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Provide for old-age security in Budget

There is a need to consider setting up think tanks to focus on medical, sociological and economic needs of the growing elderly population. The field of geriatrics is still in its infancy in India, despite the 11-crore elderly.

Provide for old-age security in Budget

Pensioners stage a protest in Jammu. The elderly are a resource that can be tapped to activate the economy.



Charan Singh

THE Budget discussions have started and the Union Government is consulting citizens for various budgetary proposals to enhance economic growth in the country. Actually, the Union Budget is not merely a statement of account but a statement that reflects the policy intentions of the Government. 
 
While various trade, industry and commerce associations will pitch for benefits for their members, there is one segment of the society, the silent and unrepresented group of elderly, which can help in many ways. The elderly generally tend to spend, rather than save, on the family requirements, and help create a demand in the economy. This, in turn, is what helps in economic growth. 
 
In India, there are estimated to be about 11 crore senior citizens in the age group of 60 years and above of which about 8 crore have no old-age security or pension, 5 crore sleep hungry, 3 crore live alone and 1 crore are going blind, with no means to afford treatment.  Also, as women live longer than men, there are large number of female widows. Around 90 per cent of the elderly have to continue to work to eat because they have no alternative source of survival.  
 
Financial security is a major concern for the elderly as more than two-third of the elderly live below the poverty line. And the elderly population is expected to increase to 20 crore by 2030 and to 31 crore by 2050. The Government has been initiating certain measures, of which the most important one is the Indira Gandhi National Old Age Pension Scheme which was started in 1995. It offers between Rs 200 and Rs 500 per month, depending on the age profile of the elder.  The National Pension Scheme, Swavalamban, a contributory pension scheme was also initiated by the Government in 2003.
 
In May 2015, the Prime Minister announced a series of schemes for social security to enhance the welfare of the citizens, especially in the unorganised sector.  These schemes are Pradhan Mantri Suraksha Bima Yojana, an ultra low-cost accident insurance scheme; Pradhan Mantri Jeevan Jyoti Bima Yojana, a life insurance scheme; and Atal Pension Yojana (APY), a traditional pension scheme.  All the three schemes are contributory and require a bank account to become operational.
 
The field studies show that despite an effort by the Government to open new bank accounts, a large number of women either do not have the financial resources or a bank account and therefore are not able to take advantage of APY. Also, the amount of subscription is substantial for a large segment of the population.  Most importantly, as APY is only applicable to people less than 40 years, nearly 30 per cent of population in India which is above 40 years has been excluded from the scheme.  Therefore, there is a need to have another look at the old-age pension schemes in India.
 
According to studies on ageing, social security helps in increasing longevity, which in turn increases growth.
Absence of social security is a major factor responsible for poverty during old age as well as low aggregate demand in the economy. In view of the economic impact of ageing, the Government needs to consider out-of-the-box solutions.  A universal pension scheme which assures a minimum pension to the elderly in the country could be one alternative to smoothen consumption and address poverty-related issues. A number of countries like Nepal, New Zealand, Mauritius, Mexico and Sweden offer universal pension to resident citizens. 
 
India could also consider a universal pension of Rs 500 per month which would amount to about Rs 66,000 crore annually, assuming that 11 crore elderly live in India.  This amount is nearly one-fourth of the food subsidy, one-ninth of annual interest payment and one-thirteenth of the gross fiscal deficit, which India can certainly afford. As the elderly are generally responsible and, therefore, serve as an anchor for the family, universal old-age pension  can ensure supplementing resources of the family in the most meaningful way, without money being squandered in wasteful expenditure. 
 
Just providing pension probably is not the Indian way of taking care of its elderly and much more needs to be done. At least, a beginning can be made by providing financial security. Further, in view of various factors, many elderly are not able to physically and financially afford a good meal or medical treatment.  The Government could consider instituting an old-age meal scheme and old-age medical scheme for the elderly.  To successfully launch and monitor such schemes, the participation of local bodies would be essential.  The help and support of private sector, probably, through Corporate Social Responsibility (CSR), could also be explored.
 
The rising number of the elderly in the country also implies that special products, medical gadgets and entertainment programmes would be necessary to engage them. It is not sufficient to have a few religious channels on TV and presume that the elderly can be kept engaged in a fruitful manner. This is not caring for the elderly in their sunset years. Rather, tax incentives could be provided to those industries and goods which cater to the medical and other needs of the elderly. Finally, there is a need to consider setting up think tanks to focus on medical, sociological and economic needs of the growing elderly population.  The field of geriatrics is still in its infancy in India, despite the population of 11 crore elderly. The Union Budget could attract attention towards this aspect and announce funding of departments dedicated to geriatric study in Government medical institutions.
 
The elderly have priceless knowledge and sterling experience to share, as epitomised by the legendary Bhishma Pitamah. Therefore, the abundant resource available in India in terms of the elderly population should not be treated as waste management but as wealth management. In a country like India, it should be considered normal that the elderly should be able to retire with a degree of personal comfort without worry and with dignity.  This is the least that elderly citizens can expect in India or rather Bharat that venerates age. 
 
The writer is RBI Chair Professor of Economics, at IIM Bangalore.

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