Everyone deserves a pension
Maharashtra's very own 'long march' reached the state capital, Mumbai on 11th March 2018, more than eighty years after its more famous Chinese counterpart. The marching farmers demanded higher prices for their produce and farm loan waivers. They also demanded pensions for farmers. As a personal finance writer, the last of these is of particular interest to me. A CRISIL report released at the recently concluded 4th PFRDA Pension Conference revealed that vast numbers of India's senior citizens are working because they have to and not because they want to. The share of working senior citizens among the overall senior citizen population varies from 22% in relatively prosperous Goa to 51% in Bihar. The figure for Maharashtra is 42%. The report estimates that 68% of elderly working men and 82% of elderly working women work out of economic compulsion rather than career motivation.
India already has a fantastic pension scheme for the unorganized sector (including farmers) called the Atal Pension Yojana or APY. In return for monthly payments of as little as Rs 42, anyone can build a minimum pension of Rs 1000 per month. The monthly contributions increase for older scheme entrants but even at an entry age of 40, the indicative monthly contribution for a pension of Rs 1000 per month is just Rs 291. The APY does face a major inflation problem - 1000 rupees per month is going to mean very little indeed, 10 or 20 years down the line. The APY monthly pension needs to periodically increased in the way that government pensions are, through Pay Commissions. However, this is a problem for the future. The problem at present is that the APY isn't spreading fast enough.
On 3rd March 2018, the APY had 1.33 crore subscribers (including the NPS lite variant) but this is still a drop in the ocean. The 2011 census puts India's senior citizen population about 10.38 crore. In other words, APY subscribers amount to only 12% of India's senior citizen population. In addition, APY subscribers are India's future and not current elderly (the scheme is only open to people between the ages of 18 and 42). As India's demographic dividend matures and starts to morph into a huge mass of retirees, APY subscribers will constitute an even smaller share of senior citizens than the current 12%.
Who is responsible?
The answer isn't a person, party or government but rather a haphazard, piecemeal, approach. The Atal Pension Yojana isn't spreading fast enough because the government isn't co-contributing to APY pensions, in a meaningful manner. Current rules add government co-contributions if the subscriber isn't a recipient of any other social security scheme or if he or she is an income tax payer. This is utterly flawed. Why exclude someone simply because they are employed under MGNREGA or get LPG for cooking or have a ration card? Why assume that everyone who pays income tax is too rich to deserve a pension? The government has to co-contribute in the way that other countries do to their social security schemes.
A number of state governments provide ad-hoc pensions to differently defined groups of people. This is great but does little to solve the problem. India needs a 'national' social security system, not a state one. There is no good reason for the elderly residents of Jharkhand to have a different deal that the elderly of Rajasthan. We are all equal and our equality is guaranteed by the Constitution of India.
The solution to India's old age poverty problem is mind-bogglingly simple. Introduce a government co-contribution to the APY and popularize it. Farmers in Maharashtra deserve a pension and so do the rest of us.