India's
social security system is woefully inadequate, compared
even to those of several third world economies with
no higher per capita incomes. Some states in India
have fairly comprehensive social security schemes,
notably Kerala, and also West Bengal and even Tamil
Nadu, but the scale of benefits they provide is modest.
The Union government however, despite its enormous
fiscal powers, has been quite lackadaisical in providing
social security. Even the Unorganized Sector Workers'
Social Security Act enacted by it, which came into
force in 2009, is merely an enabling legislation;
it does not seek to put on the statute books any specific
comprehensive scheme of social security.
This niggardliness is particularly evident in the
case of old age pension schemes. Some state governments
no doubt have responded to the need to provide old-age
pensions, but they have been inevitably hamstrung
by their meagre resources. The Union government no
doubt has the Indira Gandhi Old Age National Pension
Scheme, but it covers only the BPL population and
persons above 65 years of age; and the pension amount
it provides is an abysmal Rs.200 per month. Even so,
the desperate need of the people for succor can be
gauged from the fact that an estimated 1.65 crore
persons access this scheme despite the meagre help
it provides.
Even if we add together all the existing pension schemes,
they collectively touch, at best, only the fringe
of the problem. First, they are an assortment of specific
schemes rather than an expression of a right to pension.
Secondly, they do not provide universal coverage.
Leaving aside the pension schemes of the organized
sector, the others, such as they are, target specific
groups of unorganized sector workers; and even when
they are not tied to specific occupational categories,
such as the IGOANPS, they nonetheless cover only the
BPL population, whose size, as is well-known, is arbitrarily
fixed by the Planning Commission at a ludicrously
low level. Thirdly, a large number of them insist
on some contribution from the beneficiaries. And fourthly,
the amount of pension they provide, as we have already
seen, is pathetically meagre.
This is a serious problem, and one that is likely
to become even more serious in the years to come because
the increase in longevity and the fall in the birth
rate would raise the percentage of the ''old'' in
the population. It is estimated that by 2050, nearly
a fifth of the world's population will be above 60,
and in India and China the proportion is likely to
be around 24 percent. All over the world progressive
forces are demanding the institutionalization of a
publicly-funded, universal, non-means-related, non-contributory
pension scheme for the aged, to be accessed by them
as a matter of right. This demand has also begun to
be raised in India, as the dharna at Jantar Mantar
between May 7 and May 11 has just demonstrated.
So pervasive, however, is the impact of the bourgeois
media in India that even many otherwise well-meaning
persons may not appreciate the rationale of this demand:
why, they may ask, should a pension scheme be publicly-funded
when those who draw the pension are persons who had
earlier been employed by private employers? Why should
it be universal instead of being means-related? And
why should it be non-contributory: why should people
who have not paid towards a pension scheme nonetheless
enjoy a right to draw a pension?
The starting point of the answer to such questions
is the basic social philosophical position which underlies
the argument both for the welfare state and for socialism,
namely that material deprivation is the result not
of some individual failing on the part of the deprived
but of the social arrangement within which they live.
If there are people in society who are hungry and
malnourished, then it is not their fault but that
of the social arrangement under which they live; if
there are people who are involuntarily unemployed
then the reason for that lies in the social arrangement
under which they live; if there is concentration of
wealth at one pole and of poverty and destitution
at another, then this is reflective not of some ''natural
order of things'' but of the specific social arrangement
under which people live. And this social philosophical
position is not a matter of faith, but is analytically
sustainable.
To overcome destitution, including that which afflicts
the old, we have to change the social arrangement
which produces it, and the first step in that direction
is the use of the fiscal powers of the State. (The
socialist argument is that such use, which also amounts
to interfering with the distribution of resources,
is not enough, and that the underlying property relations
themselves have to be altered). And since the essence
of democracy is that everyone must have adequate means
of sustenance, access to it must be a right which
is guaranteed by the State, upon whom falls the responsibility
of adjusting the social arrangements for this purpose.
Now, the State has alternative means of raising its
revenue. Contribution by beneficiaries towards a State-maintained
pension scheme is just one way that the State can
raise resources for such a scheme. But to make that
a condition for pension payment, apart from being
iniquitous, undermines the right to pension that must
be a part of democracy. The demand for a non-contributory
scheme therefore is derivable from the rights-based
approach, as indeed is the demand for universality.
Of course if a person is already a beneficiary of
an existing pension scheme, providing an additional
pension to that person as part of a universal publicly-funded
scheme appears unnecessary; but many would argue that
a system of progressive direct taxation would automatically
take care of this double benefit; hence such double
benefit should not come in the way of universality.
But this last point belongs to the realm of minutiae.
The basic argument for a universal, non-means related,
non-contributory pension scheme, as a right ensured
to the old, stands unimpaired. Of course the ''old''
are not the only deprived section in our population;
poverty, deprivation and hunger are rampant in our
country, but that is an argument for extending the
right to adequate means of livelihood to all, not
for denying it to the ''old''.
But, what, it may be asked, constitutes adequate means
of livelihood? Here one can follow two different approaches.
The first, which is used in much international discussion,
is to define ''adequate'' in the sense of avoidance
of poverty, which in India is defined officially as
access to 2100 calories per person per day in urban
areas and 2400 calories (later reduced to 2200 calories)
per person per day in rural areas. The daily per capita
expenditure level at which this was achieved in 2009-10
was Rs.36 in rural (for 2200 calories)and Rs.65 in
urban areas, whose weighted average (if we are to
avoid different amounts of pension payments), works
out to Rs.46. At current prices this would be equivalent
to around Rs.60, in which case the monthly pension
amount on this criterion should come to Rs.1800.
The other approach, the one adopted by the ''Pension
Parishad'' which had organized the dharna at Jantar
Mantar, sees the pensioners as ''workers'' and hence
entitled to a proportion of the wage income as pension.
On this basis the Parishad has demanded half the monthly
minimum wage rate, or (in view of the differing minimum
wage rates across states) a flat amount of Rs.2000
at the current price, whichever is higher, as the
pension amount per month. This approach has merit.
But, no matter what precise figure is adopted (and
the two are pretty close to one another), the point
to note is that on either approach the monthly pension
payment should be far higher than the current measly
sum of Rs.200.
The ''Pension Parishad'' puts the pensionable age
at 55 for men, 50 for women and 45 for specially deprived
communities, while international discussions take
the age to be a blanket 60 for the third world countries.
The ''Parishad'' estimates about 10 crore persons
as belonging to these age groups. If some exclusions
are made, e.g. for those who pay income taxes, or
those belonging to the organized sector whose pensions
already exceed the stipulated amount, or if the age
is increased to say 60, there would still be around
8 crore persons to provide for. At the rate of Rs.2000
per person per month, the total amount would come
to Rs.192000 crores which is, in round figures, 2
percent of the GDP.
Questions will be immediately raised on how resources
of this order of magnitude can be found. But the magnitude
of the requisite resources can be put into perspective
as follows: the growth rate of the economy, as the
Union government never tires of repeating, has been
around 8 percent , or, in per capita terms just over
6 percent. The resources required will be only one
third of the increase in per capita income, i.e. if
only a third of the increase in one year in the per
capita income of the country is collected from the
''average'' Indian then the resources so obtained
will be quite adequate to finance a universal pension
scheme .The average Indian of course does not see
his or her income rising at 6 percent per annum in
real terms, but this should make it even easier to
garner the required resources from the well-to-do
who corner the increases in income. In subsequent
years, since the ''real'' pension per head will remain
unchanged and the total amount will increase only
at a rate slightly higher than the rate of population
growth (owing to the increase in longevity), the percentage
of GDP required for the scheme will keep going down,
i.e. lesser and lesser proportions of the additions
to annual income will have to be taken from the ''average''
Indian for financing the pension scheme. This surely
is affordable, especially when the Union government
has given away Rs.500,000 crores per annum, i.e. more
than double the amount needed for the pension scheme,
in the form of corporate tax reliefs in recent budgets.
For raising these resources however fresh taxes will
have to be levied. The National Commission on Enterprises
in the Unorganized Sector had suggested a set of cesses
to finance a far more modest social security scheme,
costing only 0.5 percent of the GDP. In international
discussions the emphasis has been on a combination
of Tobin Tax (at 1 percent) and profit tax (2 percent
of profits) for financing such a global scheme (which
is supposed to cost $250 billion, at $1 a day for
all those above 65 years in advanced countries and
above 60 years in third world countries). Similar
tax proposls can be worked out for India as well.
The crucial need is to put democratic pressure on
the State for launching such a scheme.
* This
article was originally published in the Hindu, 10
May 2012, and is available at
http://www.thehindu.com/opinion/lead/article340
1455.ece
