Only 8% of employees who retire from the private sector in India are covered by pensions while the remaining 92% have no income security or health insurance, according to a recent report released by Crisil, a ratings agency. Fiscally, the report adds, the government cannot afford to ensure social pensions to a large populace that is also increasing along with life expectancy.
IndiaSpend had earlier reported on demographic challenges before India – both for youth and for the elderly. We have explored how India’s ageing population is a concern for policy makers and analysed how some states in India have witnessed a fall in fertility rates, leading to a proportionately higher population of the elderly, implying an increasing burden on the working population.
We have also raised concerns about the future of the youth with low employment levels in the country. Other than better and more employment and skill development, the government also needs to focus on ensuring financial stablility for the current young generation. With falling fertility rates, old age dependency ratio will rise in the coming decades, and it will be fiscally burdensome to support the aged.
The Crisil report has built pension scenarios for India’s retired population in the future decades. According to their calculations, India’s best case can be where the economy can avoid fiscal burdens.
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