India’s Elders: Challenges to Inclusive Growth

By: Moneer Alam
Changing demography of the country, specifically age related structural changes can have serious implications for India in terms of its inclusive growth policy. The paper analyses the kind of changes implied by India’s rapidly changing demographic parameters in context of its elders.

India is fast shedding many of its past perils, particularly in the twin areas of macroeconomic management and demographics. Despite some serious distributional issues and lack of social protection to weaker segments – women, children and elders – India has already emerged as an important growth centre with the potential to emerge as one of the leading economies in the world. Recent projections by economic advisory groups such as Goldman Sachs and Citigroup underscore these facts. Demographically, India is moving fast to improve its major demographic parameters – leading to a great deal of changes in its age composition. The provisional population totals reported in Census 2011 confirm this. (The total population of children in the 0-6 age group was 163.82 million in 2001. It has however declined to 158.8 million in 2011). India thus needs to substantially deliberate on the economic implications of these age structural changes.

The growing working-age young may inundate the country’s labour market and might choke its clearance system while the burgeoning number of elders will need support to meet their economic and health care needs. The 12th Five Year Plan (2012-17), which envisages reducing poverty in the next five years from the current 29.8 per cent (based on the Tendulkar Committee formula) to 20 per cent by further strengthening inclusive growth strategies, would need to serve both of these population groups deftly and ensure their well-being on a sustainable basis. Enabling their greater involvement in economic activities, access to health, education, formation of skills in employable occupations etc. are some of the areas that will need special attention.


Demography of Ageing

Starting from the late 1970s, India has seen changes in the age composition of its population. From over 6 children per woman in the 1950s to about 2.6 children per woman now, the total fertility rate (TFR) in the country has persistently declined and is expected to decline further in most states. This may as well happen in the demographically low performing states of India’s northern belt. Alongside, there is a persistent decline in mortality with a considerable increase in the life expectancy levels. This has caused a significant change in age composition resulting in fast growth of elderly population. It may also be noticed from population censuses and other data sources that women have achieved greater longevity than men, posing serious issues of widowhood. They need to be involved in our paradigm of inclusive growth and brought outside the poverty net.

As noted before, the growing bulge in younger (working age) cohorts may need a concerted effort to build human capabilities and enable speedier expansion in employment, while accelerating growth in the post-60 cohorts may need creation of support institutions to meet old age income security and health care (M Alam and Armando Barrientos, Ed. 2010, ‘Demographics, Employment and Old Age Security’, Emerging Trends and Challenges in South Asia, Macmillan). Unfortunately, more than 80 per cent of elderly Indians do not have retirement resources outside their families nor access to formal safety nets, except a paltry means-tested old age pension scheme. This scheme is essentially part of the anti-poverty measure by the government but is confined only to elders living below the poverty line. The problems are compounded by the almost complete illiteracy and a high disease burden of the old. Making matters worse, they are now confronted with a pro-market economic regime without any social protection, (The United Nations Population Fund (UNFPA) 2012, ‘Report on the Status of Elderly in Select States of India, 2011’).


Inclusive Growth Strategies

In India, and for that matter in most of South Asia, rapid ageing of the population is occurring at a time when the region is changing dramatically because of its growing market influence and reversal of many traditional values, including the family system. Rapid economic development in cities and metropolises is leading to migration of younger populations, leaving many of the elders to fend for themselves – physically, emotionally and economically. There is also a growing body of evidence to suggest that income insecurities force a large fraction of older persons to continue working in highly challenging low paid employment until much later in life, often even beyond 70s or 80s (A Moneer and M Arup 2012, ‘Labour Market Vulnerabilities and Health Outcomes: Older Workers in India’, Journal of Population Ageing). The inclusive growth strategies of the 12th Plan period have been designed to ameliorate some of these concerns and encourage all population groups to participate in varied economic activities, which is likely to occur in response to the faster gross domestic product (GDP) growth in the coming years and further expansion in India’s market economy.

However, the expectations from the current Plan period may not cover the needs of the aged – especially illiterate and poor women residing in rural areas. Arguably, these women may not be able to participate in the economic opportunities created by market led growth. Current and future Indian governments will have to follow the economies of Europe and North America and create public funded pillars of income and health security to ensure their well being. Some exceptions may however be found in the form of educated and well experienced retirees. These retirees – professors, doctors, scientists, accountants, engineers and such other professionals – may serve for many more years, especially in the private sector, with the help of training and re-orientation programmes. In face of such a situation, it is plausible to argue the following: (i) As done in many other countries, ageing needs to be recognised in India as one of the important challenges requiring wide ranging public interventions to create necessary infrastructure to meet health, income security and other basic requirements of the old; and (ii) because India (and the rest of South Asia as well) had a smaller elderly population in the past, there is little scientific study to develop an evidence-based policy regime. We thus need to bring the entire scientific community from all major disciplines on-board, to examine the range of ageing issues.


Political Economy of Ageing

The coming years would also showcase the evolving political economy of ageing in India. With over a 100 million elderly populations, a thriving democracy and a fast erosion of emotive issues used by politicians in preceding decades, India appears to be ripe for such an emergence. Elderly cohorts in response may need to unite and create pressure groups to seek economic benefits against their votes. India has a large number of NGOs working across the country on issues related to elderly rights and the
prospects of a thriving political economy based on the ageing population, may not be
completely implausible.


Moving Towards Needed Responses

India has a well crafted, though non-functional, National Policy on Older Persons (NPOP) since 1999. This policy is currently being modified by a team of experts with Dr. (Mrs) Mohini Giri, as its chairperson. The NPOP has mandated the provision of shelter, health, income security, protection against exploitation, and other welfare enhancement services to the old. Much of this Policy, however, remains crippled and a revision would augur well. In addition, the Government of India has also passed a Maintenance of Parents and Senior Citizen Bill in 2007. A ‘reverse mortgage’ scheme, offered by the National Housing Bank to provide the elderly a monthly income against the mortgage of their self-owned properties, despite being in place is yet to become operational. India has also reformed its pension policy by substituting defined benefit for defined contribution and a market determined return to the contributed fund. A Pension Fund Regulatory and Development Authority (PFRDA) has also been instituted. The lack of financial literacy among older persons about various investment options and market volatility risks are major hurdles that make reformed pension policy a difficult choice for many. Responding to health needs, the Government of India is working
to initiate, in about 100 select districts, a
National Programme for the Health Care of the Elderly (NPHCE).

However, despite such initiatives, a review of the programmes related to the elderly is likely to project a dismal picture. There also seems to be a paucity of a scientific and region oriented database for formulating issue specific programmes. To gain lost ground, several initiatives by scholars, major academic institutions and UN agencies were undertaken. Three of them are noteworthy:

  • UNFPA has now identified ageing as one of the most critical issues and, therefore, launched a series of policy-oriented studies to find gaps in programmes related to older persons in India. It has also published a report on the Status of Elderly in Select States of India, 2011, the findings of which clearly indicate that ‘income insecurity, illiteracy, age related morbidity, poor functional health, and economic dependency are factors that render the elderly, and particularly elderly women, very vulnerable’. As one of the policy options, the Report seeks to improve the economic and social welfare of the elderly through their enhanced participation in social welfare schemes.
  • The National Science Academies of China, India, Indonesia, Japan and United States are working jointly to strengthen the scientific database of policy development to lay an evidentiary foundation for policy making in India and parts of Asia. The Academies have recently published a report titled ‘Preparing for Challenges of Population Ageing in Asia: Strengthening the Scientific Basis of Policy Development’, 2011.
  • International Institute of Population Sciences, in collaboration with the Harvard School of Public Health and RAND Corporation, has launched a longitudinal survey on elderly health with financial support provided by the National Institute on Ageing (USA). Yet another longitudinal study on Global Ageing and Adult Health was launched by the World Health Organisation involving 6 major countries including India.

There are many other networks, including NGOs, economists and demographers, working to raise awareness about the challenges of ageing and its implications for the economy. As an attempt to foster an inclusive growth paradigm in the country, the government may work to encourage the private sector to utilise skills of elderly persons, particularly retiring olds. This may inter alia help them in cutting their labour cost and improve their competitive edge in international markets.

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