CivilsDially:: Govt. Schemes & Programs:: From Jan Dhan to Jan Suraksha: A Journey towards Financial Inclusion and Security

Quick catch up on 3 pro poor schemes launched by Modi Sarkar.

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The budget 2015-16 had announced 3 Social Security Schemes:
#1. Pradhan Mantri Suraksha BimaYojna (PMSBY)
#2. Pradhan MantriJeevan Jyoti Bima Yojana (PMJJBY)
#3. Atal Pension Yojana (APY)

Why the schemes?

• India faces the biggest challenge of providing banking facilities and insurance coverage to all
• Having access to institutional finance has so far remained a far cry to a vast chunk of rural population
• As of May 2015, only 20% of India’s population has any kind of insurance and only 11% has any kind of pension scheme
• Insurance is a way of managing risks & give necessary protections in case of financial loss
• When one has an insurance policy, certain rights and protections are derived out of it to the person and his family
• There is a dire need for providing social security at a very nominal cost to the millions and economic empowerment of the poor <what is social security? Why is it lacking in our country? Answer in comments.>
• PMJDY is a major step to bring people across the country closer to institutionalized finance, and save them from the clutches of informal financiers
• However, most of the PMJDY accounts had zero balance initially. The government aims to reduce the number of such zero balance accounts by using these schemes <what is the proportion of zero balance account now? Answer in comments.>

PMSBY & PMJJBY:

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• Implementation: The scheme will be offered by all Public Sector General Insurance Companies and all other insurers who are willing to join the scheme and tie-up with banks for this purpose
• Govt Contribution: Various Ministries can co-contribute premium for various categories of their beneficiaries from their budget or from Public Welfare Fund created in this budget from unclaimed money
• Auto-debit: The premium amount will be auto debited from subscriber’s bank account
• The schemes will be linked to the bank accounts opened under the Pradhan Mantri Jan Dhan Yojana scheme

Criticisms of PMSBY:

• Private banks have complained that the Govt should focus on upper middle class instead of the poorer section
• Western scholars have argued that financial inclusion is a myth and serving such large number of people would only increase the burden and work-load of public sector

Criticisms of PMJJBY:

• The banks have complained that revenue received will be very low
• Some bankers have claimed that amount they are receiving is not sufficient to cover the service costs
• Insurers have also pointed out that no health certificate or information of pre-existing disease is required for joining

Atal Pension Yojana

• It focuses on the unorganized sector where nearly 400 million employees representing more than 80% of all employees are engaged <what is unorganized sector? differentiate b/w informal and unorganized? Answer in comments.>
• The aim is to make sure that needy people could get fixed amount when they get old
• It is the improved version of Swavalamban scheme, launched in 2010-11, which has been found lacking in clarity with regard to pension benefits at the age after 60

Features:

• All citizen of India aged between 18-40 years are eligible
• A guaranteed minimum monthly pension will be provided to the subscribers varying from Rs. 1000 to Rs. 5000 per month
• The pension amount depends on contribution by subscriber
• Government of India will guarantee the minimum benefit of pension
• Most interesting part of the scheme is that the government will contribute 50% of the contribution made by the subscriber or Rs. 1000 whichever is lower
• However, contribution by the govt is available for only those who are not income tax payers and are not covered by any Statutory Social Security Schemes
• Bank account holder of Any Bank account is eligible

Suraksha Bandhan drive- Spreading the social security message

• Aim: To take forward the Govt’s objective of creating a universal social security system in the country, targeted especially at the poor and the under-privileged
• Participating Banks supported by the participating Insurance Companies are carrying out local outreach, awareness building and enrolment facilitation under the drive
• Public service organizations supported by peoples representatives are participating in these efforts through various outreach activities such as enrolment drives, camps etc. in large numbers during this period.