Economics of ageing

The passing of the Pension Fund Regulatory and Development Bill 2011 in Parliament is a momentous event for India’s elderly. But there is still more scope for improving their welfare. As a result of increased life expectancy and medical advancements, the numbers of the aged have increased worldwide and will continue to do so.

As a result of this phenomenon, the state has had to take on more responsibility in addressing the needs of the elderly, in the form of various socio-economic programmes. The predominance of nuclear families, especially in urban areas, has disturbed the joint family’s traditional role of old age support.

An important government scheme is the Indira Gandhi National Old Age Pension Scheme (IGNOAPS), which provides the elderly beneficiary monetary assistance of ₹500 every month.

The beneficiaries of the IGNOAPS scheme have increased to nearly 1.7 crore in 2010-2011. But this and other similar schemes are meant only for families below the poverty line (BPL). Non-BPL individuals continue to suffer in poverty and lack of medical help.

Much more needs to be done. For long, it has been generally held that the elderly are a burden to society; this is based on the assumption that the elderly do not contribute to the economy.

However, government statistics on the elderly clearly show that a significant number of old people do work till later years, especially in rural areas and in the unorganised sector, with no retirement age or benefits. Their withdrawal from economic activities is a gradual process. They stop working only when they are physically unable to carry on.

Interestingly, in many families, aged people also support a number of dependents in the family, instead of the other way around. Therefore, it may be helpful to consider universal pension for all elderly above a stipulated age. This would help not only the aged to fight poverty, but also provide support to the family.

Studies have shown that there is a positive relationship between elderly people being physically active and their healthy aging.

In view of longer life-expectancy and elders’ willingness to remain active, there is need for various interventions, in addition to pension schemes. The government could think of extending the retirement age or providing re-employment opportunities to elders.

It would get their services at a lower cost and make them feel secure, socially relevant and employed in a familiar environment.

Medical care requires policy attention. The high cost of medical treatment and non-availability of health services results in deteriorating health. Those who can afford these services spend a substantial proportion of their savings on medical care. For others, especially those from the unorganised sector, financial constraints, lack of time, and distance to the hospital inhibits access to medical care.

Hence, universal coverage of old age health insurance is worth considering, as health-related expenditure rises significantly with age.

The challenge of a rising aged population is expected to intensify. In order to reach out to the large number of elderly, the involvement of the private sector, NGOs and religious institutions also needs to be considered.

Public-private partnerships can do a world of good.

Bharati is a research associate at the Centre for Culture and Development, Vadodara. Singh is the RBI Chair professor of economics, IIM-Bangalore. The views are personal