universal age pensions for India

This is one of the best, concise essays I have seen in defence of universal age pensions. The author, Prabhat Patnaik, is an Indian economist known to be a Marxist, but I see nothing Marxist in this essay. Since the newspaper link may not last long, I have taken the liberty of sharing with TdJ readers an edited version that is about half as long as the original. To download and read the full essay, click on the link below.

Incredible as it may seem, the Union government provides a pension to the elderly which amounts to an absurd sum of Rs 200 [US$2.71] each per month, and even for accessing this the beneficiary must belong to the BPL [Below Poverty Line] population which, as is well-known, is notoriously underestimated. True, the state governments add something to this amount, but, their resources being meagre, the additions cannot be large. What is more, this figure of Rs 200 has remained unchanged since 2006-07; even the elementary courtesy of indexing it to inflation has not been accorded to the elderly.

This is truly a scandalous state of affairs …. This attitude sees the payment of pension as a largesse on the part of the State, an act of charity towards a set of mendicants. But an adequate old-age pension is actually a right. […]

If adequate pension is an economic right, then it must be universal, like the fundamental political rights enjoyed by all. The pension scheme cannot be either contributory or means-related. It cannot be targeted, not just because any targeting invariably leaves out many deserving beneficiaries, but, more importantly, because it violates the principle of universality that must characterise all rights of citizens. To be sure, in fixing the amount of pension, the fact that a person is already drawing a pension from some other source must be taken into account; and once deduction is made on that score some will automatically get excluded or drop out, but that does not amount to an infringement on a person’s right. […]

The provision of a laughable pittance as pension, as is the current state of affairs, is therefore a violation of the spirit of the Indian Constitution, a throwback to feudal times when rulers occasionally showed kindness to the ruled by bestowing favours upon them, of the sort that our governments think they are doing in providing a pittance for a pension.

The Pension Parishad, a network of several groups, organised a dharna in Delhi on September 30 and October 1, to demand an adequate universal rights-based pension. The principle enunciated by the Pension Parishad is that the amount should be half the minimum wage, … [which amounts to] Rs 3,000 per person per month. […]

[I]n terms of a daily calorie-intake norm, [half the minimum wage is sufficient to cover the cost of a weighted average of minimum food requirements,] namely 2,100 calories per person per day in urban India and 2,200 calories in rural India …. […]

[W]hat is required is just about 2% of the country’s current GDP for financing a universal rights-based pension … [of Rs 3,000 a month].

The question often raised against such a plan is that the country cannot afford this amount. But 2% of GDP, it should be noted, is less than a third of the annual increment that occurs in GDP at present. The provision of this amount of pension, if it is financed through taxes paid out of incomes, would not imply any decline in the average post-tax income of the non-pensioners compared to the preceding year. …. Nobody in short needs to be squeezed in absolute terms for paying out pensions that provide a minimum living standard to the elderly.

Prabhat Patnaik, “The Great Pension Scandal: A Laughable Pittance of Rs 200 a Month!“, News Click, 8 October 2018.

Prabhat Patnaik (born 1945) earned a BA with Economics Honours from St. Stephen’s College in Delhi, India. In 1966 he went to Oxford University, where he obtained his B.Phil and D.Phil. degrees. In 1969, Patnaik joined the Faculty of Economics and Politics of the University of Cambridge, UK. In 1974 he returned to India, where he taught in the Centre for Economic Studies and Planning at Jawaharlal Nehru University in New Delhi until retiring in 2010. He served also as vice-chairman of the Kerala State Planning Board from June 2006 to May 2011.



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