In Kolkata, PM Narendra Modi launched three social security schemes that were mooted in this year’s budget. The Suraksha Bima Yojana will provide a renewable one-year accidental death-cum-disability insurance cover of Rs 2 lakh to persons between the ages of 18 and 70 for an annual premium of Rs 12. The Jivan Jyoti Bima Yojana similarly aims at providing life insurance cover of Rs 2 lakh for an annual subscription of Rs 330 to persons between 18 and 50 years of age.
Lastly, the Atal Pension Yojana for persons between 18 and 40 years of age would, depending on the plan opted for, ensure that the subscriber gets a monthly pension of between Rs 1,000 and Rs 5,000 after turning 60. In the one-week trial period prior to the launch, 5.05 crore people have reportedly already been enrolled for the schemes. Coupled with the 125 crore new bank accounts that had been opened under the Jan Dhan Yojana by January, the Modi government has managed to make impressive progress — notwithstanding the dormancy of many of these new accounts — in the project of financial inclusion and social security provision.
Given the poor penetration of pension and insurance — only 4 per cent of Indians have accident insurance, 20 per cent have life insurance, and only 11 per cent of workers are subscribed to a pension scheme — this project is an imperative. Indeed, the macro gains from the spread of insurance and pension should not be underestimated — productivity as well as economic and social stability improve in less uncertain, more equitable environments. But importantly, the government is yet to make public the nitty gritty of the schemes’ funding. And even though they should not be viewed as dole — one has to check into them and pay a subscription fee — the government will need to work out how to finance their subsidy component. Saddling banks and insurers with a prohibitive unfunded mandate — or the Centre taking on an unsustainable subsidy burden — would be unwise.
Equally, the government must learn from the failure of past experiments and projects. For instance, why didn’t the UPA’s Swavalamban pension scheme take off? And how can an EPFO-sized hole in the balance sheet be avoided? But overall, a gradual shift away from state intervention in markets towards a strong social security architecture is the way to go.