In an effort to regain its political poise, the Congress-led United Progressive Alliance (UPA) is proposing a pension scheme for all the aged living below the poverty line (BPL), while for the rest of the population, it is exploring a contributory pension scheme.
“There is a lot of activity on the pension scheme. There are also chances that Prime Minister Manmohan Singh announces a scheme for those below the poverty line and above the age of 65 in his Independence Day speech,” said a senior government official close to the development who did wish to be quoted.
The PM addresses the nation from Red Fort early Wednesday morning. Late Tuesday, it couldn’t be independently ascertained whether the pension proposal would remain part of the PM’s speech.
But labour minister Oscar Fernandes confirmed the pension plan to Mint.
“We are planning to introduce pension for BPL unorganized sector workers,” he said. “We are also planning to extend it to the non-BPL workers on a contributory basis.” Approximately 395 million, or 86%, of India’s working population belongs to the unorganized sector.
Fernandes said the pension scheme, details of which are not yet finalized, is part of the legislation being readied to provide social security to workers in the unorganized sector. The minister said he hopes the Bill will be presented in the ongoing session of Parliament, but admitted that much depends on the Left-backed trade unions, which are seeking several changes to the proposed legislation.
Currently, the flagship National Social Assistance Programme under the National Old Age Pension Scheme (Noaps) grants pension to only destitutes above the age of 65. The amount of pension was raised from Rs75 per month to Rs200 in 2006-07.
However, The National Commission for Enterprises in the Unorganised Sector has found there are difficulties in defining destitutes (and establish their dependency on able members of the family) and has recommended a wider coverage.
“We found that only two-thirds of destitutes could get the pension benefit under Noaps. Others have to resort to the Annapurna scheme which offers 10kg of foodgrains per month in lieu of Noaps,” R.S. Srivastava, full-time member of the commission, said.
Srivastava said even while Noaps has worked well, the commission believes that the entire BPL population in the unorganised sector should be covered under the scheme of social security.
The commission has recommended an old age pension of Rs200 per month to all BPL workers above 60 and provident fund to all other registered workers. This is also part of the Social Security Bill likely to be introduced in the current session of Parliament.
The estimated cost to the exchequer through central grant, according to the commission, would be Rs3,600 crore per annum in case only one person above the age of 60 in one BPL home gets the pension, and Rs2,300 crore if the cut-off age is raised to 65.
“If two members of a family are considered, the amount becomes Rs5,000 crore if they are above 60 and Rs3,000 crore if they are above 65,” said Srivastava. The outgo under the current Noaps through central grant was approximately Rs2,800 crore in 2006-07.
According to the commission, there are around 17 million BPL individuals in India above the age of 60 and 12 million above 65. If one person in each household is to be covered under the pension scheme, the total number of households covered will be 10 million in case the age of 60 is considered, and eight million in case it is 65.
The political leadership of the Congress party too seems to have thrown its weight behind the government.
Addressing the Congress parliamentary party on Tuesday, UPA chairperson Sonia Gandhi said: “After much discussion, for the first time in our country’s history, the Bill on social security for workers in the unorganized sector will be introduced. This is truly a landmark and, like the National Rural Employment Guarantee Act, it is in keeping with one of the key pledges of our manifesto.”
The Left parties have demanded changes in the draft to include legally-guaranteed social security and clearer instructions on the stipulated working conditions for the unorganized sector workers.
Economists like S.L. Rao, chairman, Institute for Social and Economic Change, feel there is no question why BPL families should not get the pension. “The problem in India, however, is of identification of deserving candidates and making the pension amount reach them,” said Rao. He gives the example of BPL and ration cards, which are far in excess of those required and 50% of which are being misused. “Besides, in other social welfare schemes, the disbursing official siphons off 30-40% of the money that is to be given to the poor. What is the guarantee that the same is not repeated in pension scheme?” asks Rao.