Economic and Financial Aspects of Ageing in India-

Economic and Financial Aspects of Ageing in India-
Requirement of Policy Changes
1.Introduction

India is a world within the world. It is occupying an area of about 2,287,263 square
Kilometers with over one billion population (census 2001). Nearly all the languages are spoken in this country and all religions find their practitioners here although Hinduisms is the dominant religion. Sixteen per cent of the world’s population lives in the country. Some 826 languages and thousands of dialects are spoken. Different regions of the country – river valleys, plains, deserts, vast stretches of coast, snow covered mountains, present different types of life style and culture. While 72 per cent of the population lives in rural areas, there are more than 225 cities with over 100,000 population, and ten cities with over a million people. India has rich deposits of minerals, natural gas, oils, fertile lands, and other flora and fauna. Art and architecture, dances and music, and other histrionic arts of the populations have their origin in the deeper layers of history of India. Modern India has been carved out from thousands of princely states, from various political thoughts and from diversity of socio political habitation. India has been a subject of invasions from foreign invaders from many parts of the globe. India has been the treasure house of goods to be imported by many countries. Indian population with stood great invasions, great famines, floods, tsunamis, earthquakes, droughts, diseases, and grown and aged with over a billion population, the second most populous country in the world. Now different parts of the country are experiencing varying degrees of socio-economic change. Literacy, employment, health and morbidity rates vary from region to region. Urban and rural environments present contrasting pictures with respect to quality of life at any age. Thus India is united in diversity. Indian democracy is respected with active participation of all parties within power or outside power.

With the economic liberalization started during 1990, India is now trying to become economic super power in the near future. However, growing population, poverty, unemployment, natural calamities, disease ,cross border terrorism, regional disparities, political instability, and add to all these the population ageing and large number of aged workers in the informal sector are the growing concern for India.

2. Ageing in India
The current problem of the policy makers to extend socio economic security for the poor is the demographic ageing and increased number of aged in the country’s population. The growth of the aged population which is either dependant on the young or unemployed or working for food during the evening yeas of their life is a challenge to the social security systems in the country. As there is no correct definition to the aged, we consider , that the population above the age of sixty as aged. This can be safely taken as the retirement age in the organized employment in the country is between 58 years to 60 years on majority. According to the data available from the decennial census the number of aged has increased from about 19.6 million in 1951 to 75.93 million in 2001 or by 287 percent over 50 years period. Their share of population increased from 5.5 to 6.8 percent. However in effect, nearly 72 percent of the increase in the number of the aged has to be attributed to population growth, where as the balance 28 percent has been due to the aging of the population.
Growth of elderly population aged 60 and over, by sex, in India 1901-2001

Population 60+ (in millions
Year Persons Males Females

1901 12.06 5.50 6.56
1911 13.17 6.18 6.99
1921 13.48 6.48 7.00
1931 14.21 6.94 7.27
1941 18.04 8.89 9.15
1951 19.61 9.67 9.94
1961 24.71 12.36 12.35
1971 32.70 16.87 15.83
1981 43.98 22.49 21.49
1991 55.30 28.23 27.07
2001 75.93 38.22 37.71
Source: Sharma, S.P. & Peter Xenos. ‘Ageing in India: Demographic background and analysis based on census materials’ Occasional paper No. 2 of 1992, Office of the Registrar General and Census Commissioner, India, New Delhi, 1992 (4).

Majority of the people in India do not know their actual age, therefore the statisticians or the demographers adopt a technique of smoothening the age. To illustrate the smoothed data in 1961 and 1971indicated the number of the aged in India as a whole to be 21.32 and 28.25 millions or about 14 percent less than the reported figure of 24.71 and 32,70 million respectively. In 1981, the reported and the smoothed differed to 3.3 percent. The smoothing for the population for 1991 age distribution has lowered the number of the aged only 1.3 percent and their share in the population from 6.8 to 6.7 percent. The process does not end here; the constant aging process will disturb the mood of the policy makers if we look at the projections of the aged in the population in the years to come. If we assume a closed population unaffected by immigration or emigration, persons in the age group 60 and above over the next 25 years will be survivors of those who are already in the age group of 35 and above. (Visaria and Visaria)

India projected figures of the population aged 60 and above
1996-2026
a. Official projections for the 9th plan.

Year Males Females Persons
(in Million) ( % in parentheses)
Year Males Females Persons
1996 32.33 29.99 62.32
[6.67] [6.67] [6.67]
2001 36.21 34.36 70.57
[6.91 [7.03] [6.97]
2006 41.83 39.99 81.81
[7.41] [7.55] [7.48]

2011 48.86 47.06 95.92
[8.05] [8.23] [8.14]
2016 57.36 55.60 112.96
[8.84] [9.05] [8.94]

b. Alternative long-term projections.

1996 31.02 32.81 63.83
2001 36.42 38.52 74.94
2006 42.68 45.33 88.01
2011 50.30 53.41 103.71
2016 60.20 63.86 124.06
2021 72.58 76.93 149.52
2026 87.16 92.20 179.36
2031 103.35 109.47 212.82

Source: census of India 1991, population projections for India and states, 1996-2016
Registrar general, India, New Delhi, 1996

According to the above population projections number of persons aged 60 and above was expected to rise from 54.5 million in 1991 and 62.3 million in 1996 to 70.6 million in 2001, 81.8 million in 2006, 95.9 million in 2011, and 113.0 million in 2016. In other words, while the total population is projected to increase by 49 percent from 846.2 million in 1991 to 1263.5 million in 2016, the number of the aged is likely to grow by 107 percent over the 25-year period. The share of the aged in the total population will rise to 8.9 pent. Unlike during 1951-1991, the contribution of the changing age structure to the growth in the number of the aged will be a major factor accounting for 55 percent of the projected growth.

The characteristics of the aged as per a survey conducted by the national sample survey ( as bulleted below) is relevant for us to understand the problems of the old who require social protection.
• Only 4 to5 percent of the aged live alone. Less than 1 percent were inmates of old age homes. About 11 percent of rural aged and 8 percent of the urban aged lived with the spouse only, about 46-47 percent lived with spouse and other relatives. Among others, 33 to 35 percent lived with their children. About 5 percent of the aged lived with “other relations or non-relation”.
• About 30 to 31 percent of the aged males in rural and urban areas reported that they were fully dependent on others. The corresponding figures for females in rural and urban areas were 71 and 76 percent, respectively.
• About 30 to 31 percent of the aged reported that they were not dependent on others. The percentage was much lower for females {11 to12}.
• Only about 5 to 6 percent of the aged reported that they did not have a surviving son or daughter. Almost 88 percent had two or more living children.
• About 76 percent of the aged, who were economically dependent on others, received support from their children or grand children. About 14 to 15 percent depended on their spouse. Only 6 to7 percent reported they have depended on others. For about 3 percent of them, no response was recorded.
• About 54 percent of both the rural and the urban aged reported having financial assets, and a majority of them managed as well. About 70 percent of the aged males reported possession of assets, whereas the proportion was much lower among females {39 and 38 percent in rural and urban areas}.
• About 63 percent of the rural aged and 58 percent of the urban aged reported possession of property. A majority of them managed it also.

About 52 percent of the rural aged and 54 percent of the urban aged reported that they suffered from a chronic disease. The most frequently reported ailments were “problem of joints”, cough, and a high or low blood pressure. The problem of cough was reported by 22 percent of the rural aged and 16 percent of the urban aged; the corresponding figures for blood pressure were 11 and 23 percent, in rural and urban areas respectively. These chronic ailments would raise the need of the aged for medical or health-related expenditure. The Ministry of Social Justice and Empowerment further looks at the problem as “The special features of the elderly population in India are :- (a) a majority (80%) of them are in the rural areas, thus making service delivery a challenge, (b) feminization of the elderly population ( 51% of the elderly population would be women by the year 2016) , (c) increase in the number of the older-old ( persons above 80 years) and (d) a large percentage (30%) of the elderly are below poverty line.”(Annual report Ministry of Social Justice and Empowerment)

This situation of the old thus requires the urgent attention of the policy thinkers or the policy makers of social protection. Keeping these problems in view we will further our discussion to understand societal implications on the aging in India, the economic implications and possible recommendations to address socio economic issues covering the elderly.

3. Societal implications on ageing
Traditionally Indian Society has respected and regarded the aged. The younger generations treated the aged as the treasure house of care, knowledge and authority. Family has been felt complete if there is at least one aged person. For performing religious rituals, on the occasions of births, deaths and particularly in marriages the elderly are consulted and their opinion is respected. There are a number of instances where elderly of other families are consulted on such occasions where there are no elderly in the family. Elderly thus commanded care in traditional Indian society. Care was never demanded. However as it is repeatedly repeated by every scholar, urbanization and industrialization have disturbed the extended family setup for simple economic reasons, there by making state and the community think of elderly care.

3(b) Ageing and the Family
Traditionally family has been the key institution that provided psychological, social and economic support to the individual at different stages of life. Elderly in the family enjoyed undisputed authority and power. They were treated as knowledge banks and resource persons for the younger. Their advice is accepted as law; their words are respected as words of god. However the structure of family has undergone changes differently at different stages of human history in India. Intergenerational relationship and the role of women in the family are changing that affect the care of the aged in the family.
Industrialization and urbanization have brought changes to family structure in India to a great extent. The extended family that existed in the society has changed to a nuclear family. This has affected the position of the elderly in the family as well as the family's capacity to take care of the aged. However, in India the older people are still cared for by the younger relations. As keeping parents in old age homes draws criticism from social networks and community at large, living in old age homes is not popular in India. The strong cultural pressure makes the families to take care of the elderly. Traditionally the aged felt that the money spent on their offspring was an investment that could enjoy the returns when they became old. They derived psychological and economic support from the younger generations.
In the recent times individualism, independence, and achieved position in the family are becoming part of family culture in India. The aged would now prefer to live independently as long as possible and the children do not feel guilt of being away from the parents. Nevertheless there is no total societal acceptance to deserting parents by their children. Living arrangements for the elderly are influenced by several factors such as gender, health status, disability, socio economic status, societal tradition and cultural heritage.
3(c)Women and Ageing
Women take care of every one in the family. Aged in the family get a special attention from the women, particularly the daughters in law. The son is responsible for the aged parents, so is his wife a caregiver. Today, women are more educated and would like to work outside the home. This working role sometimes brings in conflict with the care-giving role, especially if there is a very old parent to take care of. Many women have to forgo their jobs to take care of the aged. This dilemma is going to increase in the future, as the family structure becomes more and more vertical in shape. Problems become multiple when there is an elderly person in the home requiring constant care.
In India still a majority of the population living in villages involved in agriculture. Most of the women work in the agriculture field, which are closer to their homes. Women are thus providing care to the aged, even if they are working. However, due to urbanization, industrialization and rural poverty, many are migrating to cities in search of job. Normally, the weak and frail are left in the village leading to destitution of the aged in India. In cities the, the women often have to work irrespective of their age to supplement the family income. In such situation, the care of the aged in the city is becoming a problem. It puts additional burden and strain on the women as caregivers.
Life expectancy of women is longer than men. The implications of longer life of women are manifold. Larger proportion of older women is likely to become widows. In the case of men, many remarry but widow remarriage has no societal acceptance fully in India. For women, widowhood signifies loss of role in relation to the spouse. With the emergence of the vertical family structure in India large number of widows were living alone depending on their children or other relations. Since women live longer, they are likely to suffer from more chronic illnesses and disabilities. In India, widowhood can push the aged woman into oblivion. She is excluded from all the social functions in the family and financially also her dependency increases on her sons. They constitute the poorest among the elderly. Widowhood involves loss of roles for the women to a great extent. However, with the modernization, widows are gaining their place in the society, especially in the cities.
4 (a) Care-services for older persons in India
Indian Government and traditional Indian society, both have the systems of aged care India. Nevertheless, the traditional aged care is more dominant and respected where as the institutional care for the aged is looked down upon on an individual as his irresponsibility to take care of his parents. The ‘Vanaprsthashrma’ or disengagement has been described as on of the four stages of human life in Indian scriptures. This stage in a man's life requires him to give up his authority over family and property, and devote his time to self-realization. Such cultural traditions played an important part in the life of elderly Indians. Indian social norms not only call for the proper care of the elderly by the family and the kinship group, but also define their status with regard to most family matters. Therefore, old age has never been seen as a social problem in India in the days gone by. India has a tradition of philanthropic and voluntary activities for mitigating the sufferings of disadvantaged and marginalized groups. The aged, the poor, frail, disabled and homeless over the centuries have been taken care of by various initiatives, though not adequate, supported by voluntarism in combination with state provisions. However the voluntary sector was the first to recognize and respond to the needs of aged in India.
In contemporary Indian society, however, the position and status of the elderly, their care, and protection that they traditionally enjoyed have been ignored by several factors. Urbanization, migration, the break-up of the extended family system, growing individualism, change in the role of women from being full-time carers, and increased dependency of the elderly may be a few. The changes in terms of education, aspirations and values, and availability of resources have contributed a lot to this decline. Consequently, the family is unable to meet the financial, social, psychological, medical, recreational and welfare needs of the aged, thereby creating need to look for other support sources. .
The rural urban aged care arrangements and practices some times appear totally opposite to each other. More than 80% of those aged over 60 live in rural areas. The rural elderly are older than the urban elderly, but have little access to tertiary care services. In the rural areas 6% of the women are elderly, in the urban areas 5.1 %. While 78.2% of the elderly men are currently married, thus having the support of the spouse, 64.3% of elderly women were widowed, and most of them are dependent. A large workforce exists in the rural informal sector: 70% of rural elderly men work, as against only 48% of urban elderly men. In rural India care of the aged has been the responsibility of the family. In majority of cases elderly in the family have been accepted as way of life but not as burden unlike urban India, where nuclear families are becoming too individualistic. The institutionalized old age income support schemes are totally absent in rural India where as urban employed class to some extent enjoy this. The health care services also differ significantly in rural and urban areas, with emphasis on primary health care in the rural areas, and tertiary care in the urban areas. Aged still resort to traditional methods of costless home treatments for palliative actions.
4(b) State and voluntary support to the aged
The responsibility of the State for its senior citizens is enshrined India's Constitution. It includes pension schemes, but these are applicable largely to the organized workforce. Is estimated that 67 % of the country's elderly men and 16% of its elderly women are economically active. Of the non-working elderly, only 23% of the men are retired pensioners; 71% of the men and 52% of the women are dependent on others.
In addition the constitutional provisions, the processes of social change – modernization, urbanization and technological change leading to urban migration, employment of women outside the home, nuclear families have made voluntary and philanthropic groups come forward to help the aged.
A voluntary agency in the care of the elderly in 1982 listed 379 agencies in the care of the aged; the number of new ones established each decade showing an increase especially after India attained Independence. About 86% of the listed agencies are institutions providing services like day care, recreation, counseling, geriatric care and financial as assistance. A decade later in 1992, the Handbook of Information published by the Association of Senior Citizens listed 665 organizations in India working in the field of welfare of the aged. The list included old age homes, day care centers, pensioners’ associations, institutions providing medical help, institutes devoted to research, and associations of senior citizens. Most of these voluntary agencies provide care in the form of old age homes, either as free or on a ‘pay and stay’ basis. Many of these are set up under religious considerations. Old age homes in India are used by the aged to spend their last days either as a last resort when the family support system breaks down, or for family and social compulsions.
The 8th and 9th plan have recognised and emphasized the role of voluntary agencies in the care of the aged. The National Policy on Older Persons (1999) talks of promoting and assisting voluntary organizations for providing non-institutional services, construction and maintenance of old age homes, organizing services such as day care, multi-service citizen’s centers, reach out services, supply of disability related aids and appliances, short term stay services and friendly home visits by social workers.
The government of India endeavours include:
a. Uniform age of 60+ for extending facilities/ benefits to senior citizens;
b. The National Council for Older Persons has been re-constituted in 2005. Presently, it has 37 members
c. Financial security to the elderly population by (1) proposing tax benefits and higher interest rates for senior citizens (2) promotion of long-term savings in both rural and urban areas (3) increased coverage under of old age pension schemes for the destitute elderly(4) Employees Pension scheme 1995 for industrial workers covered under Employees Provident Funds Act 1952 and (5) prompt settlement of pension, provident fund, gratuity, and other retirement benefits;
d. Health care and nutritional needs of the elderly populations by 1. Strengthening of primary health care system to enable it to meet the health care needs of older persons; 2. Training and orientation to medical and Para medical personnel in health café of the elderly. 3. Promotion of the concept of the healthy ageing. 4. Assistance to societies for production and distribution of material on Geriatric care. 5. Provision of separate queues and reservation of beds for elderly patients.
e. Food security and shelter by 1. Coverage under the antyodaya scheme to be increases with emphasis on provisions for the benefits of the older persons especially the destitute and marginalized sections 2.Earmarking ten percent of houses/ house sites for allotment to older persons.3. Barrier free environment for the disabled and elderly persons etc.
f. Meeting the education, training and information needs of older persons. Developing Human Resources in Geriatric care
g. Identification of most vulnerable among the older persons and working for their welfare.
h. Realizing the crucial role by the media in highlighting the situation of older persons and emphasizing their continued role in society.
i. Protection of life and property of the elderly population.


The other steps taken by the government include:
Inter-Ministerial Committee
The Ministry of Social Justice and Empowerment (SJ&E) has also set up Inter-Ministerial Committee (IMC) headed by Secretary (SJ & E) for ensuring speedy implementation of the decisions taken in the meeting of the National Council for Older Persons and also to review the progress of plan of action 2004-2005 as well as annual plan of action 2003-2004 for implementation by the concerned Ministries/ Departments as in many cases, the activities have to be initiated by the other Ministries/ Departments and, therefore, a combined effort by all the Ministries/ Departments is required to implement the National Policy on Older Persons. Several meetings of the Inter Ministerial Committee were held. The last Inter-Ministerial Committee meeting was held to analyze the progress made so far as per Annual Plan of Action.
The Plan of Action 2000-2005
The Plan of Action 2000-2005 to operationalise the National Policy for Older Persons has been prepared and finalized by the Ministry. The initiatives as per the Plan of Action 2000-2005 are to be implemented by various Ministries/Departments concerned. For this, the Ministry has also set up an Inter-Ministerial Committee for ensuring speedy implementation of the decisions taken in the meetings of the NCOP and also to review the progress of Plan of Action 2000-2005 for implementation by the concerned Ministries/Departments. An Annual Plan of Action 2004-05 for implementation by the concerned Ministries/Departments has also been prepared and finalized by the Ministry in this regard.
The Inter-Ministerial Committee comprises of twenty two Ministries/Departments and representatives of State Governments and UT Administrations. The Inter-Ministerial Committee is responsible for the implementation of the action points as described. The last Inter-Ministerial Committee meeting was held on the 23rd December, 2002 to review the progress of the Plan of Action and to discuss the proposed Plan of Action 2003-04. The need for a committed budgetary allocation for each Ministry in case of fund-based programmes and a shift in policy/procedures in non-monetary areas of intervention were highlighted in the meeting.
State Governments are also being alerted to the importance of drawing up a State policy for older persons and a plan of action with clear budgetary commitments.
An Integrated Programme for Older Persons is being continued into the 10th Plan period. Under this scheme financial assistance up to 90% of the project cost is provided to NGOs for establishing and maintaining old age homes, day care centres, mobile medicare units and to provide non-institutional services to older persons. The scheme has been made flexible so as to meet the diverse needs of older persons including reinforcement and strengthening of the family, awareness generation on issues pertaining to older persons, popularisation of the concept of life long preparation for old age, facilitating productive ageing, etc. The budget allocation during 2003-2004 was Rs.17.80 crores which was revised and the revised estimate was Rs. 15.80 crore, against which the expenditure was Rs.16.50 crores. As regards the implementation of the Scheme of Integrated Programme for Older Persons, financial assistance has been given for 323 Old Age Homes, 281 Day Care Centres and 42 Mobile Medicare Units in different parts of the country during the year 2003-04.
9. Scheme of Assistance to Panchayati Raj Institutions/Voluntary Organisations/Self Help Groups for Construction of old age homes/multi service centres for older persons provides for one time construction grant for old age homes/multi service centers. The registered societies, public trust, Charitable Companies or registered Self-help Groups of Older Persons in addition to Panchayati Raj Institutions are eligible to get the assistance under this scheme. The budget allocation during 2005-2006 was Rs.198.0 Million which was revised and the revised estimate was Rs. 140.0 Million, against which the expenditure was Rs.140.0 Million The budget allocation for the year 2006-07 is kept at Rs.28) Million
5. Adequacy of arrangements of aged care and challenges:
As we have seen sending the age to the old-age homes or to the elderly care centers has so far not gained the societal acceptance uniformly both in urban and rural India. Neither the urban young fully ready to send their elderly to the old age home unless there were other compulsions. The immediate requirement is making society and community understand the need and importance of supervised aged care and creation of a good company for the aged where they can share their view and new to the members of the care centers- to their peer group. This makes the aged psychologically strong. Social security programs for the aged both in formal and informal employment will have to be redesigned and strengthened.
Multinational companies, policies of assertive action are preferring and supporting women taking up employment. But, it has implications on the care-giving function of the women. Indian working women living with the extended family, has tremendous pressure on her to play the dual role of work and care giving. There is an urgent need of an alternative in the informal support system to take care of the aged, while the woman is working. There may be community based voluntary support available for the aged. If such alternatives in the informal support system are not developed and encouraged, the urban families in India may have to look for viable formal support system to take care of the aged. This may lead to an extra burden on the exchequer of the state or to emotional disturbances in the families.
Another dimension of aged women is, they are more in number in the aged population in comparison with their male counterparts, but old age social security and benefits are fewer for women. This is mainly due to non availability of old age income security programs for the workers in the large informal sector and coverage gap in the formal sector.( P. Madhava Rao, Social Security for the Unorganised in India) That is why there are poorer and needy among the female aged widows than among the male aged. They also suffer from more chronic diseases more intensely and also from disabilities. The situation has heavy financial implications for the health and social service sectors. Therefore, it will be a challenge for the welfare state to find a viable social security system for women that will meet their health and other old age needs.
6. Economic Implications of Ageing In India
Living longer is welcomed by every one and everywhere in the world. Thanks to the standards of health care, health awareness education and nutritious food available to the population who can afford it. However this demographic transition has many implications on the economy of the country in terms of development and welfare. We will try to discuss these here.
Indian economic development looks at youth and their involvement in the development process. May be this is because young are more informed and expected to participate actively and productively for longer years. Therefore the programs of support and of economic products appear to have been directed to the youth and the adult not for the aged. As the country is ageing, this will affect the economy, because the economic needs of the society will be different in an ageing society. Further, the strength of any economy is it's productive Human Resources in younger age brackets. Thus every aging nation suffers from over dependency and lesser participation of younger Human Resources in productive processes. Industries suffer from short supply of productive labour. It is felt that the retired ageing populations start using the nations resources for social security needs, which is estimated to be a big burden on the exchequer of the state. Thus, the impact of ageing on Indian economy is multi-faceted, which includes production, consumption, labor force and social expenditure on retirement. However short supply of labour has not yet been sees as a big problem due to vast un unutilized human resources of the country and still acceptable fertility rates.
Coming to the issue of productivity, the older workers are considered to be less productive than their younger counterparts. Researchers believe that absenteeism is more among the older workers due to medical reasons and therefore their productivity tends to decline. With technology advancing faster in every production process, the ageing of the labor force will speed up the obsolescence of human capital. Although retraining of the older workers is suggested to overcome this problem, it is very difficult to motivate older workforce to unlearn and relearn and retrain new techniques and skills. Employers too, prefer to induct youth and fresher from the universities and management institutions at a cheaper cost than re training their older and shortly retiring workers.
The other economic dimension of the ageing of population, although it is not immediately visible in India is, as the ageing work force is retiring; there will be fewer younger workers to replace them. This will create high demand for labour leading to increasing wages. It will reach a situation that the cost of labour will make the production not viable. The developed world has already witnessed this and is looking for options to over come this problem. Japan has long ago adopted technology driven automated production process to overcome this problem. Other options examined are the business process out sourcing- that is shifting of the production units to developing countries, where young and cheap workers are available- like India. Another option would be to practice a liberal immigration policy to bring in young and trained human resource into the country. This option has social and cultural implications. However New Zealand, Australia and Canada have these options open now.
The challenges for the policy makers would be to work on a new design of economic development to meet the changing needs of society in the light of demographic transition. Another challenge would be to harness and utilize the right mix of human capital to sustain economic development.
In case of social security and health care for the elderly in India, unfortunately most of the Indian aged do not have an institutionalized old-age income and survivor benefit programs. The available programs are defined benefit old age pension for the civil and defense service personnel and for the workers in the private and public sectors. These systems have serious implications of ageing as they have been repeatedly criticized as not actuarially valued neither actuarially valued Employees Pension Scheme 1995 of Ministry of labour has been criticized as under funded. The current programs mainly address the workers in the organised sector and the workers in the civil and defense services of the country. There is no retirement in the unorganised sector therefore there are no social security programs for the aged informal sector workers in India. However it is observed in the demographic transition may have implications on Indian economy, though slowly, Indian social security systems require restructuring and expansion. Demographic transition coupled with poor coverage by existing provisions suggests that India is moving towards a situation of gigantic number of destitute elderly. Faced with such huge numbers, a social safety net for retired workers or a poverty alleviation program, which aims to pay even a modest subsidy, would require a staggering expenditure - much beyond the capacity of the current levels of Government income.
Traditionally we have seen that family, social networks, membership institutions have developed support systems for the destitute elderly in addition to markets and the state. The current situation have grater implications on the community rather than the family as we have seen the disintegration of extended family.
The Indian situation does not make us to worry immediately about shrinking working population, but definitely has a requirement of looking at social protection policy and review it thoroughly to meet any challenge without losing the ground.
7. Recommendations:
In India the ageing process was influenced by the socio-economic development of the society. Better standard of living, freedom from infectious diseases, and better nutrition, social protection programs, be it for a limited number of working class- all contributed to the ageing process of the society. But now we are entering into a new century, where the process is going to be reversed. The ageing of society is going to affect the course of socio-economic development. On one hand it is a welcome trend that human beings are living longer in our country on the other hand the situation poses a potential danger if not addressed immediately- we may have millions of destitute down the line. A serious welfare policy shift is required to address the situation. Some of the recommendations may be:
a) Encouraging the family members in the first place to take care of their aged parents and incentive scheme wherever feasible and possible,
b) Including geriatric sociology in the curriculum of the schools so as to sensitize the younger generations to the problems of the aged so that they may keep the family tradition in tact
c) Value education, advocacy on the rights of the aged has got to be given priority in all the programmes
d) Immediate strengthening of primary health centers and motivating the doctors to work in the primary health centers in rural India;
e) Retraining rural un-qualified doctors, who have been accepted by the rural socio economic system, in geriatric care and assigning them with the responsibility of elderly care;
f) Designing and developing occupation based social security programs for the workers in the Unorganised sector with individual contribution and along with employer contribution where ever there is an identifiable employer;
g) A rights based approach than an institutionalization of aged care should be thought of for mainstreaming the aged
h) Establishing district wise old age homes with community support; ( As a lost resort for family care and mainstreaming is strongly recommended)
i) Raising the retirement age in public service to 65 so that the knowledge and skills of the aged can be fully utilized at the same time lessening the burden on pension systems to pay for longer unproductive years
j) Designing annuity linked defined contributing pension systems so as to lessen the burden on the defined benefit systems;
k) Encouraging micro medical insurance and occupation specific and gender specific micro medical insurance systems;
l) Giving training on retirement planning to the workers who are expected to retire within two years, covering socio-psychological and economic aspects of retired life.
If policies are re drafted taking all these into consideration and restructure the revenue system with progressive taxation and incentives to old age care programs, India can avert the old age crisis. Otherwise the traditionally respected aged in India would be on roads and the India culture meets its natural death.

Impact of Liberalisation on Social Security Arrangements in India

IMPACT OF LIBERALISATION ON
SOCIAL SECURITY ARRANGEMENTS IN INDIA
-P.Madhava Rao



INTRODUCTION

Ever since the seeds of Liberalisation have been sown in the country, the roots of this plant started spreading to all the directions. The social security of the population has no exception to this rule. In the beginning people felt that the social security sector does not have a direct attack on, but the time proved otherwise. The social security programs available in the country are mainly for the working class that too in the organized sector in urban India. It was felt in the beginning that the economic efficiency is the prime role of liberalization and expected that the distribution of wealth would be rationalized to allow more people participate in the production process there by not only \improving the GDP but also guaranteeing some minimum standard of living. However the liberalization process started showing its impact on the wageworkers in regular employment, increase in the casual employment, outsourcing the employment by the public and private industrial houses, and growth in the unorganized sector. This paper therefore seeks to examine the Social security arrangements in India, and the impact of liberalization on employment and the social security programmes.

SOCIAL SECURITY
Before going into the details of the impact of liberalization on social security let us once gain understand what the social security is? Many authors have defined social security by many ways. For our understanding, we consider the social security as the continuous economic support to a human being for his or her social well being- at least in the evening years of his/her life. It is therefore necessary to link up traditional social security policies and economic policies in general. Getubig for instance defines social security for the developing countries as “ any kind of collective measure or activities designed to ensure that members of the society meet their basic needs as well as being protected from contingencies to enable them to maintain a standard of living consistent with social norms” Dreze and Sen distinguish two aspects of social security, which they define as the use of social means to prevent deprivation and vulnerability to deprivation. The focus of the social security is to enhance and protect people’s capabilities to be adequately nourished, to be comfortably clothed, to avoid escapable morbidity and preventable mortality. The average experience of poorer populations understates the precarious nature of their existence, since a certain proportion of them undergo severe and often sudden dispossession, and the threat of such a thing happening is ever present in the lives of many more. The decline may result from changes in personal circumstances or from fluctuations in the social surroundings. Therefore, we may understand the social security as “ the provision of benefits to households and individuals through public or collective arrangements to protect against low or declining standard of living arising from a number of basic risks and needs. For clearer understanding we may enlist the social security measures or programs for income generation, income sustenance, income maintenance and for medical needs etc ore we may call them as Preventive (promotional measures) and Protective measures. The promotional or preventive programs of social security promote growth of income or income generation for an individual, or a vulnerable groups or in a notified area where individuals are understood to be living a sub standard life or below poverty line. The protective programs are predominantly income maintenance programs and employment related. The available programs in India can be listed as:

(1) Provident Funds/Gratuity,
(2) Old age, survivor, widow and disability pension,
(3) Medical care of all sorts and
(4) Protection from all kinds of risks life and non-life affecting the social existence of individual
(5) Programs of income and employment generation/

The above programs mainly looked from the angle of the working population in India although the entire population suffers from the contingencies of life and where the techniques of social security become operational. While discussing the impact of liberalisation on social security it will be probably sufficient if we discuss the impact of liberalization on the labour market in India and the situation of working class in India. Keeping the various limitations in view we will confine our discussion only to the employment related issues.

LIBERALISATION
Liberalization is understood to be the situation of the political economy where the means of production will be in the hands of the market and the economic efficiency is measured in terms of market-defined objectives. Major economic activities are opened for private participation keeping only key issues of welfare and other regulatory mechanism with the state. This opening up of various sectors for private participation and allowing them to manage the businesses for maximizing the profits will clearly underline the freedom available for the market to have their own labour participation practices and deployment of human resources. Liberalisation thus aims minimizing the labour participation and down sizing the workforce in the industry in the name of removing the dead wood to maximize efficiency.

The liberalization in India started showing its effects by:

a) Casualisation of employment and increase in the problems of the old
b) Increase in the unorganized work force
c) Decrease in the organized employment
d) Growth in unemployment

DEMOGRAPHY AND THE AGED
The above facts can be studied in detail with the help of the data hereunder, starting with the problem of the aged population, which requires social security to begin with. The aged population is the main concern for the social security policy makers of any part of the globe with or without liberalization. The problems of the aged population in India are manifold, as the organized employment in India has not grown enough to gradually absorb all the unorganized eventually. Old are still required to work for their own lively hood where dependency on the younger was not possible. Add to this the liberalization has thrown many younger population into destitution on whom majority of the older population is dependent. Therefore the study should begin with the older population and their composition in the total population and in the workforce.
If we observe the statistics of the older population and the population projections, we come across many concerning issues.
Table.1
India projected figures of the population aged 60 and above(1996-2026)
a. Official projections for the 9th plan. (in Million) ( % in parentheses)


(in Million) ( % in parentheses)
Year Males Females Persons
1996 32.33 29.99 62.32
[6.67] [6.67] [6.67]
2001 36.21 34.36 70.57
[6.91 [7.03] [6.97]
2006 41.83 39.99 81.81
[7.41] [7.55] [7.48]

2011 48.86 47.06 95.92
[8.05] [8.23] [8.14]
2016 57.36 55.60 112.96
[8.84] [9.05] [8.94]



B. ALTERNATIVE LONG-TERM PROJECTIONS.
(In Millions)
1996 31.02 32.81 63.83
2001 36.42 38.52 74.94
2006 42.68 45.33 88.01
2011 50.30 53.41 103.71
2016 60.20 63.86 124.06
2021 72.58 76.93 149.52
2026 87.16 92.20 179.36
2031 103.35 109.47 212.82

Source: census of India 1991, population projections for India and states, 1996-2016
Registrar general, India, New Delhi, 1996

According to these population projections summarized in the table above, the number of persons aged 60 and above is expected to rise from 54.5 million in 1991 and 62.3 million in 1996 to 70.6 million in 2001, 81.8 million in 2006, 95.9 million in 2011, and 113.0 million in 2016. In other words, while the total population is projected to increase by 49 percent from 846.2 million in 1991 to 1263.5 million in 2016, the number of the aged is likely to grow by 107 percent over the 25-year period. The share of the aged in the total population will rise to 8.9 pent. Unlike during 1951-1991, the contribution of the changing age structure to the growth in the number of the aged will be a major factor accounting for 55 percent of the projected growth.

The characteristics of the aged as per a survey conducted by the National Sample Survey (NSS) is relevant for us to understand the problems of the old who require social protection.
· Only 4 to5 percent of the aged live alone. Less than 1 percent were inmates of old age homes. About 11 percent of rural aged and 8 percent of the urban aged lived with the spouse only, about 46-47 percent lived with spouse and other relatives. Among others, 33 to 35 percent lived with their children. About 5 percent of the aged lived with “other relations or non-relation”.
· About 30 to 31 percent of the aged males in rural and urban areas reported that they were fully dependent on others. The corresponding figures for females in rural and urban areas were 71 and 76 percent, respectively.
· About 30 to 31 percent of the aged reported that they were not dependent on others. The percentage was much lower for females {11 to12}.
· Only about 5 to 6 percent of the aged reported that they did not have a surviving son or daughter. Almost 88 percent had two or more living children.
· About 76 percent of the aged, who were economically dependent on others, received support from their children or grand children. About 14 to 15 percent depended on their spouse. Only 6 to7 percent reported they have depended on others. For about 3 percent of them, no response was recorded.
· About 54 percent of both the rural and the urban aged reported having financial assets, and a majority of them managed as well. About 70 percent of the aged males reported possession of assets, whereas the proportion was much lower among females {39 and 38 percent in rural and urban areas}.
· About 63 percent of the rural aged and 58 percent of the urban aged reported possession of property. A majority of them managed it also.

About 52 percent of the rural aged and 54 percent of the urban aged reported that they suffered from a chronic disease. The most frequently reported ailments were “problem of joints”, cough, and a high or low blood pressure. The problem of cough was reported by 22 percent of the rural aged and 16 percent of the urban aged; the corresponding figures for blood pressure were 11 and 23 percent, in rural and urban areas respectively. These chronic ailments would raise the need of the aged for medical or health-related expenditure.

EMPLOYEMNT AND THE INFORMAL SECTOR
The second impact is the growth of the unorganized and their problems. Before we go into the details of the growth of the unorganized let us have a quick look at the employment generation in the country. It is found that the registration of aspirants has gradually been coming down due to non-availability of regular wage employment. Even where the employment exchanges were providing the placements it has drastically come down from 388.5 thousand of 1985 to 173.3 thousand in 1996. This trend is mainly attributable the liberalization process set in way back in early nineties. The fall in the organized employment further supports this view, which can be seen from the table below.




Table.2

STATUS OF THE LIVE REGISTER
Year No. of Emp.Exch. Registration Vacancies Notified Placement Live Register % Increase over pre,year
1985 800 5821.5 674.7 388.5 26269.9 11.6
1986 821 5535.4 623.4 351.3 30131.2 14.7
1987 835 6011.7 600.9 334.4 30247.3 0.4
1988 840 5963.2 543.3 328.5 30050.2 -0.7
1989 849 6575.8 600.2 289.2 32776.2 9.1
1990 851 6540.6 490.9 264.5 34631.8 5.7
1991 954 6235.9 458.6 253.0 36299.7 4.8
1992 960 5300.6 419.6 238.7 36258.4 1.3
1993 887 5532.2 384.7 231.4 36275.5 1.3
1994 891 5927.3 396.4 204.9 36691.5 1.1
1995 895 5858.1 385.7 214.9 36742.3 0.1
1996 914 4584.1 330.0 173.3 37738.3 2.7
1997 934 6322.0 393.0 275.0 39140.0 3.71
1998 945 5852.0 359.0 233.0 40090.0 2.42
1999 955 5966.0 329.0 221.0 40371.0 0.70
2000 985 6042.0 285.0 178.0 41344.0 2.41



( Source: DGE&T, Government of India.)

Table.3
EMPLOYMENT IN THE ORGANISED SECTOR
(IN LACS)



Year Public sector % Change on a previous year Private sector % Change over previous year Total % Change over previous year
1989 185.09 74.53 259.62
1990 187.72 1.42 75.82 1.73 263.54 1.50
1991 190.57 1.52 76.76 1.24 267.33 1.44
1992 192.10 0.79 78.46 2.35 270.56 1.23
1993 193.26 0.62 78.51 0.06 271.77 0.44
1994 194.45 0.61 79.30 1.01 273.75 0.73
1995 194.66 0.11 80.59 1.60 275.25 0.50
1996 194.29 0.21 85.12 5.62 279.41 1.49
1997 195.59 0.66 86.86 2.04 282.25 1.21
1998 195,40 -0.09 88.35 1.71 283.75 0.31
1999 194.20 -0.61 87.00 -1.55 281.20 -0.90
2000 193.10 -0.56 86.50 -0.57 279.60 -0.57
2001 191.40 -0.88 86.50 0 277.90 -0.61



Source: Director General Employment & Training

Although there has been a marginal increase in the private sector employment during the years under review, the public sector employment has shown sharp fall every year beginning from the year 1992. Such trend is also set in, in private sector from 1999. The public sector has shed 4.2 lakh jobs between the years 1997 and 2001. This can be safely attributable to the liberalization process and the VRS schemes that have been set in, in the country. We even find the reflections of this trend in the coverage of workers under employees provident fund and miscellaneous provisions act, more particularly under the exempted sector where large number of the workers are from the public sector. The table below shows the coverage of members under Employees provident fund scheme over the years both in the exempted sector and in the Unexempted sector. In the exempted sector there is no growth of employment at all over the last ten years. Even if find a marginal increase in some years it has come down in the later years. Interestingly we find that the number of establishments increased over ten years and not the employees’ strength. This goes without saying that the replacement of the workforce in the exempted sector has not been done to the extent of the labour turnover,

Table .4
COVERAGE OF MEMBERS OVER THE YEARS
UNDER EMPLOYEES’ PROVIDENT FUNDS & MISC. PROVISIONS ACT, 1952
(Establishments in Nos. Members in Lakhs)
EMEMPTED ESTBALISHMENTS UN-EXMEPTED ESTABLISHMENTS


EMEMPTED ESTBALISHMENTS UN-EXMEPTED ESTABLISHMENTS
Sl.No. Year Estt. Members Estt. Members Total
1. 1989-90 2907 41.33 192054 105.31 146.64
2. 1990-91 2933 43.77 204053 113.31 157.07
3. 1991-92 2956 45.37 209176 120.78 166.15
4. 1992-93 3041 45.44 220549 127.67 173.11
5. 1993-94 3109 45.46 233772 134.44 179.90
6. 1994-95 3143 45.48 247895 141.66 187.24
7. 1995-96 2934 45.79 261914 147.36 193.15
8. 1996-97 2970 45.36 274585 157.53 202.89
9. 1997-98 2948 44.03 296256 168.16 212.19
10. 1998-99 3123 41.09 315307 190.10 231.19
11. 1999-00 2630 43.40 323911 201.97 245.37
12. 2000-01 2624 42.60 337389 220.41 263.01


(Compiled by the author from the statistics collected from EPFO )

and the establishments started outsourcing and causualising the employment. The increased figures of casual employment support this observation. The workers thus casualised and out sourced have become predominantly a part of the unorganized, disproving the traditional ILO’s view of unorganized taking a place in the organized. When the workers get into the unorganized employment, they suffer from much insecurity.


The insecurity dimensions of the unorganized sector:

1. Poverty Levels. Poverty levels in the country are increasing every year though there has been a marginal improvement in the recent past. The unorganized labourers are directly hit either by inflation rise or by the price rise since their wage rise is always not indexed to the inflation trends in the country on the lines of their counter parts in the organized sector. Unorganized as the very definition goes are unorganized and they cannot organize themselves for the common objective of any nature like wage increase, working conditions, or the working hours. Therefore the unorganized suffer from any increase in the price of essential commodities or from any wage hike for the organized sector or for the employees in public sector. This throws the unorganized poor into more poverty than they were in before price rise or inflation rise. However, has there been any marginal increase in the wage structure for the unorganized in the rural and urban settings, this has not been in proportionate to the wage rise for the organized sector.
2. Casualisation of employment. Another great problem faced by the labour market is the process of casualisation and out sourcing the employment by the industry. The uncertainty has been increasing in the urban as well as rural employment market with more emphasis on the out sourcing the work force requirement by the organized industry. The casual labour suffers more from the poverty and from uncertainty of income because of casual nature of employment. The table given below shows the trends in casualisation and decreases in regular wage employment over the years.






Table.5
EMPLOYMENT STATUS OF WORKFORCE, 1972-3 AND 1993-4[IN PERCENTAGE]

Self employed Regular wage workers Casual workers All workers
Areas Gender 1972-3 1993-4 1972-3 1993-4 1972-3 1993-4 1972-3 1993-4
Urban Male 39.2 41.7 50.7 42.1 10.1 16.2 100.0 100.0
Female 48.4 45.4 27.9 28.6 23.7 26.0 100.0 100.0
All 41.2 42.3 46.3 39.4 12.5 18.3 100.0 100.0
Rural Male 65.9 57.9 12.1 8.3 22.0 33.8 100.0 100.0
Female 64.5 58.5 4.1 2.8 31.4 38.7 100.0 100.0
All 65.3 58.0 9.3 6.4 25.4 35.6 100.0 100.0
Total Male 60.5 53.7 19.8 16.7 19.7 29.6 100.0 100.0
Country Female 63.1 56.8 6.3 6.2 30.6 37.0 100.0 100.0
Total 61.4 54.8 15.4 13.2 23.2 32.0 100.0 100.0


Source: P. Visaria [1996] Structure of the Indian Workforce, 1961-1994, in the India Journal of Labour Economics, New Delhi,October.pp.737-8


The above table shows both in the rural, urban employment markets the regular wage earners are decreasing, and casual workers are increasing. Interestingly and ironically, the self-employed have become casual worker over the time thus creating more dependency on the wage employment than on the self-employment. If we look at the all India figures of self-employed and the shift in the market, there has been a decrease of 6.6 percentage points in the self employed over the twenty years under examination, this works out a decrease of roughly over 10 percent within the self employed sector.

3. Gender inequalities. Another malady of the unorganized labour is the gender inequality. If we look at the above table again, we find that the female are more in casual employment than the males both in urban and the rural labour markets. We find same phenomenon in the self-employed segment also.

4. Old aged and the Child Labour. In the unorganized sector, we find more child labour and the persons aged above 60 years of age. Since the economy is not fully developed to replace the child labour and put the child only on education, the economy of the country still gains from the contribution of the child labour. It is the case with the aged population also. Roughly, 20.6 million persons above the age of 60 still earn their lively hood on their own.

5. No enforceable labour laws. The unorganized in the country do not have any enforceable labour laws. Even bonded labour abolition has not been able to wipe out the bonded labour fully in the country. The minimum wages act has never been fully enforced even in the organized industrial markets for the casual labour they engage. The industrial disputes Act, The trade Unions Act etc. are far from the reach of the unorganized workface thereby making them more insecure than their counterparts in the organized sector..
The table given below is an attempt to assess the composition of the unorganized in the total work force

Table.6
UNORGANIZED IN THE IN THE WORKING POPULATION (In Million)

YEAR ORGANIZED UNORGANIZED TOTAL
Workers % Growth Workers % Growth Workers % Growth
1973 18.82 7.61 217.48 8.74 236.30 7.96
1978 21.24 13.39 249.46 14.70 270.70 7.85
1983 24.01 13.04 278.69 11.71 302.7 7.93
1988 25.71 7.08 296.29 6.31 322.00 7.99
1991 26.73 3.96 315.17 6.37 341.9 7.82
1994 27.38 2.43 344.72 9.37 372.1 7.36
1998 28.37 3.61 371.63 7.80 400.00 7.09
1999 28.11 -0.91 372.87 0.33 400.98 0.25
2000 27.96 -0.53 373.06 0.05 401.02 0.01


Compiled by the author on the basis of figures from DGE&T.

If we look at the above table, it shows that the composition of organized and unorganized in the total work force of the country over the past 25 years beginning from 1973. In the organized sector we see an average growth of 0.38 million workers per annum and in terms of percentage, there has been an annual average growth of 2.02 percent over the last 25 years. In case of the unorganized sector the annual average growth registered is 2.77 percent i.e.0.75percentage points more than the organized workers. The annual growth in the workforce recorded has been 6.16 million per annum on an average. This is 16.22 times more than the workers in the organized sector. If we consider the trends only from 1991, we see a growth of 8.07 million workers in the unorganized sector and .020 million workers in the organized sector. This is attributable to the trends of casualisation and out sourcing of employment within the organized sector.

Further, in 1973, there were 11 workers in the unorganized sector for every one worker in the organized sector. This is grown to 14 unorganized workers for each organized worker. During the period between 1994 and 1998 itself, there has been a growth of 27 workers in the unorganized sector for each of the worker added to the organized sector. Even the population of the country has not grown at this pace during the period between 1991 and 1998. This abnormal growth of employed class in the population reveals the health of the economy that is producing wage employment to the population at the same time it is a major concern for the employment so created which is neither remunerative nor permanent to the employee. In addition, these workers neither have income sustenance nor income maintenance programs either run by the state or by their employer.
At the same time we can also see the impact of liberalization on Public sector and the Banking industry in the country. The finance ministry’s calculations revealed that on the basis of business per employee (BPE) of Rs 100 lakh, there were 59,338 excess employees in 12 Nationalised banks. If the BPE were raised to Rs 125 lakh, the number shot up to 1,77,405. On this estimate, it could be said that roughly one lakh people over staffed the public sector banking system. In November 1999, the government sanctioned the release of the VRS to the IBA. Between November 15, 2000 and March 31, 2001, all public sector banks, except the Corporation Bank have introduced VRS system resulting in mass voluntary retirements. Out of the total 8,63,117 employees in 26 public banks, around 1,00,810 (11.7 per cent) employees took the offer before March 2001, according to a study on VRS as per IBA bulletin. In the case of SBI, the total number of employees who were given VRS stood at 20,784, of which there were 6,694 officers, 11,271 clerical staff and 2,819 subordinates. It is not heavy to the hearts if we say that all these exercises have thrown the people in the un employment trap at their working age. In addition to these, some of the other industries infected by VRS and the approach of down sizing include Air India, Hindustan Organic Chemicals, Reliance Industries Ltd, Mumbai Port Trust, Bombay Stock Exchange, ITI, VSNL, HMT, Hindustan Motors, Yamaha Motor India Ltd., Crompton Greaves, Bajaj Auto, Tata Tea, Glaxo India, Mico, Modern Food Industries Ltd, SAIL and BHEL etc.
In these circumstances of mass off loading, casualistion and out sourcing of the employment, and rapid growth in the unorganized sector, the responsibility of the state increases to provide social security to the ever increasing existence needs of the working population at least. State too has concerns for them but it could not provide the social protection programs to these underprivileged lots
However the liberalization has also brought with it not only a threat to the existing working population and their social security institutions but also, to the money market, interest structures, and investment pattern which squarely influence the social security funding patterns and invites the private players in to the market. Thus Governments will have a grater role to play to sustain the interests of the economy and to provide for the social insurance and the social assistance programs out of the exchequer, at the same time facing the pressure from the external agencies like World Bank. IMF, and the Asian Development bank that were successful to certain extent to influence the India government to establish committees like Dave Committee, Bahttacharya Committee, and the IRDA.

The Dave Committee suggested that there should not be any government participation in the pension systems and the individual should be encouraged to save for the future say in 5 to 8 rupees a day. It has conveniently forgot the minimum wage in India and the wage of a daily wager in the unorganized sector and the poverty levels. It is very strange that how far individual savings would mean social security and cost involved in managing the small money by the private players.
The Bhattacharya committee suggested that the Pension for newly recruited government employees should be contributory and funded pension scheme unlike the present pension system, and should be privately managed.
The Insurance Regulatory Development Authority (IRDA) had suggested that there should not be any cap on the private players to run the pension schemes and the investments should be encouraged to be in the equity market. It had also suggested that the Employees Provident Fund Organisation should transfer its pension administration eventually to the IRDA. The equity market situation is well known to every body and the entire market is with scams and highly risky. Parking the social security funds in such a market would only make some fast buck to the companies that mushroom to run the social security schemes but no to the member.

CONCLUSIONS
In the countries like India where there is a great trust in the welfare state and the a majority of population live below poverty line, the examples and experiences of developed countries do not work. India still has not reached to an optimum level of spending from GDP towards social security; neither had it ratified the ILO s convention on minimum standards of social security. The ‘Golden Handshakes’ however golden they were, are proving gilt and getting rust, ultimately not helping those who felt happy in the initial stages.
The words and phrases like ‘Economic Efficiency’, ‘corporate welfare state’ and welfare state is no more a free lunch’ etc. may sound scholarly and good , however governments require taking a cautious step before yielding to the pressures of liberalization for the lives of many people working and non-working, and where the lives of the widows’ children and destitute are involved.

Pension Reforms in India –The insecurity dimensions.

Pension Reforms in India –The insecurity dimensions.
P. Madhava Rao

Introduction:
It is not known whether the process of liberalization in India encouraged investment wizards from within the country and from out side to develop the country and generate employment, but has given the strength and freedom to many to freely comment, lobby and divert the attention of policy makers from welfare state attitude to individual’s responsibility to sustain himself/ herself in the name of ‘economic efficiency’ and to ‘allow’ the government produce only pure public goods. This ironically does not consider poverty levels and population growth and employment opportunities in the country, on the other hand advocates downsizing or ‘right sizing’ to throw the people out of employment, at the same time telling them that they should save for their future in the name of reforms to Social Security systems, leaving other non plan expenditure totally ignored or un touched. The committees like OASIS, Bhattacharya and IRDA etc. set up to suggest strengthening social security systems for the vulnerable groups, have purposefully exceeded their limits to comment on the sustainability of Old age and survival benefit schemes currently available in the country and with a simple agenda of liberating them from state governance and allowing private fund mangers to enjoy the fruit of managing pension funds. The reports also suffer from many maladies like data insufficiency, ignorance of economic literacy of the population, poverty levels and wage levels in the informal economy, volatile financial markets, longevity of pension funds maturity, unstable political economy, trust that has been built in the publicly managed financial organization, and above all continuity of financial requirements of retired people. Thus the schemes formulated, advocated and proposed to be implemented appear to be with full of insecurity dimensions. Although they are said to be Social Security schemes they predominantly appear neither ‘Social’ nor ‘Secure’. It is in this background proposed to examine in this paper, the proposed Pension reforms in the country, their scope limitations and the insecurity dimensions and whether India could opt for such drastic changes in its current state of poverty and unemployment. The paper also seeks to draw some policy conclusions on the provision of social security schemes for the targeted population.

The premises:
The story of pension reforms started with commissioning of project OASIS (Old Age Social and Income Security) during August 1998 by the Ministry of Social Justice and Empowerment, Government of India, which claimed its stake as a provider of Old- Age security to the population as a measure of Social Justice. The original mandate and focus of the Project OASIS expert committee was on the ninety-percent of workers that are not covered by any pension scheme in India, however it made a ‘paradigm shift’ in advising reforms to civil services pension in India on the premise that the government finances are under pressure due to an aging civil service grew.[1] The work of the project was given to one Invest India Economic Foundation, Mumbai, a private firm interested in financial and capital market education in India. The foundation feels that the Ministry of Social Justice and empowerment realized that the poverty alleviation programs directed at the aged alone cannot provide a solution to the income and social security problems of our elderly, the problem will have to be addressed through thrift and self help, where people prepare for old age by savings accumulating through their decades in the labour force. The role that Government can play in this enterprise is to create the necessary institutional infrastructure to enable and encourage each citizen to undertake this task.[2]

The Schemes:
On the above premises, the expert committee under the Project OASIS suggests an individual contribution based – non-benefit guaranteed- non return guaranteed – non accumulations guaranteed- pension scheme for the unorganised sector, suggested to be managed by private fund managers, where the contributions of a small amount of Rs.5 to Rs.10 per day per worker flow in to the system. The worker is expected to contribute continuously from the age of 25 to 60 years at these rates every day so as to enable him to get the accumulations converted in to an annuity that is expected to give him a monthly pension of Rs.1500. The experts group further proposes to give a choice to a worker to decide the pattern of the investment. With regards to the paying capacity of a worker in the unorganised sector, for a scheme designed to alleviate poverty at the old age, the experts take the per capita income as the base to support Rs.10 per worker a day as contribution as prudent. The expert group further observes “ we assume a contribution rate of Rs.10 per day from age 25 (Rs.3600 per year) till age 60, growing at 3 percent per year. Then the terminal wealth proves to range from Rs.0.2 million (100 percent government bonds) to Rs. 0.8 million (significant use of equity index). Hence, the minimum annuitisation of Rs.200, 000 is reliably attainable under the most conservative investment strategies as long as Rs. 10 is contributed into the pension account every day from age 25 till age 60; better investment strategies bring down this threshold to Rs.2.50 per day. In the India of 2000 with an approximate average per capita GDP of Rs. 20,000 per person per year (or Rs. 80000 per family of four per year), the universe of potential participants in the pension system, who can make contributions averaging between Rs.2.50 per day to Rs.10 per day, should be fairly large” [3]. Calculating the contributing capacity of a worker from the unorganized sector based on the per capita GDP of a nation, and claiming that he would be able to contribute towards an unknown amount of future benefit to alleviate his poverty is some thing beyond the comprehension of any economist of the world who has measured and seen the poverty and the wage levels of the informal sector workers requiring economic support for their old age poverty alleviation.

Having satisfied with the ‘paying capacity’ of an individual for his old-age income security needs, the committee has come out with an investment package, where again an individual of small means and who is expected to save less than Rs.10 a day will be given a chance to speculate with his future by selecting a fund manger and a product of his choice and try his luck. The committee originally suggested six fund managers to operate in the filed and offer 18 products with three styles. . (Table-1) However the report does not speak of any explicit or guaranteed benefit or return on the investments made by the fund manager on the advice of an individual participant.
Investment guidelines for three styles

Safe Income Balanced Income Growth

Government Paper >50% >30% >25%
Corporate Bonds >30% >30% >25%
Domestic Equity <10% <30% <50%
Of which, International Equity <10% <10%
Table-1









(Source: Report of Project OASIS, Ministry of Social Justice and Empowerment, 2000)


While investing, of course, the committee suggests that for the first five years, all domestic equity investments should be implemented using index funds on the NSE-50 or the BSE-100 indices only. In a plan of old-age income security where benefits are paid after a long gestation, it is not known how such decisions would help build funds for future payments.
Another committee popularly known as IRDA committee appointed to examine possible Social Security provisioning for the informal Sector, has come out with its suggestion not on the informal sector but on the current pension system in India. Professor Ramesh Guta of Indian Institute of Management Ahmadabad says “According to IRDA, the need for reforms arises from the following reasons:. Pension: Government and state owned enterprises as employers are finding it difficult to fund their pensions liabilities and the proposed system will relieve employers from their pension liabilities. EPFO and employers’ managed funds are return inefficient, service deficient, and not in a position to meet their liabilities. Private companies, particularly insurance and fund managements, are waiting in the wings at the prospect of handling investible funds and presumably would offer better old age security to retirees for the contribution they make.”[4] We do not know how far these observations and suggestion make us think of a pension system for the Unorganised Sector workers, certainly make one think on the systems in place for the formal sector employees and pressurize the governments to disturb the current systems, and they did in reality.
The Bhattacharya Committee appointed to look into the pension provisioning for the Government Employees has suggested:
1. An unfounded defined benefit, pay-as-you-go scheme (PAYG), or a pure defined contribution scheme is not suitable for government employees; instead a hybrid defined benefit/defined contribution scheme is recommended (para 10.23). This is a two-tier scheme. In the first tier, there is a mandatory contribution of 10per cent each by employer and employee. The accumulated funds would be used to pay pension in annuity form. The second tier is to promote personal savings and there is no limit for employee’s contribution but employer’s contribution would be matching and limited to 5 per cent. Accumulated funds can be withdrawn in lump sum or converted into annuity at the time of retirement. These payments would be tax exempt and portable if an employee changes job before retirement.

2. Funds collected in the first tier would be deposited in a separate fund and would be invested in both debt and equity. Some funds can be earmarked for active fund management including for short term trading for better returns. However, irrespective of fund performance, government would remain liable for pension to its employees based on predetermined benefit formula. (Para 10.37 and 10.38)

3. Contribution obtained in the second tier will have a separate institutional structure and the employee would have a choice of funds (income, balanced, and growth) to invest in. Employees may decide to continue, quit, or swap among funds while in service. Government will not guarantee any specific rate of return.[5]

Fortunately this scheme for the informal sector as suggested by OASIS committee has not been implemented, however the proverbial sword has fallen on the future employees of the Central Government, Central public Sector undertakings and the like.

Here the Central government has conveniently ignored the observations made by another committee appointed by it under the Chairmanship of A.M. Sehgl, the then Controller General of Accounts on 21 October 1999. The committee felt “The WG has included a set of projections of future pensionary outgoes of the Union Government essentially for the sake of closure of the Report. It cautions explicitly that the projections are merely an indicative base level and need to be interpreted with extreme caution in any exercise of fiscal planning.” (Para 10.1 of the Report)

“Projections based on methods that are not actuarial may lead to substantial revisions in estimates of the government’s pension liabilities if and when the new methods are incorporated.” (Para 10.6 of the Report)

“Since pensions in the government are a deferred wage component, it has been suggested that the gravity of the burden of compensation to labour can be better judged by considering the wage and pension burdens together, as a whole”.(Para 10.3 of the Report)

The Government has ultimately come out with a defined contribution pension system for the employees joining Government on or after 1st January 2004.

The salient features of the scheme are:

a) The system is expected to lessen the burden on the Government from year to year and envisages a shift from the current unfounded defined benefit pension to a fully funded defined contribution system, where the pensionary liability of the government can be estimated every year;
b) The persons joining Government service on or after 1st January 2004 are no longer entitled to receive a defined pension as was being paid to the Government employees already in service;
c) There will be a defined contribution pension system in place for the newly recruited Government Employees;
d) The Central Government will contribute at the rate of 10% of the salary towards a pension scheme for their employees;
e) Government servants will have to deposit a matching contribution from their salary;
f) The system of General Provident Fund has been dispensed with;
g) The Pension Fund Development and Regulatory Authority will identify the Fund Mangers who will operate the investment system and offer different products;
h) The Government employee has to chose the investment package like- Safe or Balanced or Growth fund offered by the private fund mangers and advise his investor to invest in that particular product or a combination of the products;
i) The fund at the end will be converted into annuity that may pay a monthly pension to the Government employees;
j) Periodical withdrawals are discouraged in the system so as to enable the Government Employee build enough sum to generate a sizeable amount of monthly annuity after retirement at the age of sixty.


Although the main intension of the Government has been to lessen the burden of the Government revenue and arrest un estimated out go to the Pension of the Government employees, it appears that it has not given a serious thought to the observation made by the Sehegal Committee. The committee cautioned the Government by saying that pre-funding pension liability from the Government budget will not reduce the burden on the Government on the other hand it will increase the government burden during the long transition that is required to shift from an unfounded system to a funded system to the newly recruited staff of the Government. In the name of transparent estimates the Government during the transition pays huge amounts towards pension out goes and towards pension contributions for the newly recruited.
Ignoring all these factors, the Government of India has implemented the new pension schme for the employees joining on or after 1`st January 2004. in the absence of any Central Registering Agency, fully functional PFRDA or identification and appointment of fund managers.

The insecurity dimensions:

The system that is being put in place suffers from many insecurity dimensions as the operating environment for a defined contribution system for the newly employed has not been established so far. Further the administrative costs of maintenance of individual retirement accounts is enormous as observed by many international experts; however the Government of India has not considered the required administrative setup and the administrative costs for that particularly when the fund mangers from the private sector are being encouraged to operate the system.

The fundamental principles of money changing the hands and expected rents by every one who changes money from hand to hand has not been seriously discussed in the system. The fund many not generate any additional income to pay the rents, but have to compromise with the benefit package. It therefore appears that the craftsmen of the scheme conveniently have not guaranteed any end product in the benefit package neither have they guaranteed even the principle amount that goes in to the system.




The list of insecurity issues goes like this:

a) The scheme is a mandatory defined contribution scheme where every employee has to contribute as directed by the Government but has not been guaranteed any thing by the Government including his/ her principle amount;

b) The fund will not be managed by the Government, but Government directs and makes it mandatory to invest it through a private fund mangers who does not have any control over the money neither the Government will take the responsibility in event of the fund performing badly;
c) The Scheme takes away the current General provident Fund where the Government employee hither to used to park his savings and use it as and when he wanted for some specific purposes;

d) The Scheme does not guarantee any family pension; early retirement pension; children pension; pension on the death of an employee; disability pension or pension on voluntary retirement. The employee has to wait for the day of retirement to come and then wait for the annuity to generate his pension amount;
e) The Government Employee can not foresee his post retirement economic support and plan his life accordingly, on the other hand he has to spend his time on market information if he is literate enough or depend on any other person who can advise him every month on the performance of the market so as to enable him to advise his fund manager who can simply escape from the criticism of being a bad performer in event of the market not performing well;
f) The decisions are of employees’. The good or the bad performance of the market is totally left to the Investment Market trends. The Scheme indirectly allows an employee to gamble. It is wise in case a person is capable of taking a decision and withstands the eventualities that follow his decisions. Only in the case of large number of rank and file employees with not much better than a BPL income, the non guaranteed mandatory system may ultimately throw them into poverty against the very fundamental principles of protective social security schemes that are designed and delivered to protect the people from falling into contingent poverty;
g) Multiplicity of agencies in the system make a person run from pillar to post in the evening years of life for agencies like the Government, the employer, the fund mangers, annuity providers and the PFDRA etc are the players in the system;

h) The system has huge administrative costs that are ultimately transferred to the beneficiary like costs on advertisements, costs on licensing, costs on selling the product, cost on maintenance of individual accounts, costs on benefit delivery, costs on annuity purchase, costs on investment, costs on regulation, costs on effecting deductions from the salary of an individual, and costs on deposits etc and series of other costs estimated and not estimated plus profits of fund mangers who wish to play in the market of non pure public goods. In the current interests rates regime, the return on investments need not be overemphasized. The fund manger has too ekes out a living out of this interest.
i) After meeting these costs it is not clear how much of the expected return will be transferred to the employee.
j) Purchase value of the annuity to provide suitable income in the old age hs neither been estimated nor quantified at least at the current rates.

Since the pension reforms as suggested by the OASIS report have not been implemented for the informal sector, and a Scheme of Social Security with government subsidy and individual contribution are being put in place with a voluntary approach it will be too early to measure the insecurity dimensions of this scheme.

Conclusions:
Pension is an Old-Age income and survivor benefit scheme in the package of Social Safety net or Social Security provisioning. Social security is said to be the security that is provided by the society for the people or individual who cannot count on his own. The main objective of any Social Security scheme is to support vulnerable groups of the Society to live a decent living and not fall in to poverty trap. Worker who earn above BPL income are not poor. However they will fall into poverty or get into poverty trap on account of various contingencies of life- like: Old Age which incapacitates one for work; Sickness by which one may not be able to take up or continue his employment; Disablement that hampers a persons work life; widowhood that makes a woman a destitute etc. The poverty that troubles and disturbs a man’s otherwise trouble free journey to his death due to these contingencies is called contingent poverty. Pension is thus a product to protect a persons falling into poverty during old age and therefore in the category of protective social security.

The schemes that are designed for protecting people from contingent poverty should be able to provide them a guaranteed return during the old age. Further the pension is repeatedly considered as a deferred wage and part of the wages paid to an employee and therefore even after shifting to a defined contribution system in the name of fiscal transparency, the Government has not shed its responsibility of supporting a pension system with its contribution. However the approach and the scheme that is more beneficial to a fund manager than to a contributor should have not been thought of at all.

Alternatively it is wise if the management of the defined contribution pension system is handed over to the Employees Provident Fund Organisation, (EPFO) which is managing funds of over three crores workers in about three lakh business houses and has experience and expertise of managing funds for over 50 years. Further the (EPFO) is on the path of modernization and re invention to offer world-class services to its members[6].

Unless all the risks are properly estimated and a comprehensive administrative machinery is established that goes into the details of the interests of fund mangers with a view to protecting the interests of the working class in the long run, the pensions funds transferred to fund mangers with the hoe that they would show some miracles in scams infested financial market would throw the civil servants into destitution in the evening years of their life. Then, thirty years or so down the line, we may not know whether political economy will be ready to bailout the programs.



[1] S.A. Dave, Rethinking pension provisions for India 2003, invest India- Tata McGraw-Hill p.3
[2] Project OASIS report submitted to the Government on January 14 2000
[3] Project OASIS report submitted to the Government on January 14 2000

[4] Pension reforms in India: Myth, Reality and Policy Choices, Indian Institute of Management, Ahmadabad, 2003
[5] Pension reforms in India: Myth, Reality and Policy Choices, Indian Institute of Management, Ahmadabad, 2003
[6] Re-Inventing EPF India, 2000

Social Security for Persons with Disabilities in India

Social Security for Persons with Disabilities in India

P Madhava Rao


While the programmes of Social Security are to guarantee income maintenance or income support, the condition of the disabled persons is somewhat different. Some might have become disabled due to work injury or accident or due to some other contingency during their work life. Such persons have employment related social security schemes in operation in India. However, there are majority of the disabled persons in the country who are not employed but require social protection. This chapter seeks to address the problems of those along with their social security needs and attempts to design a policy of social security for them.

Introduction

The International Labour Organisation (ILO) defines Social Security as “the security that society furnishes through appropriate organization against certain risks to which its members are perennially exposed. These risks are essentially contingencies against which an individual of small means cannot effectively provide by his own ability or foresight alone or even in private combination with his fellows. The mechanics of social security therefore consists in counteracting the blind injustice of nature and economic activities by rational planned justice with a touch of benevolence to temper it.” This definition of ILO clears and centers on provision of support to an individual or to his/her family to protecting them falling into contingent poverty which is that the individual is not otherwise poor but for the contingency. These contingencies as per ILO are sickness, medical care for the worker, maternity, unemployment, work injury, death of worker, invalidity and widowhood. The contingencies however are the work related contingencies and the individual and his family will be protected only in the case the individual is working before becoming a subject of the contingency. Thus being employed is a precondition for becoming eligible for social security benefits. Ironically, this definition does not cover the protection that has to be provided for the people who are already poor and therefore the Social Assistance programmes cover them.

Evolution of Social Security

The concept of social security is as old as the history of man. Stories of Bible tell us how, during the years of famine, Joseph tried to tide over the situation by making use of surplus stocks of grain which he had stocked during the earlier years of plenty. The oldest institution of social security is family that includes the extended family. Industrial revolution in the Europe has seen the growth of urban and industrial centers that affected the rural joint families thereby disturbing the institution of social security in the joint family system. When individual was unable to take care of his own needs, the society realized the importance of protecting the individual and his family. In great Britain the poor laws were enacted to provide minimal food and shelter in a workhouse to the poor. Private savings, compensation by employers medieval guilds, mutual aid or mutual benefit societies, private insurance and life insurance are some of the evolutionary forms of social security efforts.

Need for Social Security

Modernization and urbanization have resulted in radical socio-economic changes and give rise to new conflicts and tensions consequent upon the erosion of age old family and fraternal security. The transition from agricultural economy to an industrial economy brought in special accompanied problems that called for social security.

Purpose and contingencies of social security

The purpose of any social security measure is to give individuals and families the confidence that their level of living and quality of life will not erode by social or economic eventuality; provide medical care and income security against the consequences of defined contingencies; facilitate the victims physical and vocational rehabilitation; prevent or reduce ill health and accidents in the occupations; protect against unemployment by maintenance and promotion of job creation and provide benefit for the maintenance of any children. The contingencies of social security as delineated by ILO are medical care, sickness benefit, unemployment benefit, old age benefit, employment injury benefit, family benefit, maternity benefit, invalidity benefit and survivors benefit.

Social Security Strategy in India

The social security strategies include the following:

Social insurance with the participation of the beneficiary pooling risks and resources
Social assistance financed from general revenues and granting benefits on the basis of means test
Employers liability schemes where there is an identifiable employer and within the economic capacity of the employer
National Provident Funds
Universal schemes for social security.

Social Security in India

Article 43 of the Constitution speaks of state’s responsibility to provide social security to the citizens of this country. In India, we find all the above strategies in practice. For the purpose of discussion, we may categorize the social security schemes available in India as Preventive Schemes, Promotional Schemes, and Protective Schemes.

A. Preventive Schemes

Preventive Schemes are the Schemes aimed at risk prevention. In the strategy of social management of risks, preventive approach tries to prevent poverty and helps people under below poverty line to come above poverty line. Preventive health care, vaccinations against diseases forms part of he preventive strategies. Majority of the schemes are of social assistance in nature.

B. Promotional Schemes

Promotional social security schemes are mainly of Means tested Social Assistance type, where to guarantee minimum standards of living to vulnerable groups of population, the Governments at the State and Center draft schemes financed from the general revenues of the Government. These are the strategies of risk mitigation. These guarantee:

· Food and Nutritional Security by ensuring per capita availability of food grains, access to food, developing agriculture sector, targeted Public Distribution system etc.
Employment security by ensuring employment by generating employment, redeploying the surplus manpower in any sector, creating rural employment opportunities, encouraging technological up gradation.

Health Security by ensuring availability of medical facilities, maintaining standards of sanitation and drinking water, eradication and control of communicable diseases, timely vaccination of children and child bearing women, health insurance, old age homes and social insurance for the elderly.

Education Security by ensuring opening of schools, Encouraging children to attend classes, making education compulsory upto certain age, opening adult learning centers or formulating schemes like Sakshara, running schemes like mid day meals etc.

Women Security: by empowering women, encouraging women literacy, banning dowry, designing widow pension schemes.

Assistance to the disabled by undertaking programmes to promote health and education among the disabled persons, providing rehabilitation services and reservations in services so as to enable them to participate in social and economic activity.

All the above form part of promotional social security schemes where State Governments are more involved than the Central Government. Examples of schemes in the promotional social security area include: Food for work, Jawahar Rojgar Yojana, Antyodaya, Rural Landless Labourers Employment Guarantee Schemes, programmes of Integrated Rural Development Project, Drought prone area Programmes, Sakshara, Integrated Child Development Scheme (ICDS), Public Distribution System, reservations for the disabled in services, special educational institutions for the disabled persons etc.

C. Protective Social Security Programmes

The protective social security programmes help the poor in removing/reducing contingent poverty. In India, the protective social security programmes have been designed to address the contingent poverty or the contingencies d defined by the ILO. These programmes take care of old-age income needs (Old age pension), survival benefits (Provident Funds), medical need of insured families (Medical Insurance), widow and children/dependant economic needs (Widow/Children/orphan, and dependent pension), maternity benefits, compensation for loss of employment and work injury benefits.

The benefits are extended only to working population majority of whom are in the organized sector through legislations like:

Employees State Insurance Act 1948
Workmen’s Compensation Act 1923
Employees Provident Fund and Miscellaneous Provisions Act 1952
Payment of Gratuity Act 1972
Maternity Benefits Act 1976

Social Security for Disabled Persons in India

Having discussed the social security concepts and strategies and programmes available for the vulnerable groups, the need for the Social Security programmes for the persons with disabilities can hardly be overemphasized. However, we need to understand that the family has been the primary producer of welfare even before the birth of a welfare state on the lines of modern welfare approach. Later community, membership institutions, markets, and finally States provided welfare facilities. Particularly in democratic states, it has been the political necessity to produce and distribute welfare for the vulnerable groups in the society. The magnitude of the woes of the persons with disabilities is vast and its impact on the individual, family and community is severe. The most vulnerable groups among the persons with disabilities include very young children, women and the aged with disabilities. Their existence and livelihood requirements have to be taken care of by some agency in the society-that agency could be the state in the absence of benevolent markets and communities and more so when the families of the persons with disabilities cannot do so. Further it is apart of social justice that a State may assure to its subjects.

In the United States the Social Security Administration, United States (SSA) considers one as disabled under Social Security Rules, if on cannot do work that he did before and SSA decides that he cannot adjust to other work because of his medical condition(s). a person’s disability must also last or be expected to last for at least one year or to result in death. Social security programme rules assume that working families have access to other resources to provide support during periods of short-term disabilities, including workers’ compensation, insurance, savings and investments. “The Persons with Disabilities (Equal Opportunities, Protection of Rights and Full Participation) Act, 1995, inter-alia and strives to promote empowerment of persons with disabilities. The right to received support and assistance, although essential to improving the quality of life of people with disabilities, is not enough. Guaranteeing access to equal political, social, economic and cultural right should be the

Data:

NSSO 58th Round, undertaken in 2002, estimates that about 1.85 percent of population suffer from some kind of disability or other. However, detail data are available now for designing a comprehensive social security system for persons with disabilities. In contrast, detailed statistics on the disabled population in Europe is available on the basis of which social security is planned and implemented. Some of the fundamental rights contained in the European Convention on human Rights and its Protocols, and the Revised European Social Charter include the right to education; the right to work; the right to private and family life; the right to protection of health and social security; the right to protection against poverty and social exclusion; the right to adequate housing etc. based on these statistics the European countries are working hard to make their disabled people enjoy the fruit of the policies. Therefore, availability of detailed data on the disabled population in India is a pre-requisite for better planning and implementation of social security schemes. Data on the following aspects as regards the disabled population in the country will be useful in this regard:

Parents with disabled children below poverty line : This is required to design some additional social assistance schemes.
Unemployed disabled persons who can be gainfully employed: This is required to design special employment schemes and employment drives and to evolve income generation strategies for the disabled persons and ultimately make them eligible for protective type of Social Security Schemes.
Non-employable disabled persons who always require support of the Family/Community or the State: This is required to design State assisted/funded schemes as well as to rehabilitate them in the homes for disabled persons.
Disabled persons above 60 years of Age: This is required to help mitigate the hardships of the disabled senior citizens through Old Age Pension Schemes in the form of Social Assistance and State assisted health care.
Disabled women : This is required to understand whether the disabled women are dependent on their parents or on their husbands and the poverty status of their family/parents and to design schemes of Assistance or Insurance Accordingly. This will also help us to understand the requirements of the disabled women in the child bearing age and making provisions for their maternity care.
Disabled widows: This will help planners to understand the dependency levels of the widows, if they are pensioners, their economic status etc.
Disabled persons engaged in agriculture and informal sector: This data will enable the Government to design programmes of skill upgradation for the workers in the informal employment and self employment and create backward and forward linkages for their economic activities. It is also possible to specially brand the products produced by the disabled and grant export concessions and subsidies.
Disabled persons retired from armed forces and capable of being reemployed: This data will enable planners to assess the assistance required for this category of people.

Required Social Security programmes
for the Disabled Persons in India

Assistance and benefits both in the form of cash and kind will help ameliorate the condition of the disabled persons who have to bear additional economic and social cost due to their disability. Granting benefits for the persons with disabilities is a necessary condition but not a sufficient one for their empowerment and overall development. People with disabilities, like all people, require love and affection that is most often best provided by their families. Specific measures and assistance are therefore essential to help these families overcome the threat of many possible sources of deprivation and provide and caring home as a much better and more natural alternative to life in large institutions/homes for disabled for disabled. If the family itself is poor, it may not be able to extend any kind of support to the disabled members but rather treat him as an extra burden. Before designing the programmes suggested hereunder, this fundamental social understanding should not be overlooked.

The cash benefits by way of assistance could be in the form of the following:

Scholarships to the disabled children
Old age pension to the aged and widows
Unemployment assistance to the education disabled
Cash subsidies for self employed
Disablement pension
Retirement pension

The benefits in the form of kind could be in the form of:

Concessions and support in various activities and concessions in transport
Medical assistance
Medical insurance where employer liability schemes are possible
Compensation in the case of work injury resulting in disability
Maternity care for the disabled mother
Compulsory provision of crèches in all the work places for the children of disabled mothers
Reservations and Concessions in services
Special skill upgradation programmes
Special schools and Teacher Training centers
Tax rebates for the disabled persons as well as the parents of the disabled children

Available programme for the disabled

Currently reservations in services, concessions in employment, disability pension under the Employees’ provident Funds and Miscellaneous Provisions Act 1952, medical and maternity benefits under Employees’ State Insurance Act 1948, benefits under the Workmen’s Compensation Act 1923, special schools for the disabled children, disability specific assistance programmes are available in the country, through the coverage is not comprehensive. Ironically three major Social Security Acts listed above are the employer liability and employment related benefit schemes. They are operative only in the case of disability during the course of employment. There are no programmes for old age and survivor benefits in the case of the disabled who cannot be employed or the disabled person who are not employed even after crossing the employable age. There are no programmes for the disabled, dependent and aged widows excepting some very meager assistance given by some State Governments such as old age pension of Rs. 75 per month. In addition we find that multiplicity of agencies and duplicity of benefits are very common to all the social security programmes available in India, and the plight of the persons with disabilities has no exception to this rule.

Annexure II gives the status of pension/unemployment allowances for the persons with disabilities, State/union Territory wise-source: Chief Commissioner Disabilities

Programmes/Schemes required to be designed for the Disabled Persons

Currently available schemes or programmes do not comprehensively address the problems of the disabled persons. The major Social Security Acts available in India aim only at employment related disability. N fact a large number of the disabled persons are outside employment or in informal economic activities or simply dependent on their parents, children and/or spouses. In some of the Rural Development and other programmes there are some disabled beneficiaries. However, keeping in view the statutory provision of 3% reservation for persons with disabilities I all poverty alleviation schemes, the coverage is negligible. This provision needs to be effectively implemented.

In the United States the Social Security and Supplemental Security Income disability programmes are the largest of several Federal Programmes that provide assistance to people with disabilities. While these two programmes are different in many ways. Both are administered by the Social Security Administration and only individuals who have a disability and meet medical criteria may qualify for benefits under either programme. Supplemented Security Income (SSI) is a Federal income supplement programme funded by general tax revenues (not Social Security taxes) it is designed to help aged, blind and disabled people, who have little or no income; and it provides cash to meet basic needs for food, clothing, and shelter. Based on the international best practices and the India specific requirements th urgent need is to formulate the following types of benefits and programmes:

i) Universal old age defined benefit Pension Scheme for the disabled without any means test (As Social Assistance) should be thought of based on national average wage that guarantees poverty alleviation among the persons with disabilities;
ii) Universal medical benefits (possibility of establishing opening separate out patient windows for the disabled should be seen to lessen the hardships of the disabled patients who stand in the general queues in the public hospitals), free treatment to the disabled persons by corporate hospitals could be thought of a precondition for grant of license to the corporate hospitals;
iii) Universal Unemployment Assistance to the disabled persons with means test will definitely alleviate poverty among the persons with disabilities and employable. However, a scheme of discontinuance of the benefit in the event of non-acceptance of employment may be thought of to protect them from falling into unemployment trap;
iv) Trying up with corporate hospitals to extend medical care at a confessional rate to the disabled, where the disabled have a capacity to pay, and subsidizing cost of surgical treatments in the hospitals;
v) Social assistance to the disabled children and scholarship schemes for them if they are school going. Pre-examination training to enable them to sit of competitive examinations along with other candidates;
vi) Special Employment and Skill upgradation programees
vii) Bank credit at subsidized rate of interest for the self-employment projects taken up by the disabled persons (NHFDC activities needs to be expanded)
viii) Reservations in services ad other concessions provided needs to be effective implemented
ix) Incentives to be given to employers encouraging employment of the disabled persons in consonance the provisions in the PWD Act, 1995.

Financing of the Schemes

The approach to financing the schemes designed for the disabled persons as also launching of new social security schemes for persons with disabilities should be broadened and the following options including the traditional budget allocations out of the Government funds need to be explored:

Finance from the general revenues or tax financed as a major source;
Collection of cess from the industries, employment in which leads to occupational diseases and work hazards;
Special tax on luxury items and those items consumption of which are injurious to health
Contribution from employed parents of the disabled to establish a separate fund for Disability welfare;
Donations from charitable organizations;
Donations from international donors and agencies;
Employer share of contribution at enhanced rates for the programmes designed to address contingent poverty;

Administrative Arrangements

The current Administrative arrangements for delivery of support and benefits to the persons with disabilities are scattered. There is neither a uniform benefit formula nor is there any single agency that administers or guides the programme. It is suggested that multiplicity of agencies or departments currently looking after disability benefits need to be integrated together to have comprehensive programme design and implementation policy under one umbrella wit a Chief Executive officer. However disability specific branches under that agency may be designed to continue the professional approach.

As per the Act, one of the jobs of the office of Chief Commissioner for persons with disabilities is to monitor utilization of funds disbursed by Central Government. This needs to be ensured. A National Commission has also been set up recently to aid and advice the Government regarding disability and rehabilitation matters and to recommend action. Date may be collected through census as also NSSO surveys at regular intervals. A national Unique Identification Number on the lines of National Social Security Number may be thought of to avoid duplicity in benefit delivery. The State Governments may start, in right earnest issue of identify cards, preferably, SMART cards with assigning such numbers. All the States may appoint independent State Commissioners, who, as per the Act., may perform their quasi-judicial function in supervising and implementation of various provisions of the Act., and redressing grievances. Administration arrangements may be made for collection and recording of contributions and donations for developing a fund for social security programmes for disabled.

The current system of collection of contributions under protective Social Security schemes need not be disturbed; investment of funds and budgetary allocations made for the purpose need to be enhanced and designing effective income generating schemes may be given attention. Suitable schemes along with administrative arrangements may be made for delivery of benefits including medical benefits, old age pension and benefits in cash or kind.

Conclusion

The current Social Security programmes are employment related and do not appear to have any special attention to the disabled persons. To be eligible for the benefits one has to become disabled after getting into employment. This approach does not address the disability ab-intio and major problems of non-employment and poverty among the disabled persons. Disabled persons in India are the most vulnerable group. Unfortunately, disabled persons irrespective of their economic status are subjected to social exclusion in the society. Economic, psychological and social confidence building is therefore immediately necessary. Social Security programmes for the disabled, to some extent will relieve the pain of being dependent. Comprehensive administrative arrangement, poling up funds form various sources and delivering the benefit under professional supervision and control are the other immediate requirements. Lack of information and dissemination and absence of a single window approach make persons with disabilities often unaware of what benefits and schemes are available to them. Besides ensuring that available benefits reach them, more resources from local state, national and international agencies, Government and Non-Government Organisations need to be mobilized. For example, resources available under various Departments/Ministries and schemes such as Rural Development, HRD Ministry, Labour Ministry, DRDA Programmes, grant in aid schemes for special schools, pension schemes, UNDP programmes, CARART, NHFDC, and international funding organisations such as NORAD, Action Aid, SIDA, DANIDA and others need to be harnessed.




REFERENCES

Abromovitz, M. 1995. “The Elements of Social Capability”, in Koo, B. H and D.
H. Perkins (eds.) Social Capability and Long-Term Economic Growth (New
York, St. Martin’s Press).

Adarkar, B.P.,1944. Report on Health Insurance for Industrial workers, Officer on Special Duty, Labour Department, Government of India, Shimla (Government of India Press).

Ahmad, E. 1991. “Social Security and the Poor : Choice for Developing Countries”, in The World Bank Research Observer 6(1),

Ahmad, Etisham, Dreze, J, Hills, J &. Sen, A. (1991), Social Security in Developing Countries, Clarendon Press.

Anand,S. and Ravallion, M. 1993 “Human Development in Poor Countries: On the Role of Private Incomes and Public Services”, in Journal of Economic Perspectives 7(1).

Awasthi, R. and Panmand, D. K. 1994. Ralegan Siddhi: A Model for Village
Development (Bombay, Foundation for Research and Community Health).


Besley, T. and Coate, S. 1992. “Workfare versus Welfare: Incentives Arguments
For work Requirements in Poverty Alleviation Programs”, in American
Economic Review 82(1), pp. 249-261.

Beveridge Committee Report,1942. Social Insurance and Allied Services. Report by Sir W. Beveridge, London, HMSO, CMd. 6404

Burgess, S and Stern, N. 1991. “ Social Security in Developing Countries: What , Why, Who and How?” , in Ahmad et. al. Social Security in Developing Countries( Oxford, Clarendon Press).

Chattterjee, Mirai. Et. al. 1994, “Organizing for Social Security- Some experiences of Self – Employed Women Workers” in Social Security in Developing Countries, (Social Security Association of India, Friedrich Ebert Stiftung, New Delhi)

Chelliah, R. J. and Sudarshan, R. 1999. Income Poverty and Beyond: Human
Development in India (New Delhi, Social Science Press).

Datta, R.C. 1998. “Public Action, Social Security and Unorganised Sector”, in
Economic and Political Weekly , 33(22)

Dev.S, Mahendra. (1995) “Government Interventions and Social Security for Rural Labour”, Indian Journal of Labour Economics, Vol. 38 No 3.

Dreze, J and Sen A.K (1991), “Public Action for Social Security Foundation and Strategy” (Oxford University press, New Delhi)

Dreze, J and Sen, A.K. 1989. Hunger and Public Action (Oxford, Clarendon Press)

Dutta, B., Panda, M and Wadhwa, W.1997 “Human Development in India”, in
Subramanian, S(ed) Measurement of Inequality and Poverty ( New Delhi Oxford University Press)

Durvasula, R., 1992, 'Occupational Health Information Systems in India', in M. R.
Reich and Okubo, T. (eds.) Protecting Workers Health in the Third World
(New York, Auburn House)

Ganapati, A.L. 1994, “ Social Security in India- Some Suggestions” in Social Security in Developing Countries, (Social Security Association of India, Friedrich Ebert Stiftung, New Delhi)

Getubig, I.P. and Schmidt, S. (eds.) 1992. Rethinking social security. Reaching out to the poor (Kuala Lumpur, United Nations Asian and Pacific Development Centre)

Ginnikan, Wouter Van . 1998, Social Security For All Indians ( Oxford University Press, New Delhi)

Government of India (GOI). 1966. Report of the Education (Kothari) Commission,
1964-66 (New Delhi).

Government of India (GOI). 1991. Report of the Committee for Review of
National Policy on Education (NPE) (Ramamoorthy Committee), New Delhi
.

Government of India (GOI), Ministry of Social Justice and Empowerment. 1999.
First Report of Expert Committee for Devising a Pension System For India
(New Delhi, OASIS).

Government of India (GOI), Ministry of Finance. 2000. Economic Survey 1999-2000
(New Delhi).

Government of India (GOI), Ministry of Labour. Indian Labour Statistics and
Pocket Yearbook of Labour Statistics (Shimla/Chandigarh).

International labour organization, 1984, “ Introduction to Social Security” ILO , Geneva

International Social Security Association (ISSA), 1990-1998, “Developments and Trends in Social Security” ISSA

International Social Security Association ISSA, 1991, “Social Security Protection of the Rural Population in Developing Countries” Report of the Asian Regional Round Table Meeting , (Regional Office of ISSA New Delhi)

James H. Schulz., 1996, “Economic Support in Oldage: The role of Social Insurance in Developing Countries”., International Social Security Association (ISSA)

Johri C.K. 1995, “Social Security for workers in India” Encyclopedia of Social Work in India.

Mahendra Dev, S. 1995. “Alleviating Poverty, Maharashtra Employment
Guarantee Scheme”, in Economic and Political Weekly 30 (41 and 42

Mahendra, Dev, S. 1997. “Growth, Employment, Poverty and Human
Development: An Evaluation of Change in India Since Independence with
Emphasis to Rural Areas”, in Review of Development and Change II (2)

National Family Health Survey (NFHS). 2000. Health and Family Welfare, India:
1998: 1999 (Mumbai, International Institute of Population Studies).

National Sample Survey Organisation (NSSO). 1998. Attending and Educational
Institution in India: Its level, nature and cost [NSS 52nd Round] (New
Delhi, Government of India), Report no.439.

Prabhu, K. S. 1996. “Health Security for India Workers”, in The Indian Journal of Labour Economics, 39 (4),.Appendix–I
Facilities & Benefits available for
Persons with Disabilities

Several ministries/departments of the Government of India provide various concessions and facilities that include:
Concessions on Railways: Railways allow disabled persons to travel at concession fares up to 75% in the first and second classes. Escorts accompanying blind, orthopedic ally and mentally handicapped persons are also eligible to 75% concession in the basic fare.Air Travel Concessions Indian Airlines allow 50% concession fares to blind persons on single journeys.Postage Payment of postage, both inland and foreign, for transmission by post of 'Blind Literature' packets is exempted if sent by surface route.
Customs/Excise Braille paper has been exempted from excise and customs duty provided the paper is supplied direct to a school for the blind or to a Braille press against an indent placed by the National Institute for the Visually Handicapped, Dehradun. All audiocassettes recorded with material from books, newspapers or magazines for the blind are exempt from custom duty. Several other items have also been exempted from customs duty if imported for the use of a disabled person.
Conveyance Allowance All central government employees who are blind or orthopedic ally handicapped are granted conveyance at 5 per cent of basic pay subject to a maximum of Rs. 100 per month.
Educational Allowance Reimbursement of tuition fee of physically and mentally handicapped children of the Central government employees has been enhanced to Rs. 50/-.
Income Tax Concession : The amount of deduction from total income of a person with blindness, mental retardation or permanent physical disability has been increased to Rs. 40,000/-.Award of Dealership by Oil Companies : The Ministry of Petroleum and Natural Gas has reserved 7.5 per cent of all types of dealership agencies of the public sector companies for the orthopedically handicapped and blind persons. However, persons with visual handicap are not eligible for LPG distribution. Similarly, the Ministry has also reserved 7.5 per cent of such dealership/agencies for defence personnel, and those severely disabled either in war or while on duty in peacetime.
Posting : Candidates with Physical handicaps, appointed on a regional basis be given as far as possible, appointments as close to their native place.
Economic Assistance by Public Sector Banks : All orphanages, homes for women and persons with physical handicaps as well as institutions working for the welfare of the handicapped, are given loans and advances at very low rates of interest (4% under DRI) and a subsidy of 50% up to a maximum of Rs. 5,000/- is also admissible. State Governments/Union Territories also give concessions/facilities such as reservation in jobs, scholarships, old age pension, free travel in buses, etc.
Funding scheme for special schools : A grant-in-aid scheme for voluntary organisations to develop institutes that serve to provide educational and social oppurtunities for persons with disability.To know more about scheme and to download the application form








































Appendix-II

Status Of Pension/Unemployment
Allowance For Persons With Disabilities
.


States/ Union Territory
Disability Pension/Maintenance Allowance
Unemployment allowance
Remarks
1.
Andhra Pradesh
Disability Pension of Rs. 75/- per month is given to all categories of disabled who are between the age group of 18 – 65 years with minimum 40% disability.
Rs. 75/- per month is given to unemployed disabled persons who are on the live registers of District Employment Exchange and who are in the age group of 18-65 years, provided parents’/guardian’s annual income does not exceed Rs. 12,000/-

2.
Bihar
Disability Pension is provided to disabled persons by Labour Department of the State.


3.
Chattisgarh
Social Security Allowance of Rs. 150/- per month.


4.
Delhi
A scheme under which a one-time financial assistance of Rs. 1000/- is provided to those persons who have 40% or more disability and whose per annum income is not more than Rs. 22,000/-.

Proposal regarding scheme for payment of an unemployment allowance to persons with disabilities, registered with the special employment exchange for more than two years and who could not be placed in any gainful occupation has been made and is under process.
5.
Goa

.
Grant of Unemployment Allowance is approved by the Govt. Details are not yet available

6.
Gujarat
Disability Pension of Rs. 200/- p.m. is given to disabled persons who have more than 75% disability, are above 18 years of age and whose family is below poverty line.


7.
Jammu & Kashmir
Rs. 300/- per month provided as Disability Pension.
-

8.
Jharkhand
Pension Scheme for disabled exists. Details not given.


9.
Haryana
Scheme for pension for persons with disabilities has been notified. Notified.
Scheme is in force in the State.

10.
Himachal Pradesh
Disability Relief Allowance of Rs. 150/- p.m. is provided to those disabled persons who are having at least 40% disability and whose annual income does not exceed Rs. 6000/- per annum and the income of earning sons should not exceed Rs. 11,000/- per annum.


11.
Kerala
Special pension scheme for PWDs having an annual family income of Rs. 12,000/- or less exists in the State.
Unemployment Allowance to all educated youths, including persons with disabilities, subject to certain eligibility conditions, is sanctioned.

12.
Maharashtra

Government of Maharashtra has a Scheme for Educated Unemployed and this includes persons with disabilities also. This scheme is implemented through Employment Exchanges.

13.
Manipur
Disability pension of Rs. 100/- p.m.
-

14.
Mizoram
Disability pension given to totally blind and bed-ridden persons who are totally dependent on their families @ Rs. 100/- p.m.
Unemployment allowance of Rs. 100/- p.m. given

15.
Nagaland
Disability pension of Rs. 100/- p.m. is given to blind people.



16.
Punjab

Unemployment Allownace of Rs. 400/- p.m. and Rs. 300 p.m. is given to blind/deaf undemployed graduates/post graduates and under graduate respectively, for Ortho. Handicapped Rs. 200/- and Rs. 150/- p.m. respectively.

17.
Meghalaya

Implementing the scheme of unemployment allowance @ Rs. 50/- per month for PWDs



18.
Orissa
Orth. Handicapped, totally blind, mentally retarded and persons affected by Cerebral Palsy over five years of age are given pension @ Rs. 100/- p.m. (70,000 beneficiaries are being provided such pension each year.)


19.
Sikkim
Pension provided. (16.80 lacs allocated during 2002-3 - 700 beneficiaries.)
Subsistence Allowance is being given.

20.
Tamil Nadu
Those who are not placed in any gainful employment due to severe disability are given maintenance allowance of Rs. 150/- per month.
For Visually impaired, allowance is given ranging from Rs. 200/- to Rs. 300/- per month till they get employment or they reach 40 years (45 years in the case of SC, ST) whichever is earlier.

21.
Tripura
State Government is giving pension to the disabled persons of destitute families @ Rs. 125/- per month.


22.
West Bengal
Pension is provided. (6887 beneficiaries – Rs. 42,00,000 allocated for 02-03).


23.
Uttar Pradesh
Viklang Pension of Rs. 125/- pm is given to destitute handicapped persons having monthly income below Rs. 1000/- per month.





24.
Uttaranchal
Disability Pension of Rs. 125/- pm is given to destitute handicapped persons having monthly income below Rs. 1000/- per month.


25.
A & N Islands
-
Rs. 100/- p.m. as unemployment Allowance is given.


26.
Chandigarh
-
Unemployment allowance of Rs. 400/- pm for Graduate/PG VH and HI persons. Rs. 300/- pm for Matriculate and under graduate VH and HI persons is given.
All other categories get Rs. 150/-

27.
Dadra & Nagar Haveli
Financial Assistance to Destitute Disabled is @ Rs. 60/- p.m.
-

28.
Lakshadweep
Pension for Old Age, destitute disable is being given.
-

29.
Daman & Diu
Disability Pension of Rs. 60/- p.m. is available for persons with disability with the age of 55 and above.
Scheme for unemployment allowance has been formulated.

30.
Pondicherry

Rs. 200/-/Rs.300/-/ Rs. 500/- per month to unemployed educated persons is being given.