Lifecycle Deficit and Public Age Reallocations for India’s Elderly Population: Evidence and Implications Based on National Transfer Accounts

Using the computational framework of National Transfer Accounts, this paper offers new results and explanations on the role
of public support to India’s elderly population in 2004–05. New results refer to computed (a) lifecycle deficit (LCD) based
on age profiles of aggregate labour income and consumption and (b) public age reallocations based on age profiles of transfers
and asset based reallocations. The results show that the LCD of elderly population is about 34% of the LCD of all ages, or
3.74% of GNP. Surprisingly, net public transfers to elderly individuals are strongly negative and asset-based allocations
are financed by dis-saving, because the taxes paid by the elderly population substantially exceed the benefits they receive
and they pay both interest on previously accumulated public debt and paying off that debt. Public age reallocations finance
elderly individuals’ consumption by less than 0.50% and the largest burden of financing public transfers falls on elderly
for whom the net public transfers is −13.33% of labour income. The heavy burden on the elderly population is attributable
in part to India’s tax system and partly on the absence of programs that provide support to elderly individuals. If the present
private sector’s support for elderly individuals is not sustainable due to changes in the social obligations and in the absence
of a universal pension scheme, a reduction in the direct tax outflows for the elderly population may be a policy imperative
in India’s public age reallocations.