Suit-boot ki sarkarIJ Facts tell a different story
The Congress wants us to believe that the Narendra Modi Government is milking the poor to fatten the pockets of the rich, that it is a “suit-boot ki sarkar”, to use the words of party vice president Rahul Gandhi. This argument had always been factitious, but it was completely demolished on May 9 when the Government launched three mega schemes that together provide poor Indians — running into millions — for the first time, a strong social security net. All three schemes — the Pradhan Mantri Suraksha Bima Yojana, which is an accident insurance policy; the Pradhan Mantri Jeevan Jyoti Bima Yojana, which is a life insurance policy; and the Atal Pension Yojana — are designed specifically for those who live on the fringes of the financial and even the social system.
They mostly work in the unorganised sector, as construction workers and farm hands, and have almost nothing to shield them from unforeseen incidents that inevitably carry for them an enormous financial burden. Insurance and pension penetration is extremely low in this country, with just 20 per cent having life insurance coverage, 11 per cent having pension coverage and four per cent having accident coverage. As these numbers suggest, once the schemes take off, it is not just the poorest of the poor but also large chunks of the middle class that will stand to benefit. It is not that all of these people have no money. They lack access to safe investment and saving opportunities. This is where the new schemes come into play. At the macro-level, these schemes will help pool together national resources and catalyse economic activity and state-driven investment.
The PMSBY offers a renewable one-year accidental death-cum-disability cover of two lakh rupees to all savings bank account holders in the age group of 18 to 70 years for a premium of just Rs12 per annum per subscriber. The PMJJBY offers a renewable one-year life cover of two lakh rupees to all savings bank account holders in the age group of 18 to 50 years for a premium of just Rs330 per annum per subscriber. The Atal Pension Yojana provides subscribers a minimum pension between Rs1,000 and Rs5,000 per month, starting at the age of 60. The amount of pension received depends on the money the subscriber puts in and the age at which he or she signs up. Along with the Jan Dhan Yojana, which was introduced last year to encourage the poor to open bank accounts, these schemes have the potential to revolutionise financial inclusion in India, by the bringing the marginalised into the mainstream. The four schemes are already linked — anybody opening a savings account under the JDY has the option of signing up for all the new three social security plans.
The big picture here looks great though the details are yet sketchy. It isn’t clear how the Government intends to fund the schemes. While they aren’t charity programmes, they are still state-subsidised. Will the Government be able to foot the billIJ Some public sectors banks, which will be doing much of the heavy lifting, have complained about the low premiums. Finally, all three schemes build on previous efforts to provide insurance and pension to the poor, which failed. The Modi Government must take care not to repeat the mistakes.