₹500 crore for pension for unorganised labour

Allocation for existing scheme slashed

February 01, 2019 10:26 pm | Updated February 02, 2019 03:29 pm IST - NEW DELHI

The Centre has allocated ₹500 crore for a new pension scheme for workers in the unorganised sector, even while reducing its allocation for an existing pension scheme by ₹775 crore.

The new scheme, to be called the Pradhan Mantri Shram-Yogi Maandhan, will benefit unorganised sector workers who have a monthly income up to ₹15,000. It will provide them a monthly pension of ₹3,000 from the age of 60.

Workers will contribute an amount ranging from ₹55 to ₹100 each month, depending on their age, at the time of joining the scheme, while the government will deposit a matching contribution. The Centre expects 10 crore workers to get the benefit within the next five years.

“Half of India’s GDP comes from the sweat and toil of 42 crore workers in the unorganised sector…We must provide them comprehensive social security coverage for their old age,” said Finance Minister Piyush Goyal, while announcing the scheme in Parliament.

However, the Budget documents show that an existing pension scheme, which already benefits more than 3 crore poor people who are senior citizens, disabled or widows, has had its allocation slashed. The National Social Assistance Programme (NSAP), a pension scheme administered by the Ministry of Rural Development, had originally been allocated ₹9,975 crore in the 2018-19 Budget. For 2019-20, the scheme’s allocation has been cut to ₹9,200 crore, a drop of ₹775 crore.

The NSAP featured in last year’s Budget speech, when then Finance Minister Arun Jaitley had said the government was “implementing a comprehensive social security and protection programme to reach every household of old, widows, orphaned children, divyaang and deprived as per the Socio Economic Caste Census (SECC).”

Using the SECC criteria as opposed to the existing Below Poverty Line criteria would have doubled the pension coverage to more than 6 crore people. However, Mr. Jaitley’s Budget allocation remained unchanged. This year, Mr. Goyal made no mention of the NSAP, but reduced next year’s allocation from the current year’s Budget estimates.

In fact, the specific allocation for disabled and widows is even lower than the revised estimates for the current year.

Pension rights activists and workers representatives are sceptical about the newly announced scheme.

“Contributory pensions are meaningless for the unorganised sector. Many workers barely earn a survival amount and cannot afford a monthly pension contribution. They already contribute through lifelong labour and indirect taxes,” said Nikhil Dey, convenor of the Pension Parishad, a movement demanding a universal, non-contributory pension of ₹3,000 per month. “For a salaried worker, a pension contribution can simply be cut from his salary. But expecting a daily wager or migrant worker to deposit a regular contribution is a pipe dream.”

Subhash Bhatnagar, coordinator of the National Campaign Committee for Central Legislation on Construction Labour, says the experience of social security for construction workers shows the impracticality of the scheme. “The construction worker welfare boards have failed dismally in their attempt to register workers for a very nominal annual amount,” he said, noting that pension and other benefits for such workers came from a cess on construction activity, not workers’ contributions. “It is impossible to implement this.”

There are a number of unanswered questions regarding the scheme. “How will you track a migrant worker for his pension contribution? If someone switches from the informal to formal sector over the course of his working life, will he still be eligible?” asked Rajendran Narayan, a researcher at the Centre for Sustainable Employment at the Azim Premji University.

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