services for diverse needs and income levels. Given that a large portion of the population faces barriers to affordability, civil societies, which include NGOs, charitable institutions, community groups, etc., also become important players in providing services to seniors in need.

While this helps in social protection, integration, and care, the sector also demands high spending to improve quality and meet increasing requirements. Like the education and health sectors, this would be another sector in the coming years where the government alone cannot ensure and provide the entire budget to meet the growing demands. The participation of private players can generate more employment and help build a well-rounded care economy that is needed for different segments of an ageing population.

The need for elderly care will be felt more acutely in some parts of India. Kerala has the highest projected share of the elderly population in India, followed by Tamil Nadu; they, therefore, require more serious consideration of investments in senior care as their immediate action plan, and other states should also follow suit.

Tamil Nadu has recognised the issue and initiated the Tamil Nadu State Policy on Senior Citizens, 2022, establishing its intent to encourage public and private investments in the Senior care segment. Although Kerala has also initiated many government schemes to support the elderly, ranging from medical care and palliative care to daycare centres, the State remains the primary provider of the services. Karnataka has introduced schemes for the elderly such as old age homes, day care centres for senior citizens, Sandhya Suraksha Schemes, etc. for more than a decade. The state government has also undertaken a study to accommodate and provide more senior care in these changing times.  This trend is observable among other Indian states as well, but it is important that the pattern of the State being the sole provider breaks for good. Many governments look at old age care as a matter of responsibility of the State alone and demand for care, security, and protection due to abandonment. However, the new age care requirements present a different picture.

There’s still a silver lining, but it is conditional on the willingness of the governments to adopt strategic measures. India’s Senior Living Market size is estimated at $11.16 billion in 2024, and is expected to reach $17.99 billion by 2029, growing at a CAGR of 10 per cent during this period. Promoting and incentivising age-friendly businesses, investing in elderly living spaces, and promoting services that encourage a more age-inclusive approach to product and service development are some key measures that will not only help the domestic economy but also boost the export markets.

The ageing population has diverse needs — some seniors need independence, others need daily support for their needs, and some others need home-based medical care. However, the current senior care system is ill-equipped to meet all these differential needs because of a lack of formal structure, incentives, and staffing for private initiatives to bloom.

Thus far, state governments have mostly prioritised tax exemption and long-term pension plans to support the elders. However, that is going to be a very limited provision in a few decades as India’s average median age rises. The market should be incentivised to innovate the products and integrate various products on a differential basis. Health insurance can be clubbed with the care home attendees incentivising their self-monitored fitness regimes and diet controls. Regulators can insist on the best practices and positive outcomes, ensuring the quality of life for the senior care providers and encouraging the providers to adopt them. The latest technologies, like sensors and wearables, can be used to transfer data related to appetite, weight loss, blood pressure, etc., to monitor fluctuations in health. The sector's overall prosperity will improve the quality of the care staff and their salaries. Elders can be encouraged to be skilled in adapting to their age and, if possible, for a different job opportunity.

To start with, the South Indian states offer a lucrative market. However, there is a general lack of acceptance of the concept of senior living presenting as a hurdle due to the stigma rooted in the traditional Indian value of family care for elders, where placing a family member at an old age home is seen as neglectful. Additionally, the State construes it as their responsibility to take care of the elders while regarding the role of the private sector as immoral and profit-oriented; in the process, a centralised administration takes a form that tends to ignore the needs and requirements of the elderly, their socio-economic contexts, and the ability to meet their old age requirements with an assisted living. Such an outlook makes investors shy away from investing in the sector.

Factors such as the rise of nuclear families, increased migration for work, and the growing number of non-resident Indians (NRIs) have made old age homes a necessity for some. Providing the right conditions for investments to happen is very important from a socio and economic standpoint. It is time we break free from the paternalistic idea that the State should be the primary caregiver and allow for a more balanced approach that recognises the role of other players in addressing the evolving needs of the elderly population.

For such interventions to take shape, the government should set the tone by sending positive signals to the market players. The Budget has not discussed this, but it is still not too late to initiate a policy discourse around the significance of building a senior care economy, both at the Union and state levels.

(Nissy Solomon is Senior Research Associate, and D Dhanuraj is Chairman at the Centre for Public Policy Research, Kochi.)

Disclaimer: The views expressed above are the author's own. They do not necessarily reflect the views of DH.