Indian retirees dip into savings and eat less as cost of living soars

  • Indian retirees are feeling the pinch of inflation
  • Some seniors postpone their retirement
  • Savings rates have fallen as people withdraw more money
  • Government pledges to help, but state pensions are tiny

NEW DELHI, May 25 (Reuters) – TL Wali, a 66-year-old barrister at the Delhi High Court, was looking forward to retirement.

But with the skyrocketing cost of living in India, he is now forced to dip into his savings and will have to keep working longer just to pay for medicine, travel and household expenses.

“I can’t even think about life in retirement,” he told Reuters at a postal bank, where he had come to withdraw funds.

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Wali reduced fruit, restaurant outings and visits to relatives. He estimates his income is now half what it was before COVID-19 hit, with customers unable to pay what they did before the pandemic and his savings earning less interest in adjusted terms. to inflation.

Although better off than many his age, inflation forced Wali and millions of other elderly Indians to make tough choices.

The sharp rise in prices is hitting older people around the world as global supply problems caused by the pandemic – and made worse by the war in Ukraine – drive up food and fuel prices.

In India, meager state pensions mean that only a minority of pensioners can afford proper health care, with almost 15 million people aged 60 and over – around 10% of the total – being nearly homeless.

India’s headline inflation hit an eight-year high of 7.79% in April. Read more

Foodstuffs, which account for almost half of the consumer price index, have surged, with wheat, edible oils, vegetables, fruits, meat and tea rising 10-25% year-on-year . Cooking gas and petrol prices have risen by more than 40%. Read more

“Inflation is the biggest blow to the elderly,” said Anupama Datta, director of the charity HelpAge India, which estimates that nearly 90 million of the 138 million people aged 60 or over work to earn enough to live on.

India’s central bank warns that high inflation will persist at least until September.

SAVE MONEY

Many Indian retirees rely on savings accumulated over decades for their retirement.

There are no official estimates, but pensioners’ associations have said many of them are now forced to take more from these accounts than before.

India’s gross savings rate is estimated to have fallen to less than 30% of GDP in the fiscal year ending March, from more than 32% before the pandemic. Economists do not expect that to change next year.

Average interest rates on long-term deposits also fell to 6% from 8.5% over the past three years, bringing them below headline inflation.

Some retirees have shifted to riskier investments, including stocks and mutual funds, but after two strong years of returns, even stocks are now struggling with the benchmark (.NSEI) down more than 6% this year.

India’s ruling Bharatiya Janata Party (BJP) has acknowledged that the elderly have been particularly hard hit by inflation.

Gopal Krishna Agarwal, the BJP’s spokesperson for economic affairs, said the government was doing all it could to protect them, including through food and medical support.

It already provides free food grains to nearly 800 million people as part of its pandemic relief program.

Over the weekend, the government announced tax changes and subsidies that will lower the prices of petrol, diesel and cooking gas. Read more

But it is unclear what relief it will bring. State pensions are only 200 Indian rupees ($2.58) per month, although some states provide up to 1,000-2,000 rupees per month.

In the eastern city of Calcutta, Gita Sen, a 70-year-old widow of a labourer, said she could not even afford two meals a day on her monthly pension of 1,000 rupees.

“Often I have to borrow or beg for food from neighbours,” she said outside her house from a rented room in a slum.

CRUNCHY CARE

Unlike advanced economies, India has very few nursing homes. Most retirees depend on families for support, which puts additional pressure on children whose livelihoods have been hit by the pandemic and now inflation.

According to a study by Tata Trusts, the charitable arm of conglomerate Tata Group, there were just 1,100 nursing homes across the country, accommodating around 100,000 people before COVID-19 hit.

Run largely by private donations, they face their own challenges as costs soar. Rising food, medicine and energy costs mean these households have less to spend on vegetables, fruit, medicines and healthcare providers.

Saurabh Bhagat, director of SHEOWS, a Delhi-based charity that runs three such homes accommodating more than 400 people, said monthly expenses had recently increased by almost 20%.

“We can no longer think of buying fruit and have reduced spending on food supplements which delay healing for sick people in our nursing homes,” Bhagat said.

He added that the homes he runs were bringing 30 to 40 elderly people a month off the streets of Delhi who had been abandoned by their families, almost triple the rate last year.

Basanti Chand, 61, a resident of one of the SHEOWS homes, said she was abandoned by her family, even though she had spent all of her savings to make ends meet.

She had sold her small house earlier to pay the dowry for four daughters.

“I wouldn’t have survived today if the house hadn’t sheltered me,” she said, wiping the tears from her eyes. Chand didn’t blame his kids.

“I can’t think anything bad of them. After all, they’re my children…who have their own problems.”

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Additional reporting by Rupak De Chowdhuri in Kolkata; Editing by Mike Collett-White and Sam Holmes

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