THE POLITICAL ECONOMY OF PENSION REFORMS IN INDIA
| Author | Azad Singh Bali |
| DOI | http://doi.org/10.1002/pad.1681 |
| Published date | 01 October 2014 |
| Date | 01 October 2014 |
THE POLITICAL ECONOMY OF PENSION REFORMS IN INDIA
AZAD SINGH BALI*
Murdoch University, Australia
SUMMARY
India’s far-reachingcivil service pensionreforms in 2008 provided its fragmented and diffusepension system a unifyingorganizing
framework. The design and architecture of the reformed civil service program, the National Pension System, was subsequently
extended to those employed in private formal and informal sectors. The article assesses India’s pension reforms and identifies
challenges forthe National Pension System in providing old-ageincome security. The article alsopresents estimates for universal
social pensionscheme and argues that itsimplementation is constrainedby political factorsand not necessarily by fiscalconstraints.
Copyright © 2014John Wiley & Sons, Ltd.
key words—pension reforms; National Pension System (NPS); civil service pension reforms; India
INTRODUCTION
As many countries in developing Asia, including India are expected to age at relatively low incomes, financing re-
tirement expenditure is a significant policy challenge. However, ensuring retirement income adequacy for an
increasing number of elderly has received limited attention in policy debates in India. Estimates suggest that in
2050, the two largest population cohorts in India will be women aged 70 years and older followed by men aged
70 years and older (United Nations, 2010). The number of elderly (defined as those 60 years and older) will more
than triple between 2010 and 2050, from 93 million to 296 million; while as a share of the population, it will
increase from 7.7 per cent in 2010 to 18.3 per cent in 2050. The number of elderly (and near elderly) for whom
retirement income security will become economically, and politically significant will increase sharply.
Moreover, other factors such as urbanization, migratory and informal labor markets, lack of social safetynets, and
reduced economic growth and fiscal space to finance social expenditure in the aftermath of the economic crisis also
portend many challenges for India’selderly.AlthoughIndia’s labor force is predominantlyinformal, current pension
arrangements cover only those employed in formal private and public sectors. Thus, the elderly have been forced to
rely on voluntary savings and traditional familial structures and institutions to finance their retirement expenditure.
India’s civilservice pension program is perhapsone of the most generous programs availableto civil servants across
low-middle economies. The non-contributory program offers benefits that are indexed to current wages and provides
protectionagainst inflationary, longevity, and survivors’risks.Not surprisingly, the fiscalcost of the program exceeded
2 per cent of gross domestic product (GDP) in 2012–2013. Primarily driven by fiscal pressures, the government
initiated far-reaching civil service pension reforms in 2008, moving all new civil service personnel recruited after
January 2004 to a defined contribution (DC) program called the National Pension System (NPS), supervised by an
independent regulatory authority. The design of the NPS included portability of benefits, centralized recordkeeping,
investment exposure in varied asset classes, and innovations in the design of the payout phase and was a significant
departure from the traditional civil service pension scheme. In 2009, the government extended the NPS architecture
on a voluntary basis to those employed in the private (formal and informal) sectors.
*Correspondence to: A. S. Bali, Murdoch University 90 South St, Murdoch WA 6150, Australia. E-mail: bali@nus.edu.sg
public administration and development
Public Admin. Dev. 34, 294–304 (2014)
Published online in Wiley Online Library
(wileyonlinelibrary.com) DOI: 10.1002/pad.1681
Copyright © 2014 John Wiley & Sons, Ltd.
Get this document and AI-powered insights with a free trial of vLex and Vincent AI
Get Started for FreeStart Your Free Trial of vLex and Vincent AI, Your Precision-Engineered Legal Assistant
-
Access comprehensive legal content with no limitations across vLex's unparalleled global legal database
-
Build stronger arguments with verified citations and CERT citator that tracks case history and precedential strength
-
Transform your legal research from hours to minutes with Vincent AI's intelligent search and analysis capabilities
-
Elevate your practice by focusing your expertise where it matters most while Vincent handles the heavy lifting
Start Your Free Trial of vLex and Vincent AI, Your Precision-Engineered Legal Assistant
-
Access comprehensive legal content with no limitations across vLex's unparalleled global legal database
-
Build stronger arguments with verified citations and CERT citator that tracks case history and precedential strength
-
Transform your legal research from hours to minutes with Vincent AI's intelligent search and analysis capabilities
-
Elevate your practice by focusing your expertise where it matters most while Vincent handles the heavy lifting
Start Your Free Trial of vLex and Vincent AI, Your Precision-Engineered Legal Assistant
-
Access comprehensive legal content with no limitations across vLex's unparalleled global legal database
-
Build stronger arguments with verified citations and CERT citator that tracks case history and precedential strength
-
Transform your legal research from hours to minutes with Vincent AI's intelligent search and analysis capabilities
-
Elevate your practice by focusing your expertise where it matters most while Vincent handles the heavy lifting
Start Your Free Trial of vLex and Vincent AI, Your Precision-Engineered Legal Assistant
-
Access comprehensive legal content with no limitations across vLex's unparalleled global legal database
-
Build stronger arguments with verified citations and CERT citator that tracks case history and precedential strength
-
Transform your legal research from hours to minutes with Vincent AI's intelligent search and analysis capabilities
-
Elevate your practice by focusing your expertise where it matters most while Vincent handles the heavy lifting
Start Your Free Trial of vLex and Vincent AI, Your Precision-Engineered Legal Assistant
-
Access comprehensive legal content with no limitations across vLex's unparalleled global legal database
-
Build stronger arguments with verified citations and CERT citator that tracks case history and precedential strength
-
Transform your legal research from hours to minutes with Vincent AI's intelligent search and analysis capabilities
-
Elevate your practice by focusing your expertise where it matters most while Vincent handles the heavy lifting
