The Economic Survey of India 2023-24 warns of an approaching demographic crisis, emphasising the immediate necessity for policy interventions to tackle the care requirements of India’s ageing population. The India Ageing Report 2023 cautions of similar issues. The report suggests that senior citizens are facing chronic illnesses, physical limitations, especially in rural areas.
Estimates indicate that by 2050, 20.8% of the population will be elderly, signalling a need for sustained long-term action. The biggest challenge for the government is to meet the welfare needs of crores of economically vulnerable individuals.
In the inaugural budget of the 18th Lok Sabha, the finance minister’s solitary mention of the word ‘welfare’ stood out as a clear signal that the Union Budget 2024-25 would be devoid of any substantial policy commitment or allocations to address these concerns.
Budget 2024-25 prioritises the demands of the organised sector and salaried classes while completely neglecting the economic and social security of millions of informal and unorganised sector workers. The Union government appears to prefer appeasing political allies through large expenditures rather than spend on the social sector. In this budget, Rs 15,000 crore is allocated for building Andhra Pradesh’s capital, Amravati, and Rs 20000 crore for building the Bodhgaya temple corridor and highways in Bihar which is more than the budget allocated to welfare schemes like National Social Assistance Programme (NSAP), PM POSHAN, Smarthya etc.
There were (low) expectations that the new government’s first budget would include allocations to meaningfully address these challenges. However, the decreased and stagnant spending on social security makes it evident that these issues continue to hold little importance for the government.
The India Ageing report finds that presently close to six crore elderly in India fall into the poorest wealth category and approximately 18.7% of the elderly live without any income. Despite this, the allocation to the NSAP, a core centrally sponsored scheme that provides non-contributory income support of Rs 200 to the elderly and Rs 300 to widows and persons with disabilities, has been increased by only Rs 16 crore.
The budget allocated to this critical social security scheme has declined to a mere 0.2% of the total budget outlay. As pension amounts and lists of beneficiaries remain unrevised, the allocation for the programme has remained constant at Rs 9,500 crore since 2016-17.
When adjusted to inflation, the allocations have seen a decline in real terms. With declining Union budgets, the fiscal burden of ensuring adequate pension amounts has shifted to the States. As a result, most States are now contributing 5 to 10 times more from their own budgets.
At a time when the country is reeling from an unemployment crisis, allocation for the Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS) is just Rs 86,000 crore. Despite the actual expenditure for FY 2022-23 being Rs 90,805 crore, the budget for FY 2023-24 was set at only Rs 60,000 crore. This was later revised to Rs 86,000 crore for FY 2023-24, which is the same as the budget estimate for FY 2024-25.
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This is like adding a few more coins to a well and claiming it solves the drought issue. The People’s Action for Employment Guarantee (PAEG) suggests that Rs 2.72 lakh crore is required to fulfil the complete demand, highlighting the significant shortfall of the budget. PAEG calculated that Rs 2.72 lakh crore was required to meet the demand for 100 days of work for the 5.68 crore households in 2022-23.
With six crore households working in 2023-24, the MGNREGS budget is grossly inadequate to meet the demand. Currently, there are over 13 crore active workers enrolled in the programme. The Economic Survey of India acknowledges that the MGNREGS is being operated like a supply-based scheme, where employment is often unavailable when sought. Additionally, demand for work is not recorded on the portal when employment is provided. As a result, the actual demand for work exceeds what is shown on the Management Information System (MIS) portal, failing to reflect the true extent of rural distress.
The Budget for 2024-25 announced several schemes implemented through the Employees’ Provident Fund Organisation (EPFO) to support salaried employees and employers. One key measure is that the government will reimburse employers up to Rs 3,000 per month for two years towards their EPFO contributions for their employees. However, pension and economic security schemes for India’s 49.33 crore workers in the unorganised sector have not received the same level of attention.
The situation is not much better for contributory pension schemes either. The Atal Pension Yojana Scheme (APY) is a flagship contributory pension scheme of the Narendra Modi government for unorganised sector workers. For FY 2022-23, the actual expenditure incurred on APY was Rs 725 crore. During this period, the number of subscribers increased from four crore at the beginning of FY 2022-23 to 5.2 crore by the end of the financial year. Despite the number of subscribers rising to nearly 6.17 crore as of January 2024, the government’s contribution to the scheme has remained constant at Rs 512 crore since FY 2023-24.
Another contributory pension scheme of the Modi government, the Pradhan Mantri Shram Yogi Maan-Dhan (PM-SYM), saw a massive slash of Rs 173 crore. The scheme’s budget decreased from Rs 350 crore in 2023-24 to Rs 177 crore in 2024-25. The scheme was launched in 2019 with the objective of enrolling two crore workers per year. Since its implementation only 45 lakh workers have registered till date.
Despite demands of unorganised sector workers, they continue to be excluded from contributory schemes such as the EPFO and the Employees’ State Insurance Corporation (ESIC) which is designed specifically for the organised sector providing comprehensive social security benefits. Schemes for the unorganised sector, such as those integrated with the Pradhan Mantri Jan Arogya Yojana, do not provide extensive social security. Instead, these schemes are merged with existing welfare programmes, which diminishes their focus on the specific needs of unorganised sector workers.
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The budget speech also mentioned the development and integration of welfare schemes on the e-shram portal which was launched in August 2021 as a single platform for the registration of unorganised sector workers to facilitate their linking with various social security schemes. However, only 29.48 crore workers out of 49.33 total unorganised sector workers are registered on the platform.
Prior to the budget, the finance minister had stated that the main priority of the budget would be improving the “ease of living” for all citizens. The budget speech began by highlighting the intention of the government to focus on four key pillars — annadata (farmers), mahilayen (women), gareeb (poor) and yuva (youth). The failure to allocate substantial budgets to social security and welfare programmes undermine these stated priorities, resulting in significant financial gaps in schemes for support provided to crucial segments of the population. Despite having an opportunity to break from previous patterns, the Modi 3.0 government’s first budget remains disappointingly predictable.
As India’s economic ambitions soar, the government’s budgetary allocations and poor implementation of welfare policies paint a concerning picture of oversight and disregard. The significant reduction in important programmes indicate an ongoing neglect for the most at-risk individuals, keeping the advantages of economic growth just beyond the grasp of those who require them the most.
Asmi Sharma and Nancy Pathak are associated with Pension Parishad and Centre for Financial Accountability.
