Influencing the Financial Policy Initiatives for the Elder Care Products and Services in India

Influencing the Financial Policy Initiatives for the Elder Care Products and Services in India

1. There is very little awareness in the country about some simple facts about the elderly. Most policy makers, public information moulders etc., get lost in the statistics of young India – 54% below 25 years. But they forget the elderly are 10% means 110 million and growing at the rate of about 4 to 5 million annually. This size is bigger than the total population of many countries in the world. Of course, reflecting the demographic class distribution within India, only about 10 to 15% of this 110 million will be under the influence of transactional (market) economy; much smaller percentage will be covered by pension schemes or medical influence. It is a pity that bulk of the others just survive, as they had continuously struggled in their earlier six or seven decades ! Even without confining to the elderly alone, of the Indian population of about 1.1 billion about 700 millions have marginal quality of existence.

2. Those who suggest or implement any financial policy measure have to keep in mind this existential reality of India for the elderly. This paper is written with this reality in mind.

3. For the bulk of the elderly, the very existence is under daily threat. Two simple meals, a reasonable bed, to attend to natural calls without great difficulties, being able to bath and be treated by a doctor (any person who can be kind to them, even if they are not most qualified or effective) when necessary and above all to be sure of these. Any other item above these such as a place to walk, some social get together etc will be considered a boon. Most such people will be in the rural areas. Since many of the young persons and even middle aged persons have to earn their livelihoods in towns and cities, they often do not have the safety net offered by families (whatever they were in the past). However, on the positive side, many villages in India are better connected by road and telephones. Therefore relatives can come when they are in trouble. And also most critical medicines for fevers, cough etc are available in shops in town relatively cheaply. They can get from the shops (without prescriptions thus avoiding the doctor’s cost); though this can be considered “illegal” in a strict sense, this has been a great safety-net for many people in India (even for the middle class in cities !).

4. Very little special intervention can be done for them in terms of providing food availability or cloth availability as the delivery of them will be difficult. Public Distribution System (PDS) have been very ineffective. Whether availability of inexpensive pre-cooked food which require very little effort to prepare can be encouraged to be brought out by the usual market forces can be explored. Govt. agencies like DST (Department of Science & Technology) can take a lead in developing them and write off developmental cost and transfer technologies to the private companies. Govt. can waive taxes for such products. The question will arise whether other adults will avail of these products as well, thus cheating taxes on their normal food products. All schemes of cheap food grains or cheap cloths have languished. But to a limited extent Special Functional Foods mainly focused on old people may be useful. Good medical scientists may not agree on such a food composition as they would prefer assurance of normal nutrition, as empirical evidence does not exist about superiority of any such special product. Thus we just have raised the issue and would leave it there for further discussion.

5. As regards some health interventions for the bulk of the elderly’s, there is definitely a scope through mobile diagnostic centres as they exist in Uttarakhand (a TIFAC – Uttarakhand Govt. Project) successful for more than 5 years. It has also been adopted for Govt. of India’s Rural Health Mission for all the districts. Basically excellent medical diagnostic facilities are put in a Bus along with 15 KVA Generator. It visits on fixed days. In addition to Govt. initiatives, private initiatives can be encouraged by Govt. with income tax concession (say 100% reduction of the capital expenditure). Let them use it for commercial uses as well. But 1/3rd of the patients should be for total free medical check up for Below Poverty Line (BPL) people and also elderly people. For the elderly these units to cover at least one week medicine as a condition to have Govt. benefits of tax relief etc.

6. Coming now to the other elderly persons who are in the middle class and relatively well-to-do sections (i.e. abut 15% to 20% of the elderly depending on the definition) some of the financial incentives can be :

• Tax waiver on their pensions, savings from which in turn go for purchase of assistive devices and other services
• For those who do not draw pension, still pay income tax, purchase of assistance devices and services (including the expenses for staying in old-age homes) should be deductible from income tax. Expense limit for deduction can be Rs.1 lakh each year. This will also stimulate the market and grow its size so that the prices of these products and services can fall down, because of economies of scale.
• Govt. may give land on long term low cost lease for middle income type Old Age Homes with minimum fittings of assistive facilities, availability of old age care services etc.
• Govt. may also encourage infotainment services (films, broadcasts etc) for old age persons by providing them tax reliefs.
• Allow in these areas FDI (Foreign Direct Investment) as well, providing them also certain tax benefits.

7. The above mentioned tax – reliefs need not be considered as loss to the exchequer as currently very little is accruing. It is in fact for the stimulation of a new Industry in India, just as Govt. of India did during 1998 for IT Industry. Look at its growth. In fact if an Elderly Product & Services Industry (EPSI) grows within Industry sector, it not only will do yeoman services for at least part of its elderly population but also with lead to various job opportunities for many qualified and not-so-qualified persons. In the process, it will contribute to national GDP and also provide many additional indirect taxes. Those who are employed or provide supplementary support services will pay other usual taxes. In addition, it can also lead to export avenues. In the medium term one can expect that these products and services of EPSI may become 1% of GDP and growing more later as elderly population grows more rapidly towards 2020 and beyond.

8. Lastly, keeping in view a longer term perspective, Govt. may set up a Technology Development Board (TDB) for Elderly Products & Services (TDB – EPS) to allow for localized adaptions for technologies sourced abroad as well as for development of innovative technologies for local or global applications. In the final analysis, India would need to aspire technological leadership in this area. An initial fund of Rs.100 crores professionally run can make a good beginning.

9. The above mentioned items are not exhaustive. But most of them are actionable in very short period. It is essential to make a beginning in most of the above items and do improvements based on performance.

Y S Rajan

Principal Adviser, CII

(views personal)

03/05/09