Budget For National Social Assistance Programme Remains Stagnant Yet Again

As expected, the budget for the National Social Assistance Programme (NSAP) – a crucial centrally-sponsored social security scheme that provides non-contributory pensions to the most marginalised populations including the elderly, widows, and persons with disabilities in the BPL category – has remained unchanged from the previous year. 

The NSAP has become an antiquated relic, dusted off as elections approach but sidelined when real commitments are tested. Year after year, its funding remains frozen, failing to account for inflation or the growing number of beneficiaries.

How budget 2025 undermines NSAP 

The recent Union budget once again undermined the NSAP by maintaining the budget at Rs 9,652 crore – same as the previous year. In real terms, the budget reduces to approximately Rs 9,200 crores.

To simply offset inflationary pressures, the budgetary outlay should have been raised to over Rs 10,000 crore.

As a share of the total budget outlay, allocation to NSAP has steadily declined from 0.58% in FY 2014-15 to 0.19% in FY 2025-26.

Since 2011-12, NSAP has covered approximately 3 crore social security pensioners, yet its budgetary allocation has remained stagnant, effectively eroding in value over time. In 2014, the programme was allocated Rs 10,547 crore, but by 2025-26 the allocation has fallen to Rs 9,562 crore.

To maintain the same purchasing power and level of support over 11 years, the allocation should have been increased to at least Rs 18,000 crore (assuming an average inflation rate of 5% per annum). 

However, the abysmal budget allocations year after year are symptomatic of deeper structural issues within the programme itself. These issues stem from two reasons:

• Lack of proactive identification and coverage of beneficiaries 
• The union government’s unwillingness to increase pension amounts since 2007.

Gross underestimation of beneficiaries

Unlike most other welfare programmes where beneficiaries are determined based on the 2011 SECC data, the number of beneficiaries for all states/UTs under NSAP has been inexplicably  capped/fixed based on the 2001 census and the 2004 poverty ratio determined by the erstwhile planning commission. 

Also read: Debt, Policy, Spending: Budget 2025-26 at a Glance

As a result, since 2011-12, the number of beneficiaries under the three pension sub-schemes has been/fixed at 3 crores, comprising 2.21 crore elderly under Indira Gandhi National Old-Age Pension Scheme (IGNOAPS), 65.73 lakh widows under Indira Gandhi National Widows Pension Scheme (IGNWPS), and 10.9 lakh persons with disabilities under the Indira Gandhi National Disability Pension Scheme (IGNDPS). 

The Economic Survey of India (ESI) 2024-25 for the first time acknowledges that of the 8.95 crore beneficiaries, nearly 6 crore additional beneficiaries are covered under pension schemes of different state governments, effectively admitting that the union government’s beneficiary list is outdated with massive underestimations. 

That nearly 6 crore eligible individuals are excluded from the central support of NSAP schemes despite being rightfully entitled calls for the urgent need to conduct the decadal and caste census to provide accurate data on eligible beneficiaries.

The ESI states that “around nine crore beneficiaries (central NSAP plus additional state beneficiaries) are covered under the pension safety net of the country at an estimated annual expenditure of more than Rs 1 lakh crore.”  

However, with less than Rs 10,000 crore allocation in the Budget, the state governments are paying close to 9 times more than the Union government. 

According to the NSAP guidelines, “States are strongly urged to provide an additional amount at least an equivalent amount to the assistance provided by the Central Government so that the beneficiaries can get a decent level of assistance”. 

Despite this, the union government’s contribution per person has remained constant at Rs 200 per month for the elderly and Rs 300 per month for widows and persons with disabilities since 2007 and 2012 respectively. Over the years in the absence of the union government stepping up, this has created an additional fiscal burden on states and has resulted in massive variations in pension amounts across the country, an issue highlighted in the CAG report.

‘A decent level of assistance’

Four percent of the government’s money is spent annually on the pensions of 64.88 lakh union government employees (including defence pensioners) which according to Budget 2025-26 is estimated to cost the exchequer close to Rs 2.77 lakh crore. Additionally, with the recent announcement of the 8th Pay Commission and the biannual revision of dearness relief, this will climb even higher. 

However, for close to 3 crore individuals covered under the NSAP, the budget has remained at Rs 9,500 crore for more than a decade. This isn’t just about comparing numbers; it’s about the government’s priorities. Pension security is unquestioned for those at the top of the economic hierarchy, but what about those at the bottom? 

The poor and marginalised are not passive recipients of welfare – they contribute to the economy in countless ways, through hard labour, informal work, and indirect taxes. If pension benefits are a recognition of service to the nation, then why are they denied the same dignity and security as Union government employees?

Also read: Budget 2025: A Step Forward, But for Whom?

At present, the Rs 2,400 to Rs 3,600 per annum pension received by beneficiaries under the NSAP – also often the sole source of income for many – falls significantly short of any reasonable definition of a ‘decent level of assistance’. The question then arises: what level of pension support would constitute a dignified standard of living, and what would be the fiscal implications for the exchequer? 

The Pension Parishad, a campaign advocating for social security pensioners, has argued that an adequate pension should be set at 50% of the minimum wage, adjusted annually for inflation. Applying this principle to the 2019 Anoop Satpathy Report – which recommended a national minimum wage of Rs 375 per day – a reasonable pension would amount to Rs 4,875 per month per person. 

If the Union government were to implement this recommendation and require state governments to match at least the central contribution, the total cost for 8.95 crore pensioners (ESI 2024 estimates) would stand at approximately Rs 2.61 lakh crore annually.

Alternatively, if we use the 2024-25 average wage rate under MGNREGA – set at Rs 279 per day across all States/ UT – a pension equivalent to 50% of this wage would amount to Rs 3,627 per month per individual which would cost the exchequer Rs 1.94 lakh crore annually.

Even based on the current coverage of 2.97 crore beneficiaries, a substantial increase in allocations is necessary to ensure a decent standard of living. Using the Satpathy estimates, this would cost the exchequer Rs 86,872 crore annually and applying the 2024-25 minimum wage per day rate would require Rs 64,633 crores a year.

While significantly higher than current allocations, these costs must be weighed against broader socio-economic benefits of improved social security, reducing poverty and addressing consequences of growing inequality. The income tax relief announced in the budget will cost the exchequer Rs 1 lakh crore and benefit only a small section of the population, a section which is relatively better off than those relying on small pension amounts. 

A pension programme that ensures a decent level of assistance is not only morally justifiable but will have a greater impact on boosting consumption. 

Given the pace of India’s ageing population and inadequacy of the existing scheme, a more deliberate attempt to restructure this social welfare programme is necessary. No matter how viksit the government claims to be, social security pensions seem like they will never see vikas. 

The government must stop paying lip service and begin making real investments in the social security of its elderly and vulnerable populations. It’s time for the Union government to align its actions with its rhetoric and ensure that pensioners are given the dignity and financial security they deserve.

Asmi Sharma and Nancy Pathak are part of the Pension Parishad Campaign and the Financial Accountability Network