As many as 19 per cent of India’s citizens will be above 60 years by 2050, but only 25 per cent of them will have a financially secure retirement. Aren’t we staring at a mammoth problem of taking care of a senior population?
That’s the food for thought this week. Besides, we will be left agape if I tell you how the central government is sustaining a public sector firm that produces a product which has long gone out of market and when the company has to incur a loss of Rs 11.65 crore per employee. Clue: it’s not Air India!
Do enjoy reading and spare a thought. But do also make time to enjoy your weekend. It’s important!
The shortfall in retirement savings
The challenges we face in providing our ageing population a financially secure retirement are well-known. In most countries around the world, standards of living and healthcare advancements are allowing people to live longer. This should be celebrated, but we should also consider the implications on the financial systems that have been designed to meet our retirement needs, which in many countries are already under severe strain.
According to a study by WEF (World Economic Forum) by 2050, 19 per cent of India’s citizens will be above 60 years. According to the United Nations Population Division, only 25 per cent people currently have some form of pension cover. Moreover, India’s pension system has been rated as one of the worst in the world, with the 2015 Melbourne Mercer Global Pension Index ranking India the lowest among 25 countries on retirement savings programmes.
One of the main reasons for this shortfall, the WEF explains, is that a majority of the Indian workforce operates in the informal sector with hardly any access to retirement saving plans. Additionally, the middle class in Asia’s third-largest economy is rapidly expanding. As incomes and the quality of life improve, the quantum of money required for retirees will also go up. Besides, unfavourable returns on investment could add to the shortfall.
Currently, India has employer-managed pension programmes that are mandatory, along with an employee provident fund scheme, and the government is trying to bring some 400 million unorganised sector workers under pension schemes with initiatives such as the Atal Pension Yojana.
Clearly, the need for more pension programmes has never been more urgent. But where is the money? Read More
This PSU lost Rs 11.65 cr per employee, and it’s not Air India
This government-owned company has been losing money for over a decade. Between 2004-2005 and 2015-2016, the company lost close to Rs 15,000 crore in total. Hindustan Photo Films was the fourth largest loss maker among all public-sector enterprises in 2015-2016.
What does the company do? Photo films went out of business a while back. The question is: Why is the government still running a photo film company? Photo film was killed first by the digital camera and then by the mobile phone. The company doesn’t make photo films any more. During 2012-2013, total production of the company stood at Rs 3.6 crore. Sales stood at Rs 3.7 crore. Now imagine who in their right minds would run a company with sales of under Rs 4 crore and which ends up with losses of more than Rs 1,500 crore, as it did during the course of 2012-2013.
As mentioned earlier in 2015-2016, the company lost Rs 2,528 crore. It employed 217 individuals. This meant a loss of Rs 11.65 crore per employee. This number shows the ridiculousness of the entire exercise of keeping a company alive.
Banks keep giving loans to a dud company like Hindustan Photo Films, because they know they are ultimately lending to the central government, and what can be a safer form of lending than this.
It is worth pointing out here that the government does not have unlimited money. Every rupee that goes towards funding the losses of companies like Hindustan Photo Films is money that does not go towards more important things like education, health, or affordable housing, for that matter. Read More
4 companies embracing circular economy
Circular economy – an economic model focused on designing and manufacturing products, components and materials for reuse, remanufacturing, and recycling – promises big opportunities for the private sector to drive new and better growth and accelerate innovation.
Shifting to the circular economy could release $4.5 trillion in new economic potential by 2030, shows an Accenture study. But how do we take that vision of a circular economy – which imagines a world without waste – and translate that into profitable and scalable action?
Let’s take a look at some of the companies featured in the report.
Aramark: Reducing food waste
Food services provider Aramark has set a goal of reducing food waste by 50 per cent by 2030 from its 2015 baseline, such as by setting standards for ordering, receiving, preparing, serving and tracking food production.
EILEEN FISHER: The path to 100 per cent circularity
EILEEN FISHER’s take-back programme, in which employees and customers can bring back unwanted clothing for $5 store credit per piece, started in 2009 under the name Green Eileen. Funds raised from the programme are donated to organizations that support women, girls, and the environment
Intel: Finding value in waste material
Computer chip manufacturer Intel has set a goal to recycle 90 per cent of its non-hazardous waste and divert 100 per cent of its hazardous waste from landfills by 2020.
Since 2008, Intel has recycled 75 per cent of the total waste generated from its operations, such as through upcycling, recycling, recovery, and reuse.
Johnson Controls: Closing automotive batteries loop
Johnson Controls has designed its conventional automotive batteries so that 99 per cent of the materials can be reused. Customers can return old batteries that are collected by Johnson Controls and turned into new batteries. The company’s circular supply chain has pushed recycling rates for conventional batteries to 99 per cent in North America, Brazil, and Europe in 2015, enabling Johnson Controls to produce batteries containing more than 80 per cent recycled material. Read More
Random thoughts on Global warming
Intellectual honesty requires that the issue be referred to as “global warming”, and not “climate change”. The theory is that human-generated CO2 is causing the world to warm up, not that humans are causing the climate to change. The climate is always changing. It was changing long before humans existed and will be changing long after humans become extinct. Anthropogenic Global Warming (AGW) is a hot/emotional topic because it is perceived as a potential excuse for more government intervention in the economy, that is, for a more powerful government. Due to the above point, the more libertarian-minded a person the more likely that he will disbelieve the AGW theory and be on the lookout for evidence that refutes or is inconsistent with the theory, whereas the stronger a person’s belief in a big role for government the more likely that he will be a proponent of the AGW theory and on the lookout for evidence that supports the theory.
Even if we assume that global warming is still happening, that it is a problem to be reckoned with and that it is caused by Man, the claim that the best solution is for the government to become more involved in policing economic activity is, at best, the triumph of hope and naïveté over experience, logic and good economic theory.
If history has taught us anything it is that when the government tries to fix a problem by getting more involved in the economy it either causes the original problem to become worse or creates an even bigger problem elsewhere. Read More