All India Radio (AIR) IAS UPSC – Benefits extended to workers in unorganised sector

  • IASbaba
  • April 3, 2019
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All India Radio
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Benefits extended to workers in unorganised sector


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TOPIC: General Studies 2

  • Social Justice
  • Welfare schemes for vulnerable sections of the population by the Centre and States and the performance of these schemes; mechanisms, laws, institutions and Bodies constituted for the protection and betterment of these vulnerable sections.

Pradhan Mantri Shram-Yogi Mandhan:

A major announcement in the Interim Budget 2019-20 was the creation of the Pradhan Mantri Shram Yogi Mandhan, a pension scheme for informal workers.

Includes: Half of India’s GDP comes from the work done by 42 crore workers in the unorganised sector, such as street vendors, rickshaw pullers, construction workers, rag pickers, agricultural workers, beedi workers, those engaged in the handloom and leather industries, and domestic workers. The Shram Yogi Mandhan scheme is aimed at achieving a “comprehensive social security coverage” in their old age, and therefore includes all informal sector workers with an income of less than ₹15,000 per month. According to the government, this works out to 10 crore people.

Under this scheme, subscribers will receive an assured monthly pension of ₹3,000 per month from the age of 60 onwards. Towards this, they will have to contribute ₹55 a month (if they join at the age of 18 years), or ₹100 a month (if they join at the age of 29 years). The government will match these contributions.

Will the scheme work?

Social sector workers have pointed out that creating a voluntary contributory pension scheme for informal sector workers is not likely to work as their salaries are low. The argument is that they already pay large amounts as indirect taxes.

It must be recognised that this scheme isn’t very different from the Atal Pension Yojana which was launched in 2015 and didn’t do all that well).

Further, for a salaried worker, the pension contribution can be cut from the salary. A daily wage earner or migrant labourer will, however, have to regularly deposit her income each month, which is an uncertain proposition.

The Way Forward:

The government needs to answer on what happens to the scheme if an informal sector worker misses a contribution. Does the worker become disqualified from the scheme? If so, what happens to the amount already contributed? Will the government refund the worker that amount, or will that amount be forfeited? Another matter to be considered is what happens to a worker who transitions to the formal workforce.

Connecting the Dots:

  1. Has the government once again failed to put its money where its mouth is? Discuss.
  2. Welfare schemes that yield political dividends from their mere announcement are often relegated to dusty files in government offices eventually. Is the pension scheme that was announced by the government recently headed in a similar direction? Examine.

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