Freebies and Pensions Can Burden Future Generations, Says PM Advisor Sanjeev Sanyal

Sanjiv Sanyal, a member of the Prime Minister’s economic advisory team and a senior economist, made a very called-for warning about economic policies, particularly the "free rewdry" culture and also about reverting to previous pension packages. Sanjiv Sanyal was very categorical that unsustainable distribution of subsidies and extravagant promises about pensions are laying a burden on the next generations that may imperil the next economy. In an exclusive interview for ANI, he drew a very discerning line between a "welfare safety net" and a "politically motivated rewdry".

Sanjiv Sanyal said that in an entrepreneurial and risk-taking society like India, the possibility of failure always exists. Whether it's a startup or a small grocery store, risk exists at every level. Therefore, the government must provide a safety net for those who fall behind or fail in the race for development. He said, "I'm in favor of providing a ladder for the poor to climb up. I have no problem with that." Sanyal called this "assisted trickle-down," meaning helping people climb up rather than simply waiting for economic growth.

However, he questioned the indiscriminate distribution of free amenities. Citing the example of free bus rides for women, he said, "This isn't targeted assistance. A poor man deserves as much assistance on public transport as a woman. When you distribute amenities based on identity rather than economic need, it's not welfare, but 'rewadis.'"

Sanyal's biggest concern was the return of old-style generous pension schemes. He warned that with changing demographics, these promises would be a burden on the government treasury. He explained, "You are effectively creating liabilities for the next generation. Today's pension systems are often based on a 'pay-as-you-go' model, meaning payments are made from today's revenues. But we have to remember that India's working population will begin to shrink in about 25 years."

Sanyal asserts that with a smaller number of people in the workforce and an increasing number of elderly pensioners, the younger generation will at some point be unable to support financially through their pension funds the older generation. To illustrate this danger, he cited the example of Europe, especially France. "Many European countries are raising the retirement age to 70 or 75 years. In France, the number of pensioners today exceeds the number of working people," Sanyal said. He argues that if India ignores its fiscal reality today, we could be heading in the same direction.

Sanjeev Sanyal also cautioned young civil servants hoping for the old pension scheme. He said, "You will pay taxes for 35 years of your working life, but when you retire and reach the front of the queue, you may not have any money left to pay. This is simple economics, which ultimately will not work." Sanyal's statement comes at a time when the debate over the Old Pension Scheme (OPS) versus the New Pension Scheme (NPS) is raging in the country. As a senior policy advisor, his comments indicate that promises made for short-term political gain can pose a major threat to India's long-term economic future.