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Centre proposes to hike monthly pensions for the elderly poor, disabled and widows

Plan likely to be part of interim Budget

January 22, 2019 12:34 am | Updated 10:39 am IST - NEW DELHI

Manubai Nagtilak (left) and Kamlibai Phuphane at the Pension Parishad held in Mumbai. Photo for representation.

Manubai Nagtilak (left) and Kamlibai Phuphane at the Pension Parishad held in Mumbai. Photo for representation.

Ahead of the 2019 election, the Rural Development Ministry has proposed that the monthly pensions of the elderly poor, disabled and widows be increased from the current ₹200 to ₹800. For those above the age of 80, the proposal is to increase the pension from ₹500 to ₹1,200 a month.

The Ministry has submitted the proposal, which would have an additional annual cost implication of ₹18,000 crore, to the Finance Ministry to be considered for inclusion in the interim Budget to be presented on February 1.

“The proposal is being scrutinised for the possibility of inclusion in the Budget speech,” said a senior official of the Rural Development Ministry, which administers the National Social Assistance Programme (NSAP).

If the proposal is announced, the Ministry will then move the Cabinet to approve the increase in pensions, said the official.

Separately, a study has been launched to consider doubling the number of people covered by the scheme, a promise originally made in last year’s Budget.

Discussions are also being held with the State governments on a proposal to merge the Central and State pension schemes. The BJP’s defeat in the recent Assembly elections has forced the Centre to consider sops for rural India.

The Centre has been considering various welfare measures to benefit rural Indians and farming communities before the Lok Sabha election. Senior government officials have mentioned income support, interest waivers and increased access to credit as some of the other measures being considered.

The NSAP is a Centrally Sponsored Scheme with an annual budget of ₹9975 crore. It currently covers more than three crore people who are below the poverty line (BPL), including about 80 lakh widows, 10 lakh disabled and 2.2 crore elderly. Those who are older than 80 years are paid ₹500 per month, while the rest are given ₹200 per month. These amounts have not been revised since 2007. State governments add their own contribution, ranging from less than ₹500 to ₹2000 per month.

“The scheme will need a total budget of ₹30,000 crore in order to increase the pension amounts to ₹800 and ₹1200,” said the Ministry official.

In his last budget speech in February 2018, Finance Minister Arun Jaitley had said that the government “is 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).”

If SECC data was used to determine the number of people covered under the scheme instead of the current BPL criteria, coverage would double to about six crore people. Despite that, Mr. Jaitley said allocation for the scheme would be unchanged. Without additional funds, there has been no concrete move towards using SECC data.

However, prodded by a Public Interest Litigation petition filed in the Supreme Court demanding universal pension coverage and higher pensions, the Rural Development Ministry decided to commission a comprehensive study to evaluate State and Central schemes before proposing a revamp of the system. That study is likely to be completed by the end of June, said the Ministry official.

“There is a possibility of merging State and Central schemes to increase coverage. The evaluation study will allow us to take an informed decision. But we will have to decide a new cost-sharing ratio [between Centre and States],” said the official, adding that initial discussions with State governments had been held on January 16. Several States, including Rajasthan, Telangana, Bihar and Uttar Pradesh, have already shifted to SECC data for their own pension schemes.

In its December 13 order on the PIL, the SC had said: “It is high time that the Government of India has a relook at these schemes and perhaps overhaul them with a view to bring about convergence and avoid multiplicity. In particular, the Government of India and the State Governments must revisit the grant of pension to the elderly so that it is more realistic. Of course, this would depend upon the availability of finances and the economic capacity of the Government of India and the State Governments.”

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