This article is the seventh in a series on the state of the Indian economy co-curated by the Centre for Financial Accountability, New Delhi and The Wire. Read the first article here, the second here, the third here, the fourth here, the fifth here and the sixth here.
While presenting the Union Budget 2024-25, Union finance minister Nirmala Sitharaman lauded the Bharatiya Janata Party government’s achievements. She claimed that over the last 10 years it has ensured social inclusivity and growth for every strata through its commitment to alleviating social and financial vulnerability. Yet. the nominal increase in budgetary allocation for welfare programmes challenge this notion of ‘sabka sath, sabka vikas’.
Union government’s National Social Assistance Programme (NSAP), is one such critical scheme that provides non-contributory income security to the elderly, women and persons with disabilities in the below poverty line (BPL) category. The minimal allocations made to NSAP in today’s budget are both unsurprising and consistent with a decade-long pattern characterised by poor implementation, and restricted funding. This trend indicates the government’s reluctance to meaningfully address the issues of social security and economic protection for vulnerable and marginalised populations.
Reducing budgetary allocations
The budget for NSAP increased by Rs 16 crore, from Rs. 9636 crore (BE) in FY 2023-24 to Rs. 9652 crore in the current budget. While it looks like a marginal increase, however, this is a decline in real terms when indexed to inflation. As a percentage share of the total budget outlay, the allocation to NSAP has steadily decreased in the last decade, reducing from 0.58% in FY 2014-15 to just 0.20% in FY 2024-25.
Source: Union Budget FY 2013-2014 to FY 2023-25
(click here for corresponding numbers)
With the total budget outlay nearly tripling in the past decade, the budget allocated to NSAP has remained stagnant at approximately Rs.9500 crore.
This decrease is notable, especially considering the expansion of coverage under the three primary sub-schemes of NSAP has increased from 2.12 crore individuals to 2.97 crore individuals during the same period.
Also read: Interim Union Budget Follows Tradition of Modi Government’s Apathy Towards Most Vulnerable
Additionally, the expenditure trend over the past decade shows that the actual expenditure is consistently lower than the budget and revised estimates. Between FY 2014-15 and FY 2022-23, there has been an average underspending of Rs 331 crore in the past nine years. Underspending has ranged from Rs 646 crore in FY 2016-17 to Rs 473 crore in FY 2021-22. This indicates that funds allocated for NSAP are not fully utilised, largely due to mismanagement and the lack of transparency in the process of disbursal of funds at the state and central levels.
Only during the first year of the pandemic, in FY 2020-2021, the budget was revised nearly fivefold from Rs 9196 crores to Rs. 4,2617 crores when a one-time payment of Rs 1,000 was made to NSAP beneficiaries. However, the budgetary allocation for the subsequent years show only a nominal increase even though millions of people are still recovering from the economic shock of the pandemic.
Source: Union Budget FY 2013-2014 to FY 2023-25
(click here for corresponding numbers)
Increased fiscal burden on states
The NSAP is one of the six ‘core of the core’ centrally sponsored schemes (CSS) under the Ministry of Rural Development. According to the 2014 Guidelines, the NSAP is designed to provide monetary assistance from the Union Government for three distinct demographics in the BPL category.
Under the Indira Gandhi National Old Age Pension Scheme (IGNOAPS), assistance of Rs 200 per month is provided for the elderly between the ages of 60 and 79 and Rs 500 per month for those aged 79 and above. For widows, a sum of Rs 300 per month is provided under the Indira Gandhi National Widow Pension Scheme (IGNWPS). For persons with disabilities, Rs 300 is provided for those between the ages of 18 to 79, and Rs 500 for those above the age of 79 under the Indira Gandhi National Disability Pension Scheme (IGNDPS).
The contribution from the Union government for old-age pensions has remained unchanged since 2007; for widow and disability pensions, this amount was last increased to Rs 300 in 2011.
As a CSS, the funding for this programme is shared between the Union and states. Under NSAP, pension amounts across all sub-schemes are also supplemented with an additional contribution from the states.
In this regard, the guidelines recommend that the states at minimum match their contribution to that of the Union government. However, in the absence of any legal obligation, this discretionary approach has led to significant variation in the pension amounts received by beneficiaries across states and Union territories (UTs). State contributions range from Rs. 50 to Rs. 2300 per month in some states while others contribute no amount at all. Therefore, it is crucial for the Union government to allocate a substantial amount, exceeding Rs 200, to ensure that pensioners receive a sufficient sum irrespective of the contribution from the states.
Typically ‘core of the core’ CSS have a fiscal sharing ratio of 20:80, 25:75, or even 40:60, wherein the Union government predominantly shoulders the financial burden. However, the NSAP is an exception to this norm where the fiscal responsibility has been shifted to the states. Across 36 states and UTs, the trend indicates that a significant number of the states are contributing between 5 to 10 times the recommended amount.
RTI Reply from MoRD: State and central contribution to major sub-schemes under NSAP
*RTI Reply from August 2023, since then pension amounts may have increased in some states
Exclusions: coverage, eligibility and proactive identification
Central assistance to states and UTs under NSAP is determined on the basis of the BPL population of the state. For calculating the estimated number of beneficiaries under each scheme for each state, the Union government relies on the population figures of the 2011 Socio Economic and Caste Census.
However, with the delay in the 2021 census and the failure of state governments to proactively identify and enlist new beneficiaries, the information on eligible beneficiaries used to determine the expenditure under NSAP does not precisely capture the actual beneficiaries.
Moreover, BPL lists are susceptible to inaccuracies and errors. A recent investigation by the Reporters’ Collective revealed that the Family Identity Data Repository, an algorithm used by the Haryana government to assess the eligibility of beneficiaries under welfare schemes, incorrectly deemed numerous eligible individuals across NSAP as ineligible due to inaccurate data entry or wrong predictions by the algorithm.
In addition to the exclusion resulting from the state government’s failure to enlist beneficiaries, many elderly individuals also experience exclusion due to the fixed quota imposed by the Union government for each state on the number of beneficiaries enrolled under the IGNOAPS.
The latest edition of the India Ageing Report estimates that the elderly population in the country stands at 14.9 crore (as per 2022 estimates). Of this, two-fifths, constituting 5.96 crore individuals, belong to the poorest wealth quintile. Among this group, 18.7%, or close to 1 crore individuals, report having no source of income and face extreme financial vulnerability.
Also read: Union Budget: Revised Fiscal Deficit 5.8% in Current Year, Expected to Be 5.1% in 2024-25
In states such as Rajasthan and Bihar, where the state government provides near-universal pensions, the fiscal burden is borne by the state exchequer. The number of beneficiaries receiving old age pensions in these states alone amounts to Rs 59 lakhs and 36 lakhs, respectively, in contrast to the national coverage of Rs 2.21 crore.
The NSAP Guidelines establish strict age criteria for IGNWPS, which limits central government assistance to widows aged 40 and above. Although some states have lowered this age requirement, central assistance to states is only provided to women who meet the age requirement of the specified guidelines. This stringent age criteria hinders single women below the age of 40, who are frequently the primary earners for their families, from receiving meaningful income assistance.
Furthermore, in many states, the IGNWPS is limited to women below the age of 60 after which they become eligible for old-age pensions. For example, in Delhi, due to fixed caps in IGNOAPS, applications for old-age pensions have not been accepted since 2018. As a result, women above the age of 60 find themselves without any financial support.
Similarly, according to the 2014 guidelines, financial assistance is extended to individuals with a disability level of 80% or more under the IGNDPS. This criteria inadvertently leads to exclusion as it disregards individuals with disabilities below the cut off who may still face significant challenges and require monetary support. It is crucial to align these criteria with the definitions of persons with disabilities as outlined in The Rights of Persons with Disabilities Act, 2016, which recognises individuals with disabilities as those with a disability level of 40% or more.
Addressing the lack of proactive beneficiary identification and eliminating exclusionary criteria is essential for obtaining a more precise estimate of individuals requiring social security measures. The 2014 guidelines aspire to achieve universal coverage in the BPL category through NSAP. However, due to existing budget and policy constraints, the programme is currently functioning in a demand-driven mode, wherein benefits are given only to those who apply for it, hindering the realisation of its envisioned universal coverage.
Social security pensions play a crucial role in ensuring financial security and well-being, their adequacy and accessibility directly impact the socio-economic stability of vulnerable individuals. The longstanding demand of people’s movements has been that a universal and non-contributory minimum monthly pension equal to 50% of the minimum wage must be established that is periodically adjusted to inflation.
Similar to the Minimum Guaranteed Income Bill, 2023 in Rajasthan, the NSAP should be legislated into an Act, thereby securing the necessary legal protections that are afforded to other welfare rights such as the National Food Security Act and the Mahatma Gandhi National Rural Employment Guarantee Act. Social security pensions are not ‘revdis’ but central to the rights-based approach enshrined in the Directive Principles of State Policy to ensure minimum conditions for people to live with dignity.
Asmi Sharma is associated with Jan Sarokar and the Pension Parishad Campaign.