Economy leaps, but the old limp

India has the potential to sustain economic growth in the coming several decades, thanks to what is called the demographic dividend, or the growing size of its young population. The importance of human development in improving education and health for making the young really skilled and productive hardly needs any emphasis.

At the same time, another dimension of demography that would require added attention is care for the old. The old deserve a graceful, peaceful and a secure life, after going through an active and productive life of about four decades, till they attain the age of 60. This, we may term as the ‘demographic debt’ owed by the young to the old, or the sustenance of a kind of inter-generational equity.

Demographic trends

While the decadal average population growth has progressively declined from 2.3 per cent in the 1970s to 1.5 per cent in the last decade, the old age population had been growing at a faster rate and as a result, the dependency ratio of the old increased from 6.1 per cent to 7.4 per cent during the same period. It is expected to touch more than 12 per cent by 2026.

In absolute numbers, the old age population increased three-fold from about 19 million in 1971 to around 62 million in 2011, and it is expected to double by 2026.

The general improvement in the health care facilities over the years is one of the main reasons for the continuing increase in proportion of senior citizens in the population.

But the expectancy of life at birth, which improved significantly from 41 years in 1950s to about 58 years in 1980s and to 62 years in the 1990s, had improved only marginally to about 63 years in the last decade, reflective of some inertia in further improvement. This is despite the fact that the economy grew by leaps and bounds during the last decade. This is clearly a sign of inadequate care for the old, after they pass their working life.

Economic growth in real terms, on an average, improved to around 7.1 per cent over the period 2000-01 to 2011-12, compared with only around 5.7 per cent in the previous two decades; because of the lower growth in population, per capita GDP growth, in fact, rose sharply to 5.5 per cent per annum in the last decade, compared to well below 4 per cent in the earlier two decades.

The per capita private final consumption expenditure (PFCE) increased by 6.4 per cent per annum over the last decade, compared with lower than 5 per cent annual growth in the previous two decades.

In nominal terms, the per capita GDP increased more than threefold from about Rs 20,000 to about Rs 62,000 in the last decade, and the per capita private final consumption expenditure similarly moved up from about Rs 13,000 to about Rs 35,000 during the same period. In the organised sector, the wages per worker jumped from about Rs 45, 000 to around Rs 75,000 (Tables 1 and 2).

Plight of the Old

The benefits of growth directly impact only the working population. A new dimension of inequality, between the working population and the elderly, would emerge, unless the latter is compensated adequately in tandem with the improvements in standard of living of the working population, apart from indexation for inflation.

In the absence of such safeguards, the income levels and standard of living of old become deplorably low compared with the working population. As the health and nutrition requirements also grow with age, the inadequacy of means to fulfil them will be increasingly felt.

Thus, when the economy leaps and the condition of the working population improves significantly, the economic capacity of the old is increasingly obscured. Their means of livelihood remain stagnant, with inflation eroding their wealth and the purchasing power of their limited incomes.

Furthermore, with life expectancy improving over time, the burden of life at old age gets prolonged. Without adequate increase in provisioning for old age, the misery only increases. In an emerging India, the plight of the old is compounded by several other factors. First, the traditional joint family system has given way to nuclear families, the young and the old separated both emotionally and geographically.

Public Policy

The old are left mostly alone to mend for themselves. Secondly, while public policy has not entirely neglected the old, not much has been accomplished in practice in this respect.

The Government had brought out in June 2011, a document titled Situation Analysis of the Elderly in India .

It documents, besides the statistical profile of the aged population and the expected trends over the next decade, various initiatives under way with regard to ameliorating the conditions of the elderly.

A National Policy on older persons was announced in January 1999.

The Policy envisages State support to ensure financial and food security, health care, shelter and other needs of older persons, and equitable share in development.

In pursuance of this, a National Council for Older Persons (NCOP) was constituted in 1999. It was re-constituted in 2005 with members comprising Central and State governments representatives, representatives of NGOs, citizen’s groups, retired person’s associations, and experts in the field of law, social welfare, and medicine.

The passing of the legislation on Maintenance and Welfare of Parents and Senior Citizens Act, 2007, was another initiative to ensure need-based maintenance for parents and senior citizens and their welfare.

Further Reforms

It is deplorable that pension reform is one of the long-awaited reforms in the country. It is not merely a financial sector reform, but a matter of life and death for millions of people.

The legislation is pending for several years. Within the organised government sector itself, and between private and public sectors and between small and medium and large sectors, no uniformity of approach in policy is lacking.

For example, the Reserve Bank of India, an organisation attempting to protect people from the evil of inflation, is struggling to gain parity in pension matters vis-à-vis its owner, the Government.

The plight of the organised sector is bad enough; there is no need to talk about the plight of the old in the unorganised sector and in rural areas.

A transparent national policy is expedient.

(The author is Director, EPW Research Foundation. The views are personal.)

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