| Abstract: | This paper integrates the methodology of the National Transfer Accounts and Budget Forecasting Model to compute and forecast the impact of population ageing on India's public finance from 2005 through 2050, based on the fiscal structure in 2004–2005. The empirical results are new and have useful policy implications. The forecasted increase in the share of total public expenditure on elderly individuals is largely accounted for by expenditure on civilian pensions and other cash transfers, government services, and poverty and other social protection. Elderly individuals are found to be not very expensive in terms of public health expenditure. Tax revenues increase and result in a decline of debt-to-GDP ratio because population ageing does not lower tax buoyancy in the long run. Overall, the increasing total budget surplus and fiscal support ratio implies that the long-term impact of population ageing may be fiscally sustainable. |
