The Modi government’s new pension scheme for workers of the unorganised sector, called the Pradhan Mantri Shram Yogi Maan-Dhan 2019, is intended to benefit about 420 million workers who are not covered by any social welfare scheme, including any pension plan for old age. The scheme was introduced in the interim budget of February 1. It targets workers in both rural and urban areas. Though it was presented as a new scheme, it is an amended version of the old Atal Pension Yojna, which was itself a rehashed version of the ‘Swavalamban’ scheme launched by the UPA government in 2011. The scheme has undergone changes in its various incarnations and has sought to provide higher benefits at every stage. But even the latest version falls short of achieving its claimed aims. The design of the plan needs improvement. It also has constraints and limitations which are bound to adversely affect its implementation.
The terms and conditions of the scheme, including those relating to subscription and nominations, might actually make the worker a loser. The amount the worker might get as pension is too little, too late. The worker is promised Rs 3,000 a month as pension from the age of 60 against Rs 1,000 in the old scheme, but this will be available to only those who join the new scheme at the age of 18 with a monthly contribution of Rs 55. The subscription keeps increasing with age. The earlier version had a contribution of Rs 42 per month. The value of Rs 3,000 after 20 years, for those who join the scheme at 40, can well be imagined. Those who have to wait longer will be still worse off. The scheme keeps the age limit for subscribers between 18 and 40, and it is estimated that about 13 crore workers will be out of its purview. In the case of demise of the beneficiary, the children will not be entitled to pension, though the spouse will be. Workers earning only up to Rs 15,000 per month are eligible to join the scheme. Doubts have been expressed whether those whose earnings are very low will be able to pay the monthly subscription, though an equal amount is contributed by the government.
Half of the country’s GDP is contributed by the unorganised sector. The workers in the sector account for most of the country’s workforce. But they are ignored and neglected and do not have any social and economic safety net. The new pension scheme fails to provide that and actually gives them a raw deal. It is an election sop, like some other goodies announced in the budget.