The Modi government is planning to provide social security benefits to 50 crore workers in the country. The scheme for which a comprehensive plan has been prepared by the Labour Ministry aims to initially provide three programs – old age pension, life insurance, and maternity benefits while leaving out unemployment, child support, and other benefits – to most working citizens, government officials said. The drafted bill plans to extend social security benefits to all workers including those in informal employment by merging and simplifying 15 federal labour laws into one. The old age pension and life insurance schemes are expected to come under the recently launched APY and PMJJBY schemes by the Modi government. Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY) is a lucrative life insurance plan, wherein the insured receives Rs 2 Lakh cover against an annual premium of Rs 330, each year. The life risk cover will get terminated after 55 years. The scheme is applicable to all bank account holders in the age bracket of 18-50 years. Atal Pension Yojana (APY) is a pension scheme targeted at people in the unorganized sector. The scheme is applicable to subscribers aged 18 to 40 years, with valid bank accounts. The scheme aims to benefit people who do not have a social security or who do not fall under the income tax bracket.
The Modi government plans present the bill in July in the upcoming session of Parliament, said Labour Minister Santosh Gangwar. The plan to provide social security benefits like pension and insurance to poor people in the country could prove extremely beneficial for electoral gains as the party goes for Lok Sabha elections next year. The UPA government used MGNREGA to provide social security and the plan proved to be disastrous with emptying government coffers without any real change on the ground. The scheme failed due to massive corruption and extremely poor planning and implementation. The social security spending in the country is pitifully low with the majority of the people living in abysmal conditions.
The country spends less than two percent on social security while our counterparts like China spend more than 5 percent.
The plan is to implement the scheme in three phases over 10 years, after which the government hopes to make it universal. The scheme will be implemented in four tiers with the government wholly financing the cost for people below the poverty line. The first phase of the scheme will cost Rs 18,500 crore, see all workers getting the bare minimum, which includes health security and retirement benefits. The second phase will see unemployment benefits being added to it while in the third phase, other welfare measures can be added.
The plan to increase social spending would add to fiscal stress and limit the scope for infrastructure development. But by giving benefits mostly to informal workers who contribute to about half of the country’s GDP, it would enhance the quality of life and raise productivity. As of now, it is likely to add pressure on India’s fiscal deficit which is already under strain due to rising fuel prices. The fiscal deficit of the country is above the government target and one of the widest in Asia.
This is the perfect time for the Modi government to plan for the social security of people as the country is young and productive. The country will be an aging society like China in 22 years if it doesn’t start working on social security today, The country is enjoying a demographic dividend at present, and therefore, the time is ripe to invest in the social security of the people to ensure a higher standard of living even as they age.