Govt-backed pension scheme for unorganised sector is slow to take off

A flagship pension scheme for daily wage earners launched last year by Prime Minister Narendra Modi has not used one third of its original budget allocation in its first year of operation, a report by a parliamentary panel has revealed.

The report showed that the Pradhan Mantri Shram Yogi Maan-dhan (PMSYM) had an initial Budget allocation of INR5bn in the fiscal year ended 31 March 2020 (FY2020), but this was reduced to INR4.08bn in the revised estimates. Eventually, only INR3.45bn was spent by 10 February 2020.

The report stated that a major part of the expenditure in the inaugural year of the scheme went to paying publicity and education bills, among other payments, reported Hindustan Times. The Modi government launched the pension scheme for unorganised workers who comprise 95% of India’s 458m workforce. The scheme, rolled out on 15 February 2019, provides monthly pension to a worker who earns less than INR15,000 ($197) a month.

Street vendors, mid-day meal delivery workers, head loaders, brick kiln workers, cobblers, rag pickers, domestic workers, washer men, rickshaw pullers, landless labourers, agricultural workers, construction workers, handloom workers, leather workers and similar other occupations are covered under the scheme.

The parliament panel voiced “dissatisfaction with the under-utilisation of the budgeted amount in the very first year of launch of the Scheme, which apparently is indicative of a sluggish response from the intended beneficiaries”. The panel wanted the ministry to make “concerted efforts to remove the initial friction” so that the initiative would become popular with the masses.

The PMSYM scheme provides for a minimum monthly assured pension of INR3,000 for unorganised sector workers from the age of 60. Any informal sector worker aged of 18-40 can subscribe to this pension scheme. The monthly insurance premium ranges from INR55 at the age of 18 to INR200 at 40. The central government is making equal contributions for these workers under the scheme. Enrolments under the PMSYM are carried out by common services centres across the country. The nation's biggest life insurer is the pension fund manager and responsible for pension payouts.

Source: Asia Insurance Review