Rs 400 solutions

Four hundred rupees a month is not a fortune. It is probably easy for any of us reading this newspaper to think of relatively unimportant aspects of our monthly expenditure that add up to more. Yet the Indira Gandhi National Old Age Pension Scheme, which currently guarantees that much to those above the age of 65 and below the government-defined poverty line, makes a difference to millions of older citizens across the country; and is capable of assisting India go through a genuine social and demographic change. The government8217;s decision to expand the scheme, reducing the age at which the poor qualify to 60, is thus very welcome indeed.

There is at least one particularly good reason for expanding the scheme now: money given to the destitute is rarely saved. At a time when the government is searching for ways of putting money into the system, expanding the reach of pension schemes is generally considered an excellent way of going about it. Furthermore, India is going through an unprecedented demographic transition. We have a young workforce and population; but it is also undergoing social churning, with greater mobility than before and fewer and fewer traditional joint families. Relying on historical patterns of support for older people 8212; intra-family transfers, in particular 8212; in this atmosphere of flux would be foolhardy; we need to create such systems of support instead, ideally systems that are eventually financially self-sustainable.

This is one of the areas where statistics, on their face, are misleading. The old appear less poor than the population in general. This is not, however, a good thing; it is because the poor die younger. What this means is that reducing the age at which government assistance is available will likely mean many live longer 8212; and, paradoxically, appear to increase the proportion of the old who are poor. In all such matters, therefore, we need to be careful about rushing to judgment about whether or not they are working. The UK8217;s widely-respected Overseas Development Institute, for example, says that the pension scheme has been particularly 8220;effective and relatively free from misappropriation8221;. Effectively widening the safety net is always wise: it helps create popular support for the reforms that keep government revenue buoyant and keeps the process irreversible.