The argument for the government’s ensuring pensions for all arises from the principle that no democratic society should expect old people to live off their progeny after retirement. A pension should be a matter of right for all citizens. For a vast number of persons who either get no pensions under any institutional schemes, or earn incomes that are so low that they can scarcely be expected to save for their old age from incomes earned during their working years, the government must make the necessary pension provisions. The responsibility of the government, in turn, arises from the fact that the relative income a person gets, which is embedded in the pattern of income distribution in the country, is socially determined; hence it is the responsibility of society to ensure that a pension adequate for a decent living is provided to all, and this responsibility devolves on the government as the avowed executor of society’s will. To rule out an increase in the pathetic pension currently being given by the government amounts, therefore, to an utterly callous and unpardonable abdication of responsibility by the government. It is more in keeping with the ethos of a feudal caste-ridden society where the poor are “kept in their places” by denying them adequate living standards, rather than a modern democratic society where a citizen is recognised as having a right to a pension. The question of resources required towards this end should in principle be irrelevant: resources simply have to be found. If, say 10 crore persons, have to be given Rs 3000 per month, then the total sum comes to Rs 3.6 lakh crores per annum, which is roughly 1.8 per cent of India’s GDP.If 1.8 per cent of GDP is spent by the government on pensions, then the pensioners will spend this amount buying various goods and services which will accrue as incomes to the producers of these goods and services and they in turn will spend some of this, and so on, generating additional incomes through successive rounds of spending. A very conservative estimate of the total additional income generated by the government spending 1.8 per cent of GDP is 3.6 per cent of GDP (that is, a multiplier of two), on which the tax revenue that would accrue to the government, taking Centre and states together assuming a 15 per cent tax-GDP ratio, will be 0.54 per cent of GDP. Therefore, to spend 1.8 per cent of GDP, fresh resources that need to be raised by the government come to roughly 1.26 per cent of GDP (namely, 1.8 minus 0.54). This should not be a problem at all for a government that is serious about instituting a pension scheme. If private wealth is taken, at a very conservative estimate, to be four times the GDP, which is consistent with the observed capital-output ratio in the country, and if the top one per cent of the population is assumed to own half of the total private wealth, again at a very conservative estimate, then the wealth of this segment comes to twice the GDP.
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