The Global Partnership for Financial Inclusion (GPFI), launched in 2010, carries the mission of ensuring comprehensive financial inclusion. The platform for the G20 countries, non-G20 countries and pertinent stakeholders also aims to execute the G20 Financial Inclusion Action Plan (readied at the G20 Summit in Seoul). The Germany GPFI Presidency in 2017 was held with the theme, “Sustainable and Responsible Financial Inclusion of Forcibly Displaced Persons.” In 2018, the Argentina GPFI Presidency was held with the theme, “Building Consensus for Fair and Sustainable Development.” Building on the German and Argentina themes, in 2019, the Japan GPFI presidency fulfils the troika (of immediately preceding, present, and future presidency nations) of GPFI partnerships with the theme, “Aging and Financial Inclusion.” The G20 Leaders’ Summit 2019 will be held on June 28 – 29 in Osaka, Japan. Financial inclusion is essential for elevating livelihoods of the deprived and the elderly population.
The announcement of the Priorities for G20 Finance Track in 2019 was made by Japan during the Leaders’ Summit at Buenos Aires in December 2018. Included among the leading priorities for G20 Finance Track in 2019 is “Aging and its Policy Implication.” Under the purview of this track, Japan has set “Aging and Financial Inclusion” as its core subject of concern for the GPFI 2019. This is built under the consideration to elevating the GPFI’s participation in the G20 Finance Track whilst also implementing the 2017 Financial Inclusion Action Plan (FIAP) going forward to 2020—that identifies “the elderly” as susceptible groups with a pressing need for financial inclusion.
The aging phenomenon is poised to pose unique challenges to financial inclusion. Tackling these challenges will also assist considerably in realising the G20 objectives of sustainable and inclusive growth, and inequality lessening. According to the estimates of the United Nations (Population Division, DESA, United Nations), by 2050, globally, over two billion people will be aged 60 and above. Notably, around 80 percent of these two billion people are anticipated to reside in low and middle-income countries already experiencing aging at a hastening velocity. The perils of aging include plummeting health and deteriorating cognitive skills, limited mobility capabilities, isolation in the social sphere, and most worryingly, experiencing financial (income) stress owing to a prolonged (uncertain) lifespan.
The financial inclusion initiatives in India—the republic being a member of the GPFI—is geared towards responding to the diverse financial needs of the (deprived) elderly can assist them in minimising their poverty issues. Financial inclusion for the elderly can make sure that the financial services are so designed for aging individuals that it also lets them manage the longevity risks. As the former governor of the Reserve Bank of India (RBI), Raghuram Rajan, says about financial inclusion: “In order to draw in the poor, the products should address their needs — a safe place to save, a reliable way to send and receive money, a quick way to borrow in times of need or to escape the clutches of the moneylender, easy to understand life and health insurance and an avenue to engage in savings for the old age.”
By 2050, India’s elderly population is anticipated to cross the 340 million mark. Studies indicate that India is aging at a faster pace than anticipated; by 2050, close to 20% of its population will be aged 60 years. “India Ageing Report 2017” by the United Nations Population Fund (UNFPA) states that the share of the population above 60 years of age (was 7.5% in 2001) could get higher from being 8% in 2015 to 19% in 2050. Also, the population of India above 80 years of age will increase from -0.9% to -2.8%.
For the elderly population, pensions form their route to access official financial services. This explains the existence of robust public pension programs all over the world for people aged above 65. The elderly can access financial services via pension programs so as to also promote financial inclusion. In 2019, the RBI has already initiated the steps to further deepen insurance and pension exposure, credit, savings, and remittances facilities under the Financial Inclusion Mission. The Pradhan Mantri Jan Dhan Yojana (PMJDY—the National Mission on Financial Inclusion), launched in 2014 and having entered its mission mode in 2018, is now an open-ended scheme. What this means for the elderly population is that now even they—fresh subscribers on their new PMJDY accounts, or those who have already subscribed, on their existing Jan Dhan accounts—can avail the new double-limit overdraft facility of Rs. 10,000. Also, the age limit for accessing the overdraft facility has also been increased to 65 years (earlier it was 60 years). As per the report titled, “India: Leveraging Mass Market Financial Inclusion for Pensions,” prepared by the Pension Fund Regulatory and Development Authority (PFRDA) Chairman, Hemant G. Contractor, close to 83% of the workers are engaged in informal employment having no formal employer and employee association. The worrying situation here is the absence of any old age income security scheme for such unorganised workers, owing to no formal (legal and enforceable) contractual undertaking between the two parties. Lastly, one of the prominent financial inclusion mechanisms, the Atal Pension Yojana (APY—launched in 2015), has at present the age of entry capped at 18 to 40 years, and an exit at 60 years. There is also a proposed initiative that suggests increasing the entry age limit to 50 years and adding yet another pension amount of Rs. 7,500 per month under the APT. How these ambitious initiatives aimed at serving the elderly align with and compliment the overall financial inclusion initiatives in India as the GPFI 2019 at Japan (with Aging and Financial Inclusion as the core theme) approaches, followed by the proposed G20 Summit 2022 to be hosted by India needs to be closely monitored.