Social security and the story of two Budgets Premium

In sharp contrast to the Union Budget 2023-24, the Rajasthan Budget is an example of upholding the rights of the vulnerable

Presenting the Union Budget 2023-24 on February 1, the Finance Minister, Nirmala Sitharaman, asserted that ‘since 2014, the central government has ensured a better quality of life, and a life of dignity’ for all its citizens. But Budget figures help distinguish rhetoric from the truth. This year, severe cuts in various social security and welfare schemes such as food security and the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA), have undermined the already precarious lives of large numbers of poor people in India.

A segment that has been sidelined is the crores of the elderly and other social security pensioners who are being callously pushed towards destitution. Since 2007, social security pensions being given by the central government under the centrally sponsored National Social Assistance Programme (NSAP), have remained frozen at an appallingly low sum of ₹200 for the elderly and ₹300 per month for widows and persons with disabilities. In addition, only those who appear on the obsolete and discredited Below Poverty Line (BPL) lists prepared as in Census 2001 are given pensions. As a result, the budget for the NSAP has remained constant, at approximately ₹9,000 crore, and steadily reducing in real terms. This year, the NSAP saw a reduction of ₹16 crore, decreasing from ₹9,652.31 crore in FY2022-23 (BE) to ₹9,636.32 crore for FY 2023-24 (BE), making a mockery of a so-called model of “inclusive growth”.

Nine days after the Union Budget, on February 10, the Rajasthan Chief Minister, Ashok Gehlot, presented the Rajasthan Budget, which was a lesson in contrasts. Brushing aside the Bharatiya Janata Party’s criticism of the rights-based approach to development, Mr. Gehlot announced a landmark, and pioneering, Minimum Income Guarantee and Pension law to be enacted in the State, providing 125 days of work through the rural or urban employment guarantee, and a minimum social security pension of ₹1,000 per month, with an automatic increase of 15% per annum.

NSAP is a centrally sponsored social security scheme that provides non-contributory income security to the elderly, widows, and persons with disabilities from “BPL families”. The central government’s contribution to the three main schemes under this programme, the Indira Gandhi National Old Age Pension Scheme (IGNOAPS), the Indira Gandhi National Widow Pension Scheme (IGNWPS), and the Indira Gandhi National Disability Pension Scheme (IGNDPS), has remained the same over the last 15 years. The percentage share allotted to NSAP of the total expenditure budget has steadily declined from 0.58% in FY2014-15(BE) to 0.21% in the current budget (FY2023-24). In addition to the central contribution, State governments are encouraged to match the amount as the central contribution under the NSAP’s guidelines. But as the central government contribution remains pathetically low, trends across 36 States/Union Territories indicate that a majority of the States are providing several times the suggested amount.

Today, Rajasthan provides social security pensions to over 90 lakh people, with the NSAP covering only a small part of the pension of 10 lakh pensioners. After this Budget announcement in Rajasthan, the total amount spent on pensions is expected to go up to ₹11,500 crore, approximately 30% more than the entire national social security pensions budget under NSAP.

Failure to index social sector expenditure to inflation has led to the even greater marginalisation of vulnerable people. India’s cumulative inflation rate from 2007 to 2023 is 193.19% with the average annual inflation rate of 6.95%. This means that ₹200 in 2007 would have become ₹586.38 in 2023 if indexed. In 2016, hundreds of social security pensioners on dharna wrote to Members of Parliament and cabinet Ministers above the age of 60, offering them a day’s pension with the request that they try and live for just one day with the sum of ₹7. The Congress party’s Jairam Ramesh, even when he was Rural Development Minister, had publicly described this sum as a “cruel joke”. It is notable that just the annual increase in dearness allowance and dearness relief for about one crore central government employees and pensioners costs the exchequer approximately ₹12,000 crore — roughly 30% more than the total expenditure on social security pensions.

It is not just the amount, but also the numbers receiving pensions that is of importance. Central assistance to States/Union Territories under NSAP is determined based on the BPL population of the State. For calculating the estimated number of beneficiaries under each scheme for each State, the central government relies on the population figures of Census 2001. Additionally, the stringent criteria of providing disability pensions only to those with a disability level of 80% or more, has excluded lakhs of the disabled even within the obsolete BPL category.