Old-age Pension & Electoral Bargaining


By TP Saran

It is to be expected that during an electoral campaign all parties contesting, both the incumbent one and the opposition, will make promises and take pledges about what they intend to do in broad lines. The party constituting the government will, in addition, emphasise what it perceives to be its achievements, though this is no guarantee of an electoral victory. This was demonstrated at the polls in 1995 when, despite an impressive record on the economic front, the MSM led by Sir Anerood Jugnauth lost the election.

It is for the first time, however, that we are seeing the sort of campaign promise that is being made, centering around an increase in the old-age pension (OAP) by not only the leader of the Alliance Morisien, but now also by the Reform Party as if to up the ante and outdo what Pravind Jugnauth is committing himself to at every meeting of his party that he is addressing. For some analysts this is beginning to sound more like an electoral bribery, a corruptive form of electoral bargaining which is apparently not well defined in the law – an issue that will certainly need to be clarified in due course, definitely before another general election.

In the meantime, though, there are three aspects of this particular measure, namely, the increase in OAP, that are being discussed and are raising concern. They are related to the budget, the impact on the economy, and the social implications for the country.

It will be recalled that the Government had been able to meet some of the expenditures of the last budget through grants from India in the wake of the abrogation of the DTAA. With the implementation of the pension increase the proportion of the budget allocated for this item is bound to rise accordingly – and progressively on an annual basis if the current regime is returned to power, for the pension is slated to be doubled by the end of its prospective mandate. No details are being given about the state of the country’s finances, and we have therefore no choice than to take the Prime Minster on trust that he has the facts and figures at hand when he is dangling the sum of Rs 9000 beginning this December, going up to Rs 13,500 eventually.

The question that arises is where is the money going to come from for such a largesse? Will we need to borrow again and repeatedly from foreign sources to keep successive budgets afloat? From which powers and how much? Perhaps the more concerning question is – since there is no free lunch – what is the trade-off? What are we giving out in return, what sort of concessions is the country being coerced into making in exchange for the sums we are begging for? Are these give-ins going to impact the social fabric? These queries are surely needed to be answered credibly and placed before the population so that it knows exactly what it is going in for.

Of course all those entitled to the old age pension will have no option but to accept the additional money that will be given to them, seeing that even those both in and out of power who qualify for pension will themselves be beneficiaries too, over and above the already over-generous pensions that they are receiving. But that does not mean that everybody is necessarily over-enthusiastic in this respect. The effusive micro-trottoir snapshots featuring elated pensioners may not be telling us the whole story, for across the board there are also other echoes being heard.

One of them is the sustainability of this measure in the long term, especially at a time when the world economy is slowing down – recent projections from the IMF are not all reassuring. We have barely managed to maintain an average growth rate of 3.5% over the past five years. With the world global economy itself in difficulty and the spectre of Brexit looming because of the great uncertainty associated with it, there is no gainsaying that we have to be on our guard about our own economy. Our level of debt has crossed 65% of GDP, with a rising trend, a fact which ‘creative accounting’ however camouflaged cannot hide. So where is our economy headed given the global constraining environment and our own inability to speed up our growth?

On the other hand, what is the model of society that we are promoting, and becoming? Like our sister-island next-door, Reunion, are we going to be a nation of assistés? All countries which have made progress have come to realise that, while they have to provide a social safety net for their citizens, they have to either curtail the chunk of their budget that is meant for social welfare or to evolve alternative models in order to meet this objective. Apart from the issue being flagged, we have not done any serious thinking about our model of fulfilling pension and other social welfare needs. All we have kept doing is an arithmetical sweetening exercise without being told that it may turn sour in the future, for surely like in all things, there must be some limit beyond which we cannot go. We are encouraging a trend of unhealthy dependency on the State instead of exploring ways to keep people engaged and make them assume a degree of responsibility that can lessen the collective social burden on the country.

Managing the affairs of the State requires utmost responsibility, integrity, competence and loyalty; above all the public interest should be upheld over personal interest, whether immediate or over the long term, or even political expediencies. It does not look like the electoral promises being bandied about in the current electoral campaign can be considered as being compatible with the national interest.

* Published in print edition on 18 October 2019

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