A country with a high standard of living and medical advancement should not bear an ageing burden. However, this might not be the case in India, with economic support for its ageing population becoming an important issue, and the absence of proper health insurance coverage and an inefficient public healthcare system creating bottlenecks in spite of considerable medical advancement. The ageing burden is particularly severe when it comes to elderly people of the low-income group who have to suffer financial deprivation, low social status and sometimes the costs of medical treatment.
India’s Ageing Burden: Interface with Policy
The process of ageing had begun much earlier in the developed world, with many countries witnessing a decrease in adult mortality rates. India however, is a developing country that is instead witnessing an increase in its demographic dividend, i.e. an increase in its rate of economic growth partly as a result of an increasing population of working-age people. The result of this demographic dividend will also be an increase in the ageing population, and without the means and conditions to take care of its ageing population, any efforts to further increase India’s demographic dividend will be unwelcome in society and in India’s economic system in the future. Just like the demographic dividend has very important implications for economic policy and growth rates, so does the ageing burden have effects on the economic system that traverses numerous economic fields, some of which include labour supply, insurance, consumption, cross-border capital flows, and so on.
As per the Census 2011, 5.3 per cent of the total population in India is above the age of 65 (Census, 2011). As India’s demographic dividend expands and the working age population grows beyond the age of 65, it is argued that so would the dependency ratio, including those dependents above the age of 65, grow in India. This canreduce the capacity of India’s economic system in sustaining an ageing population. India, with a massive middle class and large masses of poor people, might instead have an ageing burden with a largely moderate to low standard of living and increased pressures on the healthcare system. The key economic aspect that emerges thus lies in raising the standard of living of the elderly population such that the negative effects of a high dependency ratio in India in the near future that comes along with a sustained high demographic dividend are minimized.
The most popular policy idea in terms of the standard of living of elderly people is of course substantial levels of public pension. Many elderly people might not have high levels of private savings, and in this scenario, many elderly people invest in pension schemes at banks or receive pension after government service. If care for the elderly is to take a government-intensive approach, it would also be useful to look at the idea of social security. Although a comprehensive social security scheme is not present in India, the government of India is planning to introduce a new universal social security scheme with a specific focus on providing a safety net for workers in the informal labour sector. The Ministry of Labour and Employment has drafted the social security code that aims to provide universal social security beyond the Employee Provident Fund Organization and the Employees State Insurance Corporation. The draft scheme aims to cover mandatory pension, maternity coverage, insurance in terms of disability and death, with optional coverage such as unemployment and medical coverage (Magazine & Sasi, 2018). The International Labour Organization (ILO) reports that a large proportion of workers in India – 82.2 per cent in 2011-12 – work in the unorganized sector (ILO, 2016). There can be no guarantee of a regular pension for those working in the unorganized sector. Therefore much will depend upon how well the policy can deliver for a large number of India’s working people.
India’s increasing demographic dividend also means that the focus should be on economic security especially for low-income individuals, and although the details of the draft social security scheme are not final, the scheme shows a readiness to benefit people from low-income groups such as in the case of people carrying out informal labour. However, many grey areas remain such as in the case of the amount received as old age pension. Issues also remain over whether the centre, the states, or employers will contribute. The draft social security code has not yet been finalized, and cannot be fully analyzed in respect of India’s ageing burden as it is still in its draft stage. A precise analysis is important especially when standard of living may mean different things for different people, in different locations, along with different requirements needed for different people.
A bank or government pension or one as a constituent of a social security scheme serves to release the beneficiary from poverty, can ease consumption needs, improves access to healthcare and also provides protection to elderly people who are particularly vulnerable against the social effects of financial deprivation. According to the degree and nature of needs people can have different requirements and thus different standards of living. For example, an elderly person might suffer from a medical condition that requires high expenses in treatment, and thus might require greater financial resources than one who might incur lesser expenses in medical treatment. In such, government schemes such as the National Old Age Pension Scheme (NOAPS) or the Atal Pension Scheme can help elderly people in getting access to pension in old age. Such schemes along with other government poverty alleviation schemes such as life insurance schemes for example can be especially useful in working especially for elderly people who are poorer.
The Elderly as an Economic Resource
Other than pensions and social security schemes that can be addressed towards the masses, another emerging issue that can help in alleviating the ageing burden in terms of standard of living is investments that offer high returns to beneficiaries. Many people while in possession of finances can invest in acquiring financial assets such as art, real estate, government bonds, precious metals, mutual funds, etc. Many such investments can deliver high returns to elderly people when they are sold on maturation. Many a time, older people might not invest due to not being able to determine an adequate investment strategy or due to losses suffered due to investing in high-risk assets. Adapting to investment strategies might pose difficulties for older people even though they might have good knowledge of things that they are familiar with. This might create bottlenecks in terms of acclimatization of elderly people with investment strategies such that investing as an idea might not be widespread as a post-retirement option.
Investing represents a mode of earning without the power to formally contribute to the production process. Elderly people without formal participation in the production process, might be seen as a liability to the economic system. In their interface with the economic system, without the power to generate productivity, elderly people might constitute thus an ageing burden on the economic system. It can however, also be argued that given the experience and knowledge of elderly people, they can also on the other hand, be seen as a resource and not in terms of an ageing burden.
Arun Maira (2016) writes in Livemint that elderly people should not be considered a problem, but become part of solutions for society and provides the instance of community mobilizations in Vietnam as an example. There are many Old People’s Associations (OPAs) among communities in towns and villages in Vietnam which are democratically run, endorse community causes by choice, provide special assistance to certain elderly people, and assign members with responsibilities. They thus look to provide community support for elderly people and are also socially active (Maira, 2016). Any mobilization of local communities will be greatly boosted by the age and wisdom of elderly people, where they can provide their experience of society and other forms of knowledge to help local people better.
India is also steadily becoming an economy where knowledge is becoming an increasingly important aspect of the production process. It is also a fact that employees commonly tend to become most productive when they approach middle-age, indicating that the gathering of experience and knowledge is an important part becoming a more productive employee. As India moves towards becoming a more knowledge-intensive economy, it must also create opportunities for elderly people willing to contribute and earn out of their knowledge and experience. Elderly people can be very effective counsel for younger people as well, and can offer their services in exchange for earning in income. For example, it is possible that many elderly people can start or participate in private coaching or counselling centres after retirement to earn an income.
In many traditional societies of the past, the elderly were seen as leaders by local communities and were much revered as a source of wisdom and experience. In many modern societies, the diffusion of vast amounts of information in societies has in many cases led to the illusion that common knowledge among people is enough or has made knowledge gathering among people a specialized activity. This however, does not substitute for the experience one gathers as one moves through life in terms of a greater understanding of life-worlds and categories of thought.
The key to the elderly as a resource and raising their standard of living in economic terms is to recognize them as founts of experience and knowledge. Economic opportunities created thus would greatly help reduce India’s ageing burden and ease the future prospects of India’s increasing working-age population. Incomes and standards of living for the elderly must improve such that India’s ageing burden can be reduced. Although investments are an avenue whereby the elderly can create additional income, investing is a practice where the masses cannot participate without a significant development of abilities. The knowledge and experience of elderly people however, can be utilized such that they can look towards earning an income post-retirement. There however, must be opportunities that can be created in the economic system to allow access to elderly people to utilize their knowledge and experience as well as awareness for the same.
India is blessed with an increasing demographic dividend that can help increase India’s economic growth rate. However, this demographic dividend can become a liability if it leads to an increasing ageing burden. An ageing burden occurs when elderly people are not utilized as a resource in society and instead are economically deprived and suffer conditions such as ill health. The ageing burden can be minimized in India if the standard of living of the elderly can be improved such that they can meet the demands for increasing cost of living in contemporary society. Often an increasing cost of living combined with expenses unique to elderly people such as medical expenses over an increased susceptibility to certain non-communicable diseases such as cardiovascular diseases and cancer can increase pressure on elderly people. This can also act to increase the needs required to overcome the ageing burden in India.
So far policy towards reducing India’s ageing burden has been mostly concerned with providing insurance, pension and social security schemes. The ageing burden in India however, can be greatly reduced if the ageing population is not seen only in terms of an economic liability or as people that need assistance and care, but also as an economic resource. In this the experience and knowledge of elderly people can be utilized such that their standard of living can improve in terms of income. Looking into the standard of living in terms of India’s ageing burden must look beyond insurance, pension and social security schemes and create policies that also look to nurture the agency of elderly people in raising their own standard of living.