There are very few serious differences between India and the US over economic issues. But a relatively minor issue, at least at the nation-to-nation level, is one of major significance to the hundreds of thousands of skilled Indians working in the US on various kinds of temporary visas. The absence of a ‘Totalisation Agreement’ between the two countries, which would have eliminated Indian temporary workers in the US paying social security taxes both home and abroad, has meant that Indians who work temporarily in the US do not get any benefits from the money they have paid out there on their return to India. Given the number of Indians who are affected — most of them technology workers earning high salaries — their contributions add up to a not inconsiderable sum. The Ministry of Overseas Indian Affairs estimates that Indians contributed around $4 billion to the US Social Security programme last year, and over $25 billion over the past decade.
That might be chump change for the world’s largest economy, but it is a serious cost to Indian workers as well as their employers, who often have to cover this. Eliminating this would make India’s IT sector more competitive; the absence of such an agreement acts as a non-tariff barrier, the Indian IT industry has argued. There is merit in this argument, but even on the principles of natural justice, India has a strong case. It is fundamentally unfair to collect money from individuals for benefit payouts they will never receive. An agreement would not only exempt them from social security contributions, but also enable exportability of pensions in case of relocation. And since any bilateral agreement is, by definition, reciprocal, US citizens working in India would have received similar benefits.
Yet, negotiations over the past decade have failed to achieve this. The US has argued that it cannot legally enter into such agreements with countries where at least half the population is not covered by any form of mandatory social security programme. India’s argument that schemes such as the Rashtriya Swasthya Bima Yojana and the Atal Pension Yojana meet this test, has been rejected on the grounds that they are neither universal nor mandatory. Other counters have included the opacity and difficulty of access of the Indian Provident Fund scheme, as well as issues in ensuring that repatriated benefits actually reach the intended beneficiary. While Commerce Minister Nirmala Sitharaman is expected to press India’s case at an upcoming meet in Washington, it might be worthwhile for the Centre to reflect on the underlying issues. As we aspire to a place at the global top table, perhaps it is time to seriously consider universal social security and medicare programmes.