Measuring Financial Vulnerability Among India’s Older Adults: A LASI-Based Index

Abstract

India's rapidly ageing population faces financial risks that standard poverty measures often miss. Using nationally representative LASI Wave-1 data (2017-2018), we constructed and validated a multidimensional Financial Vulnerability Index (FVI) for adults aged ≥60 years (analytic N≈27,000). Indicators spanning resources (income, assets, pensions, insurance), risks (debt), and social position (gender, widowhood, caste, residence, education) were standardized and combined via principal components analysis to yield a continuous measure of late-life financial risk; analyses applied survey person-weights with PSU-clustered standard errors. The FVI is approximately normal (mean 0, SD 1; range - 2.73 to +2.81) and shows pronounced stratification: the most vulnerable quartile is predominantly rural ( ∼69% ), includes a high share of widowed women ( ∼31% ), and over-represents SC/ST/OBC groups. In weighted OLS models, vulnerability is higher for women ( β=+0.134,p<.01 ), rural residents ( β=+0.219,p<.01 ), those with no schooling ( β=+0.292, p<.01 ), the widowed ( β=+0.178,p<.01 ), and SC/ST/OBC ( β=+0.160,p<.01 ); lack of pension ( β=+0.245,p<.01 ) and insurance ( β=+0.197,p<.01 ) further elevate risk ( R^2≈0.39 ). These findings indicate that late-life financial vulnerability in India is multidimensional and systematically patterned across gender, caste, education, place, and program coverage. The FVI offers a practical tool for program targeting, monitoring change over time, and evaluation, enabling governments to prioritize widowed rural women and other intersectionally disadvantaged groups and to track whether pensions, insurance, and access initiatives.