The Coming School-Age Decline and What It Means for Education Budgets in South Asia

As South Asia enters a new demographic era, a recent World Bank–backed study argues that the region has a rare opportunity to rethink how it funds education. Conducted by researchers from the World Bank's Education Global Department and the Center for Distributive, Labor and Social Studies (CEDLAS) at Argentina's Universidad Nacional de La Plata and CONICET, the study examines how falling fertility and a shrinking school-age population could reshape education budgets across eight South Asian countries between 2020 and 2050. The message is clear: fewer children could mean more resources per child, but only if governments actively reform how education systems operate.

More children in school, but less learning

Over the past decade, South Asia has made impressive progress in expanding access to education. Primary schooling is now close to universal in most countries, and secondary enrollment has risen steadily. Yet learning outcomes remain alarmingly weak. In India and Bangladesh, more than half of children complete primary school without basic reading skills. In Pakistan and Afghanistan, the situation is even worse. According to the study, this gap between access and learning reflects not just low spending, South Asian countries invest about 3.5 percent of GDP in education, below global recommendations, but also how that money is used. Budgets are heavily tied up in salaries and buildings, leaving limited room for proven, low-cost interventions that improve teaching and learning.

Fewer students, more fiscal space

Demographic change could alter this equation. Fertility rates have fallen sharply across most of South Asia, and by 2050, the number of children under 17 is expected to decline by about 10 percent across the region. The trend is uneven; Afghanistan and Pakistan will still see growth in school-age populations. In contrast, countries such as India, Bangladesh, Sri Lanka, Nepal, Bhutan, and the Maldives will see steady declines, but the overall direction is unmistakable. In simple terms, fewer children mean fewer students to educate. If systems adjust, this could free up money that is currently spread thinly across large cohorts.

What the numbers show

Using a detailed fiscal breakdown, the researchers estimate that if education systems continued operating as they do today, demographic change alone could reduce public spending needs for basic education from about 2.7 percent of GDP in 2020 to around 1.8 percent by 2050. That difference, nearly one percentage point of GDP, represents potential savings that could be reinvested in education rather than lost. Even if countries use part of this space to achieve universal enrollment in primary and secondary education and reduce inefficiencies like overage enrollment, the region could still reallocate about 0.6 percentage points of GDP on average. Smaller, demographically advanced countries such as Bhutan and the Maldives would find this transition relatively easy, while Pakistan would face a tougher challenge because of higher fertility and lower starting enrollment.

Growth can amplify the dividend

Economic growth makes the opportunity even larger. If South Asian economies grow at 2 to 4 percent per year, the combined effect of growth and demographic change could free between 1.7 and 2.1 percentage points of GDP by 2050, assuming per-student spending stays stable in real terms. Even if spending rises with income, as it often does, significant fiscal space remains. Similar, though smaller, opportunities appear in pre-primary and tertiary education, where declining youth populations could also ease budget pressures, though ambitious expansion goals would still require careful prioritization.

Reform is the real test

The study's strongest warning is that none of these gains will happen automatically. Schools are expensive to close, teachers are hard to redeploy, and fixed costs do not fall neatly when enrollment declines. Experiences from Europe and Central Asia show that countries with shrinking student populations often failed to save money because they avoided politically difficult reforms, leaving underused schools and excess staff in place. For South Asia, turning demographic change into an education dividend will require deliberate action: consolidating under-enrolled schools, adjusting teacher deployment over time, and ensuring that any savings are clearly reinvested in better teaching, learning materials, and student support. Without such reforms, the region risks missing a once-in-a-generation chance to convert population change into lasting gains in learning and human capital.