Retirement
FDI in Pension: Set up old peoples’ home for retirees!

While old peoples’ home is a shelter for many, it offers a viable investment opportunity for many others, especially the government

 
In the previous article—FDI in pension: What purpose can it serve? (please click here to read the article), we briefly covered the issue of the government’s move to open the pension sector for Foreign Direct Investments (FDI) as it has been felt that this move will bring in much-needed capital for its expansion. Infusion of capital, whether it is indigenous or imported, will be useful as long as clear plans are made for their need and utilization.
 
According to the statistical data available, the majority of the work force or a staggering 87% do not have pension cover at the moment. In most organizations, offer is made to the permanent employee to take up both provident fund and pension, but most choose provident fund simply because it is easily transferable to the new employer, in case of change of jobs.
 
Psychologically, however, as pension refers to the age-group of 55 years and above, to get the benefits, this puts off most people from diverting part of the very meagre savings, month after month, for this purpose.
 
Besides, within the inadequate income one gets, a lot of other priority areas of allocation, such as medical insurance, children’s education, marriage, and other essential monthly commitments take away bulk of the earnings, thus leaving very little room for pension, unless it becomes mandatory. Most people are satisfied with provident fund contribution.
 
In any case, the issue is how can the pension amounts be utilized in order to give an assured return to the payee?  At the moment, under the New Pension Scheme, anyone between the ages of 18 and 55 years can participate and advice the fund manager to utilize pension amount in various investment mixes. It could be in equity (maximum of 50%) or in debt in different forms.
 
Also, there are a number of avenues open under the NPS that may be suitable for one’s needs, but participating in NPS has been made mandatory for government employees.
 
All these are fine and do give protection to the pensioner in his or her golden years after retirement. But, then, can we now look at this issue of NPS in a different way?
 
Statistically, our ageing population, i.e. citizens over 60 years of age, as per the 1991 Census was 56.7 million people. As at 2011, this figure is projected to have reached 99.2 million and the estimated population of retirees by 2021 will be a staggering 140 million. So, we have to start thinking in terms of what would be required to make these people happy and satisfied in their golden years, and provide them with reasonable comfort after retirement?
 
One of the biggest problems we face today is the growing tendency for the disintegration of the joint family system that we have traditionally followed in our country. The present generation is already branching out to set up their independent families, leaving their ageing parents to fend for themselves, sometimes extending financial support and help and most of the times with no help at all, claiming that they have “too much responsibility” to take care of their own families!
 
In other words, we are slowly copying the western culture of packing off parents to old peoples’ homes which are now springing up all over the country. For many, it is a new area of investment and good return.
 
Frankly speaking, this change in attitude and behaviour has come about in the last ten years due to a great number of Indians settling abroad in USA, UK, Canada and Europe, and learning from their local experience!
 
Perhaps the time has come for the government to seriously consider diverting some 30% of the pension amount collected and establish and develop government-sponsored old peoples’ homes with supporting infrastructure and medical facilities in all the cities in the country. Each state must provide the land and basic facilities and the pension collected from that region should be used for setting up such operations.
 
In fact, the methodology to be used for the government-sponsored old peoples’ homes will have to be worked in detail but such a project must be included in the Twelfth Five Year Plan, by making a priority provision.
 
Such a move will enable great revival of economic activity in the country; building and construction industry will get a boost; steel and cement industries will have huge orders to tackle; other facilities to generate power, road construction, etc will get good support, besides employing thousands of people in these activities.
 
Each state will have several such townships because we have to take care of the retirees who are helping to building our country today, and they need our support tomorrow when they retire!
 
Please click here to read more articles by the same writer.
 
(AK Ramdas has worked with the Engineering Export Promotion Council of the ministry of commerce and was associated with various committees of the Council. His international career took him to places like Beirut, Kuwait and Dubai at a time when these were small trading outposts; and later to the US. He can be contacted at [email protected].)
 

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COMMENTS

M G WARRIER

5 years ago

With changing times, there is need to factor in the needs of post-retirement life into working wages and saving habit of each individual. Even very rich people, when they become old or disabled, find that the secure shelter/roof which they believed was there over their heads, suddenly vanishes. Even when thousands of flats in the staff quarters of reputed companies and organisations remain empty, thanks to policy prescriptions forcing staff-reduction, retirees from these organisations find it difficult to aquire an accommodation or maintain the one they hire out or own.

nagesh kini

5 years ago

Mr. Ramdas is bang on when he writes of the bludgeoning 60+ population touching 140m in not too distant a future.
Seeing the bad conditions in which the presently government run Children, Juvenile, Girls and Womens are managed - molestation, harassment occupants forced to escape, will be wise for the state to take on the task of aging senior citizens?
The management of aging MLA/MPs occupying vast government accommodation is bad enough - most of them refusing to vacate the premises.
Mr. Ramdas' reference to breaking of old family values reminds me of these days girls asking the boys at the 'selection interview' whether they have "old furniture" or "excess baggage" at home - an euphemism for aged parents.If yes, it is an indication of a "no-no" then and there!

Rangarajan panel for giving freedom to mills to sell sugar

The Rangarajan Committee also suggested doing away with the system of levy sugar, under which the mills are required to sell 10% of their production to the government at below market price for running ration shops

 
New Delhi: The Rangarajan Committee on Friday recommended deregulation of the sugar sector, the only remaining industry that continues to be controlled by the government, by giving freedom to mills to sell sugar in the open market, reports PTI.
 
It has also suggested doing away with the system of levy sugar, under which the mills are required to sell 10% of their production to the government at below market price for running ration shops.
 
While other sectors of the economy has been freed, the sugar industry continues to remain under the government control, right from the level of production to distribution.
 
The Centre fixes the quantity of sugar that mills can sell in the open market and ration shops.
 
"Rationalisation of sugarcane pricing and liberalisation of sugar trade need to be introduced over a two to three year period, in a calibrated and phased manner. However, levy sugar obligation and administrative control on non-levy sugar need to be dispensed with immediately," the Committee, headed by Prime Minister's Economic Advisory Council (PMEAC) Chairman C Rangarajan said in a report.
 
Levy sugar is meant for distribution in the ration shops, while non-levy sugar is for sale in the open market.
 
The report was submitted to the Prime Minister today. In January, the Prime Minister had set up an expert committee to examine issues related to decontrolling the sugar sector.
 
"Markets in almost all sectors in India are constantly matching anticipated demands with supply. There is no particular reason why sugar market would not be able to do this," the Committee said.
 
The mechanism of regulated release of non-levy sugar imposes costs directly on mills (and hence indirectly on farmers) on account of inventory accumulation, inability to plan cash flows, the committee said, and advocated that "since this mechanism is not serving any useful purpose, it may be dispensed with".
 

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COMMENTS

Dr Anantha K Ramdas

5 years ago

Thanks for giving the brief on the sugar controls as they exist today; why not follow the rest of the industry and simply withdraw total controls?

Encourage the sugar mills to volunteer and supply 5 to 10% of their production to Government at the most economical price to facilitate them to offer the same to aam aadmi through ration shops who are categorised as " below poverty line". Does the government want to have this BPL group for the rest of their lifetime? Everyone is making an effort to come out of this grip and let not government measures "perpetuate" the situation.

If sugar is decontrolled, even as an experimental basis, let it function for a limited period, starting from now, till the next "festival" season, and assess the situation. It can always be brought back on control if the need arises.

If other industries have made progres, being left "free" of controls, there is no reason why anyone should punish the sugar industry!

Leave it to grow. It is survival of the fittest.

RTI should be circumscribed if it encroaches on privacy: PM

According to Manmohan Singh, citizens' right to know should definitely be circumscribed if disclosure of information encroaches upon someone's personal privacy

 
Delhi: Voicing concern over frivolous and vexatious use of Right to Information (RTI) Act, Prime Minister Manmohan Singh Friday said the citizens' right to know should definitely be circumscribed if it encroaches on an individual's privacy, reports PTI.
 
"There is a fine balance required to be maintained between the right to information and the right to privacy, which stems out of the fundamental right to life and liberty.
 
The citizens' right to know should definitely be circumscribed if disclosure of information encroaches upon someone's personal privacy. But where to draw the line is a complicated question," he said.
 
Addressing the seventh Convention of Central Information Commissioners (CICs), the Prime Minister said, "There are concerns about frivolous and vexatious use of the Act in demanding information disclosure of which cannot possibly serve any public purpose." 
 
Singh said such queries besides serving little productive purpose are also a drain on the resources of public authorities, diverting precious man-hours that could be put to better use.
 
"Sometimes information covering a long time-span or a large number of cases is sought in an omnibus manner with the objective of discovering an inconsistency or mistake which can be criticised," he said.
 
Touching upon the area of public-private partnerships, the Prime Minister said blanket extension of the RTI Act to such bodies may discourage private enterprises to enter in partnership with public sector whereas blanket exclusion may harm accountability of public officials.
 
The Prime Minister's remarks come close on the heels of the Supreme Court as also the Central Information Commission's adverse criticism of frivolous RTI applications.

Stressing on the privacy issue, Singh said the issue of a separate legislation on privacy is under consideration of an expert group under Justice AP Shah.

Referring to a recent Supreme Court order terming Information Commissions as judicial bodies, the Prime Minister said the government has decided to go in for review of the verdict before the apex court.

Singh said there was also a need to change perceptions about the right to information, noting that it should not be viewed as an irritant "but something that is good for us collectively".

"Rights cannot stand in isolation and must always be accompanied by reciprocal obligation...I believe that all of us share a responsibility to promote more constructive and productive use of the Right to Information Act. This important legislation should not only be about criticising, ridiculing and running down public authorities," he said.

Singh said the Act should be more about promoting transparency and accountability, spreading information and awareness and empowering the citizen.

"I believe that the right to information can be utilised for even better results to the benefit of our country and the people. It needs to be remembered that the ultimate goal of the legislation is to induce more efficiency in the work of the government and help it serve the people better," he said.

Earlier, speaking on the occasion, Minister of State for Personnel and Training V Narayanasamy said there is a need to create awareness about responsible use of the Act.

"It has to be ensured that it (information) does not infringe upon personal sensitive information of individuals.

Personal liberty is very important. Each society has its own concept of privacy. There is need to define what is personal information and what is sensitive information," he said.

He said people using the RTI Act to expose corruption must be protected and Whistleblowers' Protection Bill is a step in that direction.

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COMMENTS

nagesh kini

5 years ago

It is in deed sad that a person of Dr. Man Mohan Singh's stature, apart from being the PM of India, should make such statements. Let the PMO clarify what exactly he has in mind

Yes, the RTI has indeed been abused by so-called pseudo intellectuals as a tool of harassment, but never by the common man. At the same time it has benefited many. The results have been positive all along.
Only the guilty oppose it.

MOHAN

5 years ago

The Hon.PM may limit RTI queries to SIX in a year!!

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