The Hindu Business Line : <I>Spectre of an aging population </I>

The economic and social consequences of the increasing number of the aged in the demographic profiles of nations have of late become the focus of a number of studies.

I found two papers particularly informative and thought-provoking: "Is Asia prepared for an aging population?" prepared for the IMF by Dr Peter S. Heller, and "Implications of an Aging Population in India: Challenges and Opportunities", by Mr. Prakash Bhattacharya of the Institute of Chartered Financial Analysts of India for the Symposium on `Living to 100 and Beyond' held at Orlando, US in January 2005.

Dr Heller's paper covers the scope and nature of the strategies to be adopted by Asian countries in the light of emerging trends and the problems they pose.

From the macro-economic perspective, the emphasis has naturally to be on stepping up the tempo of economic growth and the resultant multiplier effects of savings and investment, so that the elderly have assured and equitable access to the fruits of development, without in any way affecting the aspirations of those of working age to maintain their standard of living.

On the micro-economic plane, there is need for provisions for health-care, social security, pension fund and retirement insurance adequate to enable the aged to lead a life of dignity and comfort.

Dr Heller's paper visualises the greatest challenge to be `to improve the distribution of income across generations, increase the willingness of younger generations to support the elderly, and create the political viability for institutional mechanisms chosen to intermediate this inter-generational transfer'.

Indian scene

The main thrust of the IMF paper being on South Asian countries and China, it does not contain much material pertinent to the Indian context, except for some interesting data on the dependency ratios of old persons and of the very elderly in different countries.

Mr Prakash Bhattacharya devotes his study to the situation in India, substantiating his comprehensive account of the ground realities with data drawn from a variety of sources.

Consider these facts: While India's population tripled from 361 million in 1951 to 1.027 billion in 2001, the number of older people has increased more than four-fold from 19 million (four per cent of total population) to 77 million (7.5 per cent of the total) during the same period.

The forecast of the UN is that the phenomenon will be repeated in the next 50 years as well: Total population will be up by 50 per cent from 1017 million in 2000 to 1,537 million in 2050, but the number of those over 60 years of age will multiply four-fold from 77 million (7.55 per cent) to 308 million (20.14 per cent) within the same time-span.

Since 92 per cent of working population does not fall within the purview of any formal scheme for old-age income, it might swell the numbers of those below the poverty line.

Ways of heading off such a contingency will have to be put in place without delay.

According to Mr Bhattacharya, `framing suitable policies regarding the availability of the pension plans, allowing the participation of the private players in the pension sector, ensuring the availability of need-based pension products, and increasing the level of consumer awareness about old-age income requirements will help to mobilise a large amount (about Rs 4,065 billion) of very long-term funds by the year 2025.

Effective investment of these funds in several fund-starved areas such as infrastructure, capital markets and human resources will make the Indian economy one of the strongest in the world.' The suggestion is worth earnest consideration.

More Stories on : Economy | Social Security | Offhand

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Stories in this Section
CST replacement therapy

Governance and the deficit debate

The Great Divide: Monetary vs fiscal purism

Spectre of an aging population

Corridors in the corridors of power

Casual confusion

A patently anomalous provision

Singur crisis

Numbers in the reform process