Finance Minister Nirmala Sitharaman and Congress general secretary Jairam Ramesh got into a war of words over the Atal Pension Yojana (APY), after Mr. Ramesh termed the scheme “poorly designed”.
Hitting back, the Finance Minister accused the Congress leader of “hoodwinking” in the named of vote bank politics.
The pension scheme, named after former Prime Minister Atal Bihari Vajpayee, provides social security for the workers in the unorganised sector.
Citing a media report on a sample study by the Indian Council of Social Science Research (ICSSR) on the pension scheme, the Congress leader, in a post on X, said the Atal pension scheme “is a fitting representation of the Modi government’s policy making: headline management, with few benefits actually reaching the people”.
Quoting the news report, Mr. Ramesh said that up to a third of the subscribers dropped out of the scheme because their accounts were opened without their “explicit” permission.
Further, he said nearly 83% of the subscribers are in the lowest slab of ₹1,000 pension, “because the monthly contribution for it is low and it goes ‘unnoticed’ by the beneficiaries”.
“For subscribers, the amount of return is not very attractive since it is a fixed income pension, which loses value with rising prices,” Mr. Ramesh noted.
In response, Ms. Sitharaman said the Congress leader “is known for using verbal sophistry to hide facts, is being malicious or is ignorant of the basic tenets of designing a good pension scheme”.
“As per the ICSSR report, out of the 2,461 total surveyed, 38 have attributed exit due to their perception of account being opened without consent. This is ONLY 1.54% of the total (38/2461) and is NOT 1/3rd as mischievously mentioned by you!” she said.
The Finance Minister said the pension scheme is based on best practice choice architecture to automatically continue the premium payment unless the subscriber opts out.
“This is a deliberate and beneficial feature which is in the best interest of the subscribers. Instead of requiring people to decide each year to continue, they have to take a decision to discontinue. This makes many of them take the right decision and save for their retirement,” she said.
Ms. Sitharaman also cited the book titled Nudge, authored by Richard Thaler (Nobel prize winner for Economics 2017) and Cass Sunstein (a professor who worked in the Obama administration), saying it explains the need for proper “choice architecture” in designing public schemes.
“Jairam Ramesh says that people are being ‘hoodwinked and coerced’ into participating! Hoodwinking is what the Congress does always — in the name of vote bank politics or minority appeasement,” she said.
The Finance Minister said coercion is what was used to make former Chairman of State Bank of India R.K. Talwar resign “because he refused to give loans to favourites of the dynasty”.
The Congress leader replied that the Finance Minister’s post was an admission that the Atal Pension Yojana (APY) was coercive and forced people to enrol without their consent. “Bank officers who are made to meet quotas are opening APY accounts even for those who do not have enough income to contribute regularly,” he said.
Accusing Mr. Ramesh of being a “spin doctor” in another post, the Finance Minister said, “When there is no coercion or force at all, where have I admitted any such! Under APY, direct debit is only allowed with consent of the subscriber”.
