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Time to pension off the professional agitators

Vivian Fernandes

Updated: May 10, 2012, 8:50 AM IST
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The right to information, the right to work, the right to education, the right to food and now the right to pension. Watching Sagarika Ghose's Face the Nation debate on the latest demand, it was clear that hoping to satisfy our civil society groups is like trying to catch up with the horizon: the closer you get, the farther it recedes.

The NGOs are getting increasingly audacious in their demands. They want the monthly pension to be Rs 2,000. This is ten times the amount that the Central government pays. They want the age limit lowered to 55 years at a time when one would expect people to work longer because of increased life expectancy. It should be universal, not selective and it should be a right, an obligation on the state, not an optional entitlement, they say. The tab: Rs 2 lakh crore or two per cent of GDP. This is no mean sum, but our pension advocates speak of it like some loose change. And it gets meaner still when the bills for other rights are added.

Aruna Roy and Nikhil Dey of the Mazdoor Kisan Shakti Sanghathan (a constituent of the Parishad) have no patience with questions like, 'where will the money come from?' For them the moral argument settles it all. 'Can you put a price to life or dignity,' they ask. 'The people in the unorganised sector have toiled all their life. They have contributed to the nation. Surely, the state has a responsibility to them when they can toil no more.'

Of course, pension for all has profound moral justification. Free market champions like (author) Gurcharan Das come across as uncaring when they suggest that it took Europe two centuries to legislate it as a right. But can we duck the issue of affordability? Can India with per head income (2010) of $1,270 aspire for the same things as China ($4,270) or Brazil ($9,390)? Calling them BRIC countries does not make them equal. Brazil is also the wrong economic model. The country went bust because of its welfare without work culture. Should we import its pension scheme? And while every toiling person contributes in their own way, what matters is the value they create not just the effort they put in.

Dey and Roy seem to think that the rich do not deserve their prosperity any more than the poor their poverty. The poor are not subsidised, Dey says, the middle classes are. Yes, the middle classes do avail of subsidies - on cooking gas, diesel, education, healthcare and housing - that are meant for all. But the middle classes also pay Income Tax. In fact, they are taxed twice over - not only on their income but also on the stuff that they buy with post-tax income and they pay for these (petrol, branded garments, processed food, cars and scooters) at higher tax rates. To think that people who are lower down in the income ladder subsidise those above is just fallacious.

If the government recovered the tax foregone on industry there will be enough and more money for the universal pension bill, say its advocates. On the FTN show, Dey said that tax giveaways to industry amount to Rs 5 lakh crore. He is nearly there: in 2010-11, tax concessions totaled Rs 4.2 lakh crore. While there is a case to remove exemptions and reduce the tax rate (which our closet Marxists will object to), much of these concessions are of a promotional nature. For instance, nearly half (Rs 1.9 lakh crore) was foregone in excise on goods manufactured in the hilly areas of the northeast, Himachal Pradesh, Uttarakhand, J&K and the arid Kutch district of Gujarat.

If the government did not reduce customs on crude oil by Rs 41,200 crore, we would pay more for fuel (or higher subsidies which would show up in inflation). About Rs 57,000 crore was export promotion concession to aam aadmi activities like garment making, leather production and vegetable marketing. Of the nearly Rs 31,000 crore foregone in personal income tax, Rs 1,405 crore was exemption to senior citizens, Rs 2,300 crore to women and Rs 579 crore was the tax rebate on health insurance premium. The NGOs can love the poor by all means. But do they have to kick the middle classes?

It is great to have good intentions. But they can have unintended consequences The Right to Education is likely to choke private enterprise in the education sector, impacting the very people that it is supposed to help.

While the employment guarantee scheme has raised rural wages in a way that the minimum wage act could not for 50 years (laudable), it is also destroying the work culture. At an interaction between sarpanches and officials, which the MKSS organised in Jaipur in 2009, I heard newly-elected sarpanches of Rajasthan complain that the defeated incumbents were unwilling to let go off the posts (and the money).

People who avail of the guarantee do little work and share wages with officials who falsify the output. The scheme is also squeezing farmers from both ends. While their costs are rising because of higher wages, their prices are capped by restrictions on exports or inter-state movement of produce.

That said, the Pension Parishad has raised an important issue. India certainly needs to take care of people who are old and helpless. So why not combine two rights into one and give the helpless aged a higher cash dole that not only takes care of their food security but also leaves something behind for other needs as well? Why not have specialised geriatric care centres in public hospitals? And why not encourage the private sector to set up old age homes on least subsidy basis?

Those who are not old must be encouraged to save as they work. Which means encouraging private industry (which is the most productive) to create jobs; not socking it with more taxes as the proponents of universal pensions propose. It would do a lot more good for this country if our NGOs pressed for more electricity, better roads and less official obstructionism in rural areas so that enterprise can flourish. That is the route to real dignity.

I have great regard for Dey and Roy. They have sacrificed a lot. Their house in hot Rajasthan does not even have a fan. In a programme of mine in 2009 that was aired on CNBC-TV18, I called them the secular missionaries of charity. We need such conscience keepers because growth without compassion would strike at the foundations of our nationhood. But if you choke growth with entitlements, you will get neither.

First Published: May 10, 2012, 8:50 AM IST

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