A good businessman is one who will make you part with your money for a product or service and then have you believe that he gave you something worth a lot more for next to nothing. Gujaratis have business in their veins and Narendra Modi is no exception. He is, in fact, an expert in the art of selling you a ping-pong ball and making most believe it to be a football.

On the weekend, he launched three new "social security" schemes. The schemes, which include accident insurance, life insurance and a pension plan, supposedly target people from the economically deprived and the unorganised sections, who are neither covered by any form of insurance nor get any. But there is a catch. Only people who have a bank account can avail of these schemes. Out of a population of 1.2 billion, we only have 150 million with bank accounts and, of these, a good third don’t have any credit balance.

Pointing out the necessity for such schemes, Prime Minister Modi, in his address, said:
"The journey to development will be incomplete if the poor do not share its fruits. Banks were nationalised for the poor but did we see the poor in the banks? In a nation of 1.2 billion people, 80%-90% 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 to die..."

Since 80%-90% do not have bank accounts, the prime minister’s new “social security” schemes do not apply to them either. So what is he talking about?

Element of Fraud

The accident insurance, styled as Pradhan Mantri Suraksha Bima Yojana, will offer a renewable accidental death-cum-disability cover of Rs two lakh for a premium of Rs 12 per annum. The life insurance scheme, called Pradhan Mantri Jeevan Jyoti Yojana, will offer a renewable one-year life cover of Rs 2 lakh for a premium of Rs 330 a year. The Atal Pension Yojana, is a pension scheme that is meant to focus on the unorganised sector and provide subscribers a fixed minimum pension of Rs 1,000 to Rs 5,000 per month starting at the age of 60 years, depending on the contribution option exercised on entering at an age between 18 and 40 years. The period of contribution by any subscriber under this scheme would be 20 years or more.

Very simply, this means that you will get back what you invest. One cannot say "more than what you invest" because, in all such schemes, you will get only a part of what your money would amount to after the interest on investments is factored in.

The previous government had the unhealthy habit of announcing government-funded schemes named after Jawaharlal Nehru, Indira Gandhi, Rajiv Gandhi and, sometimes, even after lesser members of the family like Motilal Nehru, Kamala Nehru and even Sanjay Gandhi. It made an exception for its flagship program MNREGA, which was named after Mahatma Gandhi.

One can therefore understand the prime minister naming a scheme after himself or any of his mentors, if the government provided the financial support for it.  But this is where the element of fraud comes in. These three schemes do not receive any government input nor is there any budgetary support provided. The finance minister's 2015 budget speech does not have a word on any of these.

From the sketchy details provided on these three schemes, it is clear that they are meant only for those with bank accounts, for those with money in their accounts and those willing to part with their money for any or all of them. The schemes, by themselves, are quite good, but neither are they new nor is there any budgetary input from the government. In short, the schemes are directly funded with the money invested by the participants. Then how can the government, and the Prime Minister, claim ownership of the schemes?

The last National Democratic Alliance government, during its last term in office, had introduced the Varishtha Pension Bima Yojana as a pension scheme for senior citizens. Under the scheme, 3.16 lakh people are benefitting annually and the corpus amounts to Rs 6,095 crore. The finance minister, in his budget speech, proposed to revive the scheme for a limited period from August 15, 2014, to August 14, 2015, for the benefit of citizens aged 60 and above, and an appropriate provision was made for this. But none of the three schemes launched with so much fanfare recently are funded by the government. Nowhere in his 253 paragraphs speech does the finance minister make any mention of these three "new" schemes.

Whose money is it?

Now, let us take each one of these three schemes one by one. The Pradhan Mantri Suraksha Bima Yojana entails an annual premium of Rs 12 to provide a cover of Rs two lakhs in case of accidental death, and fractions of it for various disabilities. Since as much as a third of the 15 crore bank accounts opened after the advent of the Jan Dhan Yojana have no balances in them, this scheme is clearly meant for the 10 crores with bank accounts. This still leaves 110 crore Indians outside its net. Now if the government were to provide the premiums to cover all Indians, it will entail an annual commitment of just Rs 1,440 crores. Not an outlandishly large sum for a nation with the world’s third largest gross domestic product (by purchasing power parity calculations). But the government doesn't even provide a single paisa for it but claims ownership. That to me is a fraud.

Similarly the other two schemes over which the Prime Minister claims ownership are just a case of old wine in new bottles. These kinds of schemes already exist. Given that the life expectancy in India is just 65.5 years, the policy taker will on an average benefit for only five and a half years what he pays for over a complete working age, which could be anywhere between 30 years-40 years.

Any actuarial life table, a table which shows the "probability of death" –  for each age, what the probability is that a person of that age will die before his or her next birthday – will give the insurer a pretty good idea of how many in an age group, who take out insurance on their lives, will survive. Usually the number of people who take out policies will by far exceed the number of policyholders who die, thereby giving the insurer a handsome profit. Insurance is not about charity. It’s a business to earn money. Now there is another catch here. The sum a person receives after the expiry of the policy term is considerably less than the sum the insured person would have paid after factoring in the interest earned on the monthly or yearly payments made.

Insurance benefits

There is a benefit to the government from a bigger insurance business. More than the taxes on profits earned, insurance funds, which by their very nature are long term funds, are very useful for government infrastructure projects. Thus, while the policyholder sleeps assured of his or her family’s security in the event of death, the government benefits hugely. The more the number who get insured, the greater the benefits for the state.

Quite clearly, Narendra Modi is habituated to claiming what is not his as his. As is his claim over Sardar Patel, a man who abhorred the RSS all his life and even had it banned. The government is giving nothing to us but wants us to believe that what we give ourselves is being given by it.