With increase in life expectancy and a decline in birth rates, countries across the world are facing an ageing population. In advanced countries, this has led to a situation of shortage of labour on the one hand and the increasing costs of healthcare along with the crisis of care for old people on the other. Although India is not in a similar situation yet, we are also moving the same direction.
It is expected that by 2050, 20% of the Indian population will be above 60 years of age, double of what it is currently. Most people work in the informal sector and have no pension benefits which makes them very vulnerable in their old age. With the large gaps in health, education and social protection, India is losing on many of the benefits the current demographic dividend of a high youth population could bring. This same population will then become the elderly 30 years from now, and if the situation does not change will continue to be betrayed in their old age as well. A mechanism for social security support for all old people is an urgent need.
The union government provides old age, single women and disabled pensions through the National Social Assistance Programme (NSAP). Following Supreme Court orders in the Right to Food case, the scheme was streamlined. In 2007, the amount of central contribution to the NSAP was increased to Rs 200 from Rs 75, and in 2011 to Rs 500 for those above 79 years. This scheme has seen no increases since 15 years, with the total Union budget allocation for the scheme reducing by 20% in real terms between 2011-12 and 2022-23. Currently, about 2.2 crore old people are covered under the NSAP, which is less than a quarter of the elderly in the country. It is estimated that 40% of the old people in the country are in the poorest quintile. There is also a huge state-wise variation, states topping up over the central contribution an amount ranging from Rs 50 (Assam) to Rs 3000 (Puducherry). A number of states have increased the amount and coverage, but there is still a need for a comprehensive social security pensions scheme at the national level.
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The fact that coverage and eligibility under the NSAP have not been revised for a very long time is a serious concern that needs to be addressed. Under the scheme, central assistance to states/ Union Territories is determined on the basis of BPL population of the State/Union Territory using the population figures as per the census of 2001 and the poverty ratio 2004-05 determined by the then Planning Commission. The ‘BPL’ approach is now much-maligned because of exclusion errors, arbitrary quotas and unrealistically low poverty lines. This was at least partially resolved for the Public Distribution System (PDS) by de-linking the number of ration beneficiaries from the poverty line with the National Food Security Act (NFSA) stating that 75% of the rural population and 50% of the urban population will be given ‘priority’ ration cards and entitled to 5 kgs of highly subsidised (now free) food grains every month. To identify these beneficiaries many states used the data from the Socio-Economic Caste Census (SECC), 2011. The SECC 2011 data is also used for some schemes — such as the Ayushman Bharat – Pradhan Mantri Jan Arogya Yojana (AB-PMJAY) health insurance scheme — is also now outdated. The least that could be done with immediate effect is to include all the old people who are in households covered by the NFSA into the NSAP.
However, there is also a need for serious thought on a more comprehensive and universal pension programme. The e-shram portal which registers informal sector workers is supposed to be a platform for ensuring universal social security. Once registered on the e-shram, people can sign-up for various social security schemes. The pension schemes that the government is promoting through the e-shram portal are not non-contributory, unconditional schemes like the NSAP.
The Pradhan Mantri Shram Yogi Maan-Dhan Yojana (PM-SYM) is a voluntary and contributory scheme where unorganised workers in the age group of 18-40 pay a monthly contribution of Rs 55 to Rs 200 (with central government adding a matching amount) for an assured pension of Rs 3000 per month after they attain age 60. About 45 lakh people are enrolled in this scheme so far. This is very different from the idea of a right to pension for the working population who contributed to the economy all their lives but were in jobs which did not give them any social security or even decent wages while they were working. Further, given the precarious nature of employment it is unreasonable to expect monthly contributions from the poor and the amount assured is also too little if one takes inflation into account.
What we need is a universal old age pension scheme that provides a decent, minimum wage-linked monthly amount to all, excluding those already covered by other pension plans. The Pension Parishad a network of organisations working on this issue recommends that all old people must at least be given Rs 3000 a month to begin with.
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In 2022, a group of economists wrote to the finance minister, urging an immediate increase in the central contribution to at least Rs 500, which they estimated would require an additional Rs 1,500 crore per year. Increasing the amount and coverage could be a small beginning, if it is included in the upcoming Union budget.
Notably, the urgent need for a discussion on pensions for the elderly cannot be delayed any further, given the twin challenges of an aging population and the increasing informalisation of employment.
Dipa Sinha is a development economist.
