NEW DELHI, May 24: As a multitude of devotees swirled on Hari-Ki-Pauri, door step to heaven in Haridwar this week to take holy dip in the Ganga on occasion of Somvati amausya, Ram Avatar with his seven member family was frolicking. He took repeated dips sidestepping warnings that he may slip and drown.
Don’t worry, If I drown and die, you will be entitled for my life insurance premium, the 55-year- old man told to his yelling wife.
Many others too joined the refrain. For them ultra small social security schemes announced by the Prime Minister Narendra Modi earlier this month are a respite .
Many living on fringes of big cities joked that even if Bollywood star Salman Khan or any other big wig’s car mows them down at least their family will get some cover.
Hordes of bank accounts holders mainly from the Prime Minister Jan Dhan Yojna and these schemes are making anxious queries on such schemes.
As the Government’s push to provide social security to the poor is getting operationalised on the ground, the three ultra low cost insurance schemes are finding resonance with the common man.
Going forward, these schemes may well prove to be a game changer. The popularity of three schemes , launched by Mr Modi on May 9 in Kolkata can be gauged from the fact that within days of the launch, Pradhan Mantri Suraksha Bima Yojana (PMSBY) providing an accidental cover of Rs two lakh has enrolled more than seven crore people. Likewise, the Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY)that provides a life cover of Rs two lakh has received an overwhelming response, though the Atal Pension Yojana (APY) – a long term pension plan would require a hard sell.
Under the APY, subscribers would receive a fixed minimum pension of Rs 1000per month, Rs. 2000 per month, Rs 3000 per month, Rs. 4000 per month, Rs.5000 per month, at the age of 60 years, depending on their contributions.
The Government would also co-contribute 50 percent of the total amount or Rs.1000 per annum, which ever is lower, to each eligible subscriber account, for a period of five years, that is, from 2015-16 to 2019-20, to those who join the NPS before31st December, 2015 and who are not members of any statutory social security scheme and who are not Income Tax payers.
The pension would also be available to the spouse on the death of the subscriber and thereafter, the pension corpus would be returned to the nominee. The minimum age of joining APY is 18 years and maximum age is 40years. The benefit of fixed minimum pension would be guaranteed by the Government.
Under PMJJBY, annual life insurance of Rs. 2 lakh would be available on the payment of premium of Rs. 330 per annum by the subscribers. The PMJJBY willbe made available to people in the age group of 18 to 50 years having bank account from where the premium would be collected through the facility of”auto-debit”.
Under PMSBY, the risk coverage will be Rs 2 lakh for accidental death and full disability and Rs. 1 lakh for partial disability. The scheme will be available to people in the age group 18 to 70 years with a bank account,from where the premium would be collected through the facility of”auto-debit”.Government expenditure is expected to range between Rs. 2,520 crore and Rs.10,000 crore on account of Government co-contribution to subscribers of the APY over a period of five years. (PTI)
Further, an expenditure of Rs. 2,000 crore for promotional and developmental activities for enrolment and contribution collection under APY and Rs. 250 crore for publicity, awareness buildingfor PMJJBY and PMSBY is envisaged by the Government, over a period of five years.Government expects that around two crore subscribers would be enrolled during the current financial year under APY. The Government sponsored insurance scheme was also envisaged to encourage workers in the unorganised sector to voluntarily save for their retirement.Such workers constitute 88 per cent of the total labour force of 47.29 crore. It is expected that employers too would rope in employees and motivate them to go in for the pension schemes.
The insurance plans being promoted among the poor and the marginalised in the society would sit on a solid building block in the form of the the Prime Minister Jan Dhan Yojana under which 15 crore people have already opened their bank accounts . A large number of such accounts are also linked withthe Aadhar number.
Along with the bank accounts, 13.40 crore Rupay Cards have been allotted while 1.25 lakh Bank Mitras have been deployed . Under the scheme,subscriber is entitled to Rs 1 lakh accident insurance and an overdraft facility of Rs 5 thousand after six months of account activation. The Union Cabinet has also approved a sum of Rs 50 crore for next five years for creation of awareness and publicity related to all these welfare schemes.
However, the success of all these welfare schemes depends directly on the performance of over stressed banking system and inversely on the increasing financial literacy of vast sections of people of the country who are not covered by the banking system. In fact, the success of all these schemes is hugely dependent on the Jan Dhan Yojana scheme which forms the basis of direct transfer of benefits and subsidy to the targeted persons.
Pointing out the necessity for such schemes, Mr Modi,had said,”The journey to development will be incomplete if the poor do notshare its fruits. Banks were nationalised for the poor but did we see thepoor in the banks. In a nation of 1.2 billion people, 80 -90 per cent of people do not have access to pension and insurance… But all the troubles happen to the poor, not the rich. They sleep on footpaths, they have todie…”
According to Reserve Bank of India (RBI) data, as at the end of March 2014, Indian commercial and rural banks had 243 million basic savings bankdeposit accounts (BSBD) – 126 million through bank branches and the restthrough business correspondents. Add 243 million to 116 million (359million), the number credibly covers all households.
Even if you think some of the PMJDY accounts are fictitious or duplications and triplications, this is quite simply a game-changer. Despite the huge cost of rollout, the subsidy savings that this will enable will probably pay for the costs. Without a bank account, no subsidy reform is possible, for the key to monitoring the flow of money to the right pockets depends on authentication – which the PMJDY manages to do with amix of Aadhaar-enabled IDs and/or other forms of authentication.
The problems with the scheme are obvious and short-term in nature: of the116 million accounts, nearly 83 million have zero balance. In short, they are accounts with no possibility of a transaction till money flows to them.
Under NDA , it is beginning to happen through the direct cash transfers scheme for Government payments, including subsidies. According to statistics now available, LPG subsidy payments – estimated currently in the range of Rs 25,000-30,000 crore annually – are getting routed compulsorily through bank accounts. Some 50 percent of the 16 crore LPG consumers are already linked through bank accounts, and by 1 April 100 percent coverage is expected. Once LPG is done, the next obvious target will be kerosene, where current subsidies could be in a similar range of Rs 25,000-30,000 crore.
The other big scheme to use bank accounts will be the Mahatma Gandhi Rural Employment Guarantee Scheme (MGNREGA), which has an outlay of Rs 33,000 crore annually. (UNI)
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