Economic security arrangements in the context of population ageing in India

Life expectancy in India is rising steadily.  However, a combination of migration out of rural areas and the continued concentration of the working population in the informal sector, means there is a pressing need for better economic security arrangements for the elderly. Women in particular face specific disadvantages in ensuring their economic security.

This paper describes the nature of the financial insecurity that India’s elderly face and assesses the major government initiatives that address economic security for Indians at different stages of the lifecycle. It also considers the potential lessons that India’s experience with these programmes holds for other developing countries that are contemplating similar initiatives.

The report highlights the following factors affecting the elderly:

• family ties are beginning to fray due to internal migration of working-age people, and the fragmentation of land meaning fewer children living with their parents, consequently there has been a diminished tendency to live in multigenerational family units, with changing social expectations regarding intra-familial obligations

The authors go on to assess:

• programmes intended specifically for enhancing elderly income and support, such as the National Old Age Pension Scheme and the Indira Gandhi Old Age Pension Scheme, and highlight problems associated with targeting the poor and determining the age of a older person, particularly in rural areas
• programmes intended to enhance incomes for informal-sector workers - including government activity to promote the provision of subsidized micro-credit, particularly in rural areas, and the Mahatma Gandhi National Rural Employment Guarantee Scheme
• programmes protecting against the financial risks of ill health - such as the National Rural Health Mission, and insurance coverage schemes, and the large Rashtriya Swasthya Bima Yojana (RSBY) scheme financed primarily by India’s central government intended to cover all below-poverty line individuals/households in India

The paper suggest that the main lessons from the Indian experience that apply to other countries can be divided into three areas: the appropriate role of the public and private sectors, and the division of responsibility between the national government and lower levels of government when funding is provided primarily by the government; the relative roles of tax financing versus contribution-based approaches; and programme implementation (including targeting beneficiaries, management capacity and evaluation).