Budget 2024: How the Modi Government Has Neglected Social Security Pensions Once Again

There is an urgent need to review the National Social Assistance Programme for it to be effective and meaningful.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.

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.

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.

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.

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.

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.