By
B. Sivaraman
In his Interim Budget presented on 1
February 2019, the stopgap Finance Minister Mr. Piyush Goyal announced a scheme
for a monthly pension of Rs. 3000 for
unorganised workers whose numbers he put at 42 crore. The workers in the
age-group of 18 to 55 years would get this pension upon attaining the age of 60
after paying a monthly premium depending upon the duration for which they pay.
For instance, a worker who starts paying at the age of 29 would pay Rs. 100 per
month for 31 years and a worker who starts paying at the age of 18 would pay
Rs. 55 and after 42 years he/she would get Rs. 3000 per month.
The government would make a matching
contribution. Workers who are left with lesser years of service before reaching
the age of 60 would pay correspondingly more premium but the minister did not
clarify the rates for those who are older, say between 30 to 55 years. No worker would get pension now and first
pension would flow to workers only in 2024 when the oldest category 55 years
reach 60.
Critics of the government limited
themselves to calling it a pre-poll sop or lollipop. Nikhil Dey of Pension
Parishad, a pioneering campaign for the pension rights, demanded that a pension
of Rs. 3000 should be given to all unorganised workers without collecting any
premium as their conditions are precarious. However, a closer scrutiny of
Piyush Goyal’s pension math reveals that the government is out to loot the
unorganised workers of their hard-earned money in the name of pension.
Let us now go into the details of the
pension math. Consider the case of an unorganised worker who starts paying a
premium of Rs. 100 at the age of 29. She/he would be paying this premium for 31
years. The government would also be
paying its share of Rs. 100 every month for this duration. Instead of going
into the pension fund, let us assume that this premium money is invested in
recurring deposit in banks. Several banks give interest on recurring deposit at
8% and Deutsche Bank gives a rate of 8.75%. Let us go by the most attractive
option for the worker.
If the worker invests Rs. 200 (Rs. 100
her own money and Rs. 100 matching amount given by the government) in recurring
deposit for 31 years, it would lead to a maturity fund of Rs. 3,84,572 when the
worker reaches the age of 60. If the worker invests this money either in
corporate deposit or fixed deposit in a bank how much interest she would get? A
corporate house like the RP Goenka Group or a private bank like Lakshmi Vilas
Bank offers 10.5% interest per annum on fixed deposit. At this rate, the worker
would get an interest of Rs. 40,380 per year on Rs. 3,84,572 and this would
work out to Rs. 3365 per month. But under the proposed government scheme the
worker would get only Rs. 3000 per month! The workers would lose R.365 per
month and this money robbed from the worker would go to government’s kitty.
The young workers who start paying
premium at the age of 18 would be robbed more. They have to pay Rs. 55 per
month for 42 years and the government would also pay matching amount. If we
work out a recurring deposit of Rs. 110 (Rs. 55 from workers plus a matching
amount from the government) for 42 years, the total corpus when the workers
reaches the age of 60 comes to Rs. 5,76,315. The annual fixed-deposit interest
on this at 10.5% would be Rs. 60,513 and per month this works out to Rs. 5042.
In other words, the poor unorganised worker would be paid only Rs. 3000 out of
this and be robbed of Rs. 2042 per month! Some social security this!
Assuming 10 crore workers are brought
under this scheme, the total money looted from the workers would run into Rs.
20,420 crore per month or Rs. 2,45,040 crore per year! Rs. 3000 per month per
workers after 42 years might be peanuts but this huge amount looted
collectively from 10 crore workers would not be insignificant.
Not only this. The worker would only
get a monthly pension for lifetime and at death the government would not pay
the corpus to the next of kin but grab it for itself. So the government would
loot Rs. 3.8 lakh to Rs. 5.76 lakh from every unorganised worker.
The government has also put a ceiling
and only those unorganised workers earning less than Rs. 15,000 would be
covered. Pinarayi Vijayan, the CM of Kerala, announced a labour policy of Rs.
600 minimum wage per day, or Rs. 18,000 per month, for unorganised workers in
Kerala on 14 July 2017. So crores of unorganised workers in Kerala would be
excluded from the “national” pension scheme!
Additionally, though Piyush Goyal
declared that the scheme is targeted at 42 crore unorganised workers including
agricultural labourers, in the same budget speech he said that the scheme would
cover only 10 crore workers but to pay government premium he had allocated only
Rs. 500 crore which means only 5 crore workers would be covered. Considering
the extent of loot as described above, this could well turn out to be a
blessing in disguise!
Unfortunately, no law in India
stipulates minimum pension similar to minimum wage. Rs. 3000 per month as
pension in 2050 would be a joke. For Rs. 3000, the worker can buy 100 kgs of
rice today at Rs. 30 per kg. Assuming 5% annual inflation after 30 years, the
price of 1 kg of rice would be Rs. 129.6, and the same worker would be able to
by only 23 kgs of rice in 2050. The purchasing power of Rs. 3000 after 30 years
would be around Rs. 750 assuming 5% annual inflation.
Any pension should enable workers to
spend their last years in happiness with old-age security after a lifetime of
toil. The society owes it to them. But this government only creates greater
insecurity by robbing their money and throwing only pittance at them. Rs. 3000
would work out to a paltry Rs. 17 today. After 30 years, with Rs. 17 one cannot
buy even a lollipop! So whether this would serve as a “pre-election lollipop”
to Modi is anybody’s guess! (IPA Service)
The post Interim Budget’s Pension Scheme Is A Big Hoax appeared first on Newspack by India Press Agency.
