India Needs InDIAS As A Dual-Use Instrument For Retirement And Education

By Dr. Arun Muralidhar,

India faces a unique set of financial challenges, with citizens having to worry about saving not only for increasingly expensive children’s education, but also their own retirement. At the same time, the private pensions sector remains underdeveloped, resulting in limited access to guaranteed retirement income that can help individuals maintain their pre-retirement standard of living. The same challenges exist for saving for a child’s education. While stock investments have historically provided strong financial returns, recent market fluctuations highlight the variability in retirement/education income and wealth outcomes.

This situation underscores the importance of diversified retirement planning to support financial security for individuals across different life stages and life goals, and to contribute to long-term economic stability. These challenges demand innovation, or as the Pension Fund Regulatory and Development Authority (PFRDA) slogan goes: innovation Zaruri hai”. We believe InDIAS (Inflation-linked, Deferred-Income, Annuity-like Securities), if well-designed, could serve as a dual-use solution to these looming challenges as well as help India finance much-needed infrastructure to foster high economic growth.

India’s Chief Economic Advisor, Dr Anantha Nageswaran, with extensive Wall Street experience, warned about this focus on a single asset class investment approach in the “Financing a Viksit Bharat 3.0” conference, organised by CII in Mumbai in September 2024. He has seen this picture before during the bursting of the Tech Bubble, and made a case for the development of longer-term savings instruments to complement stock holdings, namely, holding some savings in bonds. Equally important, India has challenges in raising funds for infrastructure investments from foreign investors (especially given the currency depreciation), and needs to tap the growing pool of domestic savings to make it a Viksit Bharat. InDIAS address this challenge too and ensures Atmanirbar.

Having managed the World Bank’s pension fund and co-authored pension innovations with Nobel Laureates Franco Modigliani and Robert C. Merton, my recent work with Brazil provides a foundation for these ideas. Brazil implemented two innovations in 2023 to ensure retirement security and education funding, with good success. India could easily adopt/adapt the same in short order, because India has many of the same favourable initial conditions, including a highly mobile-enabled society, UPI, a young population, etc. Additionally, a brilliant concept offered by PFRDA to allow NPS vendors to create “Pension Credits” (PC), lends itself perfectly to InDIAS as a dual-use solution.

InDIAS leverages the prescient concerns Anantha raised at the CII conference – that an equity market correction, without robust long-term savings vehicles, could cause long-term damage to the country’s savings and investment culture, and permanently damage economic prospects. While President Trump’s tariff policies and statements on Greenland (and even India) rocked equity markets in early 2026, holders of Brazil’s retirement and education bonds felt zero impact on their promised guaranteed real cash flows. This would be a boon to Indian financial markets and increase the overall stability of financing India’s debt through local savings, as opposed to being dependent on fickle foreign investors.

What do we need to pay for a child’s education or ensure a secure retirement for ourselves? For a child, we need a guaranteed real income (indexed ideally to tuition inflation) for four years when our child turns 18. For retirement, in order to maintain our pre-retirement lifestyle, we need a guaranteed, monthly, real income starting from when we turn 62, for say 20 years (average life expectancy in India). PFRDA’s PC concept is meant to ensure that NPS vendors can guarantee 3-5 years of real cash flows, starting in the future. If we can think of retirement as nothing more than five consecutive, non-overlapping PCs, one can see how a single InDIAS innovation could have a dual use for retirement and education. Visualised alternatively, the retirement cash flows are the same as saving for five children’s educations, each spaced years apart!

The simple idea is for the Indian government to issue a bond that pays nothing till some future start date (that can start from 1-year forward to as many as 30-years forward), for a period of say 4 years (average college window in India), and that too pays only Rs 10 real/year as coupons. The reason for this design was that if an individual needed Rs 50,000/year in today’s currency to cover a child’s education, then their goal is distilled to just having to buy 5,000 of these bonds before their child starts college.

Similarly, if one needs the same amount per year to supplement National Pension System (NPS) payments in retirement, then they can buy one 5,000 InDIAS that starts when they are 62, 66, …76. Buying the series of bonds is equal to buying an “individual defined benefit” pension (and vendors can offer various bundles depending on one’s potential life expectancy)! Those with no access to an NPS or even an employer-based pension scheme essentially have access to an “individual defined benefit pension.”

More importantly, investors can track where they are relative to this goal during their lifecycle, and need to answer just two questions: target date of retirement (to buy the right bond with the right start date) and target supplemental income in today’s terms. The bond embeds the complex accumulation, decumulation, compounding and inflation-indexed calculations, and reflects it in the daily price, thereby requiring no additional financial literacy for a population in a country as diverse and dispersed as India. It differs from NPS (and potentially from pressures to expand NPS) because it is voluntarily funded and is liquid; if one needs funds for a child’s medical care or wedding, one can sell InDIAS immediately (and potentially save more in the future), so it allows decision flexibility.

Brazil launched RendA+ for retirement and Educa+ for education, on their Treasury Direct platform, allowing individuals to purchase these bonds either on the internet or an app on their phone, directly from the government (or even via brokers), with the instruments listed on the B3 stock exchange, and in slices as small as $1/time (fractional bonds). The transactions are enabled through Pix, a platform identical to India’s UPI.

They issued 8 different RendA+ series – starting in 2030 (for a 60-year-old today), 2035, …, 2065 (for a 25-year-old) – and 18 different Educa+ series, starting in 2025, 2025..2043pt. The purchases are voluntary, but because prices are quoted three times a day at B3, they are liquid, and individuals can reverse or change their date of retirement/college start date or target supplemental income at will. They are also inheritable and just require answers to the two questions mentioned above. Moreover, the Brazilian Treasury went further and allowed individuals to purchase these bonds via gift cards, so benevolent employers (family or even generous individuals) can gift employees (friends, disadvantaged youth) guaranteed real retirement income.

As a recipient of charity to pay for my education from age 13 years onwards, I am the poster child for demonstrating the benefits of gifting a child a sound education. As of December 2025, 365,000+ individuals bought RendA+ bonds for a value exceeding R$9.2 billion ($1.8 bn); 190,000+ had purchased Educa+ for the equivalent of $400 mn. RendA+ received the runner-up award for innovation at the Global Pension Summit in the Netherlands in 2023, and the gift card was a finalist in the 2025 event.

As my research with Prof. Merton has shown, these bonds are a terrific deal for the Indian government as they provide matched funding for green infrastructure investments and, if well-designed, could improve overall country finances and create a long-term yield curve that can benefit other transactions like the provision of mortgages, etc. InDIAS are simple, liquid, low-cost, low-risk, inheritable, and ensure financial inclusion for the average Indian citizen (a chaiwala or Ola driver or vegetable vendor), and they are a trivial innovation to launch. All the Indian government needs is a spark of creativity and a desire to innovate.

Brazil has proved that these simple innovations allow individuals to secure GUARANTEED REAL INCOME at low cost, low risk, in a simple, liquid, inheritable security, purchasable in small slices, off a simple app for two major life goals. In effect, they have created “micro pensions” and “micro college savings”. They ensure financial inclusion, democratisation of household finance, and even gender equity. Micro savings in a country like India can lead to massive macro savings and investment (especially in infrastructure and education), and independence from fickle foreign investors. It is time for President Modi, Minister of Finance Seetharaman, RBI Governor Malhotra and Cabinet Secretary Somanathan, along with the folks at the stock exchanges, to support PFRDA’s and CEA Nageswaran’s approach and launch InDIAS.

(The author is Adjunct Professor of Finance, Georgetown University

McDonough School of Business, Washington DC, USA.)

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