governance, political economy, institutional development and economic regulation

Posts tagged ‘ageing’

Grow up well India

statistic_id254469_median-age-of-the-population-in-india-2015

So, what are we trying to say when we repeatedly stress that 65 per cent of our population is below 35 years of age? It is not as if we are growing any younger. In fact we are ageing. And that is a good thing because it is an outcome of development. India became younger between 1951 and 1970 when the median age (the point at which one half of the population fall below and above) decreased from 21.3 to 19.4 years due to improved healthcare and rising incomes.

Demographic googlies

Since 1970, the median age has increased steadily as people live longer, fewer babies die and fewer babies are born. By 2040, the proportion of the population below 34.5 years will fall to 50 per cent from 65 per cent today. Will that be terrible? Consider that by 2040 we will be in the same demographic boat that Singapore is in today. Age merely indicates we can become like Singapore in two decades if we do the right things.

The point here is that the advantages of a youthful population are exaggerated. There are 84 countries with a more youthful population than us today. None of them is competitive with India. The virtues of youth are likely to fade over time. Advances in artificial intelligence and healthcare will reduce the demand for manual work — which is best done by the young — whilst also prolonging productive life. This means that the definition of the workforce will change to include older folk — possibly up to 75 years — who will continue to earn, pay tax and pay-in rather than draw out from health insurance. Tata Sons and the BJP have already used the magic number of 75 years as a marker for obsolescence.

We are working towards an ageless society. The Pradhan Mantri Jan Arogya Abhiyan being launched on September 25 will provide in-hospital medical insurance to 107 million families (45 per cent of the total number of families) at the bottom of the income and caste pyramid. Public health centres in 150,000 locations are to be upgraded to provide pre-hospitalisation diagnostics and preventive care. State governments have also taken the lead in launching similar schemes for health security. Robotisation is widespread already in our automobile sector. Machines will progressively replace workers in construction, agriculture and sanitation.

Wear those wrinkles with pride – they signal the long road we have travelled

wrinkles

The bottomline is that we should not emulate the paranoia of filmstars about ageing. Our collective shelf life is far longer than the first flush of youth or middle age. We should also not be nudged into having more babies to keep the median age low. China, with a median age of 37.4 years, is reversing its family size restrictions and doing just that. But their demographic transition, like their economic transformation, has been jagged and artificially staged via the heavy hand of State control. Ours has been a natural demographic transition driven by personal choice, higher incomes and better old age and health insurance.

Hone kids to be productive future citizens

What we do need to fear is that we may continue our business-as-usual approach which prioritises near term results over sustainable growth. If India is to grow up with dignity we need to transform our educational system to produce multilingual, multi-skilled and multicultural professionals, as capable of cooking up a meal, singing a song or cleaning their toilets as of designing a complex space mission.

Hai! the plunging Rupee

There is another number which is being bandied about with alarm — the exchange rate of the Indian rupee versus the American dollar breached the 70-rupee mark last week. Our currency has been overvalued since 2013 because of a complex belief in a “strong” currency being a proxy for a “strong” nation.

False pride

strength

This belief is wrong on two counts. First, if our exports are not competitive because our currency is overvalued, relative to our peer exporters, then a strong rupee is merely false pride, not strength. Second, if strength is gauged from the ability of domestic producers to beat back the competition from imports and retain domestic market share, then a strong rupee works at cross purposes to this objective. It subsidises imports at the expense of domestic production. It taxes our exports and benefits our competitors like China.

The only thing a strong (overvalued) rupee achieves is to artificially reduce the landed cost of imported coal, petroleum products and military hardware. It also signals to foreign investors that exchange rate depreciation risks are minimal, thereby reducing the risk premiums they add to the hurdle rate of expected return from their investments. To this extent it reduces the stress on our fiscal position, improves the external balance and also impedes inflation.

However, these advantages of a strong rupee must be evaluated against the numerous downsides. Reduced employment and the loss of revenue from GST for those state governments, where producers have shut shop because of cheap imports. Consider also that a strong rupee actually encourages Indians to go on holidays and shop abroad rather than at home. This impacts retail trade directly. It simultaneously makes India an expensive tourism destination, versus options in East Asia.

Look to the RBI to set a predictable “real” exchange rate for the Rupee

A belief in a “strong” INR is as shallow as male machismo. Neither is a “weak” Rupee the answer. Setting the right “real” level for the rupee (accounting for domestic inflation), to optimise the complex trade-off, is best left to the Reserve Bank of India, which has the expertise and the information to strike this delicate balance. The rest of us must desist from creating false shibboleths of national strength. Our strength is best demonstrated by balancing our trade account without imposing prohibitive import or export tariffs; making our budget revenue surplus so that borrowings only finance investments and by following a need-based strategy for allocating resources for human capital development and social protection. None of these three milestones have been achieved yet.

collaboration

Grow up well India, collaboration is better than conflict; maximalist negotiating positions are self-limiting and the high from winning has diminishing utility unless the agenda ahead is compellingly uplifting.

Adapted from the authors opinion piece in The Asian Age, August 19, 2018 http://www.asianage.com/opinion/columnists/210818/grow-up-india-time-to-set-an-uplifting-agenda.html

When I’m 64

Paul Mccartney

(photo credit: wikipedia)

Paul McCartney -he of the long, brown hair who hung out in the company of the Beatles in the 1960s-wrote this song when he was just 16. Clearly he was not an economist and didn’t need to be hesitant about asking his “love” to project forward by 48 years, her likely feelings for him at the ripe, old age of 64. We don’t know what she told him then, but today it is unlikely to be the right thing to do.

First, not many lose their hair by 64 and the ones that do, get them back with renewed vigour, courtesy a visit to Dubai for a hair boost. Second, it is unwise to ask the modern spouse if she would lock the door if you remain out till 3 AM. The likelihood is that you would be opening the door for her when she comes in at 6! Third, the role distribution between men and women is no longer about the former mending a fuse and the latter knitting a sweater. Nor do women typically look forward to have three grandchildren dangling at their knees. But Mccartney got one thing right when he plaintively asked “will you still feed me when I am 64”.

The way to a man’s heart remains via his stomach and it is not just food that we refer to. In rural areas women have traditionally done most of the drudge of farming, animal husbandry and cottage industry along with fetching firewood, water and often carrying the weekly supplies home from the village market.  But now, even in urban areas, supporting the family by earning an additional income has become a critical role for women. In fact several studies of recent migrants to urban areas find that women adjust far better to the demand for skills in cities than men. The bulk of the labour demand in the urban informal sector is for housework and hospitality related jobs. Nannies in Gurgaon earn Rs. 40,000 a month, the same as recently graduated engineers. Women are better equipped to meet this demand than men, who tend to slide down the labour profile, from being proud farmers to become daily wagers in manual unskilled muscle-power related work or fall into petty crime. A woman with a steady income is consequently not to be sniffed at.

Even amongst the rich, women today play an important role in salving the stomach. Take for example the case of club memberships in the megacities. With a limited number of “legacy” clubs- leftovers from the colonial past- and growing demand, membership of a decent club has become a problem, even if you don’t have Groucho Marx’s hang up of not wanting to be a member of a club which would accept him. Most clubs however do have fast track arrangements for women memberships. A spouse, with a membership in these “legacy” clubs, is consequently a fairly efficient way of ensuring perpetual access to decent food and booze at ridiculously low prices, relative to the extravagantly generous environs.

Our PM Modi is already 64 and so must sympathise with the problems of his age cohorts. We know that this makes little electoral sense for him. After all, less than 5% of our population is above 64. Far better to cater to the 80% who are below 44. But here four things the PM should think about.

First, caring for the elderly is no longer a family effort. Nuclear families and migration make that impossible. Catering to the health needs of the old is a completely different specialization than looking after working adults. India is hopelessly deficient in this skill and public health institutions do not even waste their time on this “marginal” activity. The one thing the PM should remember is that social norms are built around how the elderly are treated. Even elephants will remain with a sick and elderly herd member, providing comfort and company. Should India not have a similar publicly funded HealthLine for the elderly?

Second, better nutrition, awareness and altered social expectations have enhanced longevity. The fond, greying, father marrying off his daughters and setting off for pilgrimage; his worldly duties done, is a Bollywood caricature, observed more in the breach, than in real life. India does not use its elderly purposefully. We tend to look at the “jobs and employment” pie as fixed. An elderly person occupying a job is seen as one job less for the young. This age based discrimination violates the fundamental principle of human rights and the economic principle of merit-based employment. Callow youth can be a disadvantage in many jobs and experience coupled with reasonable health, an economic virtue. A society which seeks to provide productive employment to the “specially enabled” cannot logically discard the elderly from its work force.

Third, the PM and FM Jaitley should regulate our private Medical Insurance Industry better. These companies blatantly cherry pick medical cover for those above 60 and make it available only to those who can either fudge their heath reports or to the few who enjoy “perfect health”, even after 60 and that too at astronomical premia.  There is no insurance cover available for those who have the typical “old age” health concerns of hypertension; diabetes and other assorted pains and aches. The pity is that there is significant demand from those who are more than 64 and can pay handsome premia but who want to insure against all possible “old age health risks and care”. Surely there is a business opportunity there which Insurance Regulatory and Development Authority (IRDA) should nudge the private health insurers to exploit as a desirable private good?

Lastly, FM Jaitley was recently reported as supporting the reduction of interest rates for kick starting the stagnant realty sector. Whilst, setting interest rates should be strictly in the purview of the RBI Governor, could Mr. Jaitley please think about extending tax and interest rate benefits to “retirement homes” of which, yet again, the supply is far less than the demand, across all price segments. Caring for the old and giving them a good send-off when they die, is a nit-picky, long term business investment and does not lend itself to the typical realty practice of theme of doubling your money in two years by hiving off an leveraged assett. Big, established, realty and hospitality companies, with a reputation to protect, can only be attracted into the retirement home segment if the deal is sweetened by government.

Hopefully the FM will include this “public benefit” in the 2015 budget. This writer is waiting to sign up for one such “home” now that I am 62.

Tag Cloud

%d bloggers like this: