Economic Highlights

New Delhi, 29 September 2012

Pension & Social Security

TIME FOR ‘INCLUSIVE AGEING’

By Shivaji Sarkar

If only three top international agencies thought alike, life would be far better, particularly for the elderly. Sadly, this is not the case. On the one hand, the United Nations Fund for Population (UNFPA) says that proper income security and health care to the aged alone can ensure world development. It calls upon national governments to universalise pension and other social security benefits to all the elderly, above 60 years of age, which would number over a billion worldwide and 315 million in India by 2050.

On the other hand, this is contrary to the position held by the World Bank and the International Monetary Fund (IMF). The two are pushing national governments to do away with these benefits and leave it to the corporate dealing in insurance to provide these to those, who would be able to pay for it during their productive years.

The UNFPA notes that the lack of pension is causing extreme miseries to the elderly, who are mistreated by their families, denied medical care and even shelter. Commenting on the western economic crisis, UNFPA states: “There is no solid evidence that population ageing per se has undermined economic development or that countries do not have sufficient resources to ensure pensions and health care of an elderly population”.

In its report “Ageing in the 21^st Century: A Celebration and Challenge,” it disagrees with the view that social benefits should be sacrificed at the altar of fiscal deficit even as corporate profits and the insurance sector soars. It may be noted that insurance business of Aegon-Religare type is gobbling up deposits of poor people without giving them any benefit. There are official estimates that over Rs one lakh crore of insurers have forfeited to these types of companies in India alone.

Prof Moonir Alam of Institute of Economic Growth (IEG), who was involved in UNFPA studies, opines that Governments must have a political will to support the elderly, whose numbers are swelling and their conditions becoming abysmal. While it has the means to support social security benefits, one finds that the government can raise service taxes on the poor rail travellers on the silliest pretext. There has to be a policy to support the poor from the vagaries of the market. Today, even yield on the deposits put in banks by aged persons suffer erosion because of low interest rates and tax deducted at source on money, on which tax has already been paid.

Social security to the aged is becoming a crucial societal issue. Besides, as per various Indian Supreme Court rulings pension is a deferred wage. It means the parts of the wages that remain unpaid during the productive working life are paid after retirement.

Strangely, while the top echelon of the bureaucracy and politicians arrange for pension for themselves, it is denied to the needy—even to those workers who were getting it till 2004. Moreover, the New Pension Scheme of 2004 is extremely loaded in favour of the large corporate as the yields are supposed to come from the stock market trading, a dicey proposal. In the US about 25 per cent of the elderly people have lost billions of dollars to pension funds since 2007. In India, since 2011 the policy is causing distress and depression to 90 million elderly, majority of them illiterate or semi-literate. Their number is to swell to 315 million by 2050, which is about 20 per cent of the population.

According to a series of surveys conducted by the UNFPA, Institute for Social and Economic Change, IEG and Tata Institute of Social Sciences seven States – Kerala, Tamilnadu, Maharashtra, Orissa, West Bengal, Punjab and Himachal Pradesh – which have the highest population of the aged people, about 75 per cent live in rural areas. Of these 48 per cent are women and 55 per cent widows. Nearly three out five single older women are very poor and two out three rural elderly are fully dependent. Additionally, there is an increasing proportion of the 80 plus and here too women are more pronounced. The statistics also state that around one-fifth of the elderly live alone or with spouse only since the past 20 years and here too women are more in numbers.

Around 80 per cent of the male and three per cent of women illiterates in 80 plus age group have to do menial jobs to sustain themselves. With 70 per cent of the elderly being illiterate in the Indian context, their earning capacity during working years has been limited and they have to depend upon some productive labour work for their survival.

This apart, they suffer from many disabilities and health problems, notes the Helpage India. Even schemes such as Rashtriya Swasthya Bima Yojana (National Health Insurance scheme) benefits are not available to them as it limits the numbers to three children and their parents. Those above the age of 60 are excluded by the families for the sake of children.

The organisation, which helps the elderly, says that the demographic dividend that India now has is to be lost by 2040. A mere 16 million are covered by Rs 200 a month pension under the Indira Gandhi Pension Scheme. Even this is not universal as bureaucrats manage to even deny this. For example, an aged widow, Amima Maity, from Murshidabad in West Bengal, living a life of penury in Vrindavan in Uttar Pradesh, where lakhs of widows reside, is denied the measly pension by the District Collector on grounds that “she is from another State”.

This apart, over 43 per cent of the elderly suffer domestic violence. About 53 per cent are mistreated by their sons and not daughters-in-law as is the common perception! The Government must consider raising the minimum pension to Rs 1000 a month, for the elderly to live with some dignity.

In Nepal, the UNFPA states that the government has ensured pension to all those above the age of 70 years. So has done China but implementation has its own problems. Among BRICS countries Brazil and South Africa have social pension and health insurance. Thus, why can’t India do it? In fact, here the old age or widow pension schemes do not reach over one-fifth of the beneficiaries and procedures are tricky, the UNFPA studies have found.

India has recognised the issues during the NDA rule in 1999 and formulated National Policy for the Older Persons. But thereafter it lacked policy focus to address the related issues and income security of older persons. It also suffered from serious lack of coordination among multiple agencies and time-bound results.

The UNFPA calls for setting up of National Commission for Elderly to ensure inclusion ageing in all national development policies and programmes, national humanitarian response and for a change of mindset and societal attitudes. The primary aim of all these programmes should be to ensure income security through a pension scheme and consider the elderly as an essential part of the society so that demographic dividend is not barred by the age factor. Can India pay heed? ---- INFA

(Copyright, India News and Feature Alliance)