Abstract
Overseas Indian workers are excluded from access to formal social security and retirement savings schemes available to residents of the 17 ECR countries. They are also excluded from formal pension, provident funds and gratuity schemes normally available to workers in India. No mechanism presently exists to enable and encourage these workers to either save for their old age or have any motivation to come back to India for a return and resettlement. As a consequence, a majority of these overseas Indian workers face the grave risk of poverty when they return to India and become too old to work. On an average, nearly one in every five Indian workers in ECR countries is a woman. Women workers are even more vulnerable to old-age poverty since they enjoy a higher life expectancy than men but are disadvantaged due to relatively lower incomes, shorter work life and interruptions in employment due to childbirth and other family responsibilities. This chapter focuses on the rationale and requirement for such a scheme and provides recommendations to the policymakers towards designing such institutional mechanism that would encourage the target population to voluntarily save for their scheduled return and to also improve their retirement incomes. The chapter argues in favour of using conditional cash transfers (CCTs) mechanism for providing a socioeconomic safety net. Even with needed reforms of formal sector pensions, part of the requirement for retirement income security will need to be met from newer instruments such as the CCTs. CCTs have received considerable attention as instruments for eliciting desirable behaviour on the part of the recipients, minimizing transaction costs and errors in delivery of public services. That the CCT mechanism can be used effectively and efficiently to motivate pension savings in India has been partly demonstrated by states like Rajasthan and Andhra by launching co-contributory pension scheme with the states contributing financially to augment retirement savings of low-income individuals.
Unskilled and semi-skilled matriculate workers travelling to 17 countries for employment carry passport with status of ‘Emigration Clearance Required’.
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Notes
- 1.
Currently, approximately 3 % of India’s working poor are actively saving for old age and less than one in five have some form of insurance. Even for this cohort, preretirement saving accumulations at best are modest (average savings corpus of above 45 years old is Rs. 25,000) and could barely last to support for no more than half a decade when they decide to retire or are unable to work (Invest India Incomes and Savings Survey 2007).
- 2.
Analysis from the IIMS Dataworks et al. (2008) and based on the Invest India Incomes and Savings Survey (2007).
- 3.
Source: Reserve Bank of India.
- 4.
The budget announcement by the Indian finance minister in 2010 has also pave in new flood gates for co-contributions under the NPS for low-income unorganized sector workers by the Swavalamban (self-support) scheme. This has motivated states like Karnataka and Haryana to announce similar co-contributions under the NPS for their respective vulnerable groups.
- 5.
A tax-funded old-age pension for below poverty line elderly aged 65 and above. The Government of India transfers a subsidy of Rs.200 per such elderly per month to state governments who in turn add Rs.200 on an average to this subsidy. Each state government is responsible for delivery of this subsidy of Rs.400 per month to the eligible aged populations.
- 6.
In June 2011, the Cabinet approved lowering the age limit for the Indira Gandhi National Old Age Pension Scheme (IGNOAPS) from 65 years to 60 years and at the same time increased the rate of pension from Rs. 200 to Rs. 500 to persons of 80 years and above.
- 7.
Examples of CCT in LA countries are Progresa in Mexico (1997), Bolsa Escola in Brazil (1995) and Bolsa Familia (2003) and later got expanded in many Latin American countries such as Colombia (2001—Familias en Accion), Ecuador (1998 and 2003—Bono de desarrollo humano), Dominican Republic (2005—Programa Solidaridad), Panama (2005–2006—Red de Oportunidades), Paraguay (2005—Tekopora), El Salvador (2005—Red Solidaria), Peru (2006—Juntos), Argentina (2002—Jefes y jefas de Hogares, Plan Familia), Uruguay (2003—Ingreso ciudadano, asignación familiar), and Jamaica (2001—PATH, Programme of Advancement through Health and Education).
- 8.
In the Indian context, CCT is efficient and effective in addressing multiple objectives (health, education, nutrition and old-age security) through the use of a single instrument; has relatively low administrative costs; can target the poorest of the poor effectively; empowers families/mothers, allowing them to make necessary choices through ‘co-responsibility’ and prioritization of expenditures as per their needs; serves as a useful measure to boost demand during a financial crisis as well as in normal times; has demonstrated positive impact on overall beneficiaries’ welfare; generates considerable multiplier effects in local communities; and does not seem to have negative impacts on work incentives, workforce participation or on labour supply and does not seem to foster dependency. India’s performance on Millennium Development Goals in health and nutrition is a great challenge, and therefore applicability of CCT for multidimensional approach is worth being considered.
- 9.
NPS Swavalamban provides for CCTs for 5 years only.
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Bhatnagar, K.V. (2014). Return and Retirement Funds for Indian Migrant Working Women in ECR Countries. In: Sahoo, S., Pattanaik, B. (eds) Global Diasporas and Development. Springer, New Delhi. https://doi.org/10.1007/978-81-322-1047-4_21
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