Population Ageing and Tax Devolution in India: A Critical Analysis with a Focus on Social Security Pension and Health Care Programmes in Kerala

<ns3:p>Introduction: Rapid population ageing in India shifts welfare and health costs to states, while the 15th Finance Commission’s horizontal devolution has strained several state budgets.Objective: To assess how ageing affects social pension and health care programmes and whether the current tax sharing formula matches states’ needs, using Kerala as a case study.Materials and methods: Secondary data synthesis (Finance Commission reports, demographic projections, union/state budgets, parliamentary records, economic reviews, news). We traced demographic trends, union allocations to IGNOAPS/NPHCE, Kerala’s spending on social pensions, palliative care and elder schemes, and simulated inter se shares for the 16th Commission with updated inputs.Results: Union funding for key old age programmes remains limited, whereas Kerala markedly expanded allocations and now covers roughly half of its 60+ residents; borrowing caps delayed pension disbursements. Simulations show that, if the 15th FC formula persists, several states including high ageing ones lose share in the divisible pool; adding the “share of older population” as a criterion would enhance equity and fiscal capacity for ageing policy.Recommendation: revise the devolution formula accordingly for the 16th FC.</ns3:p>