The Centre’s contribution to pension for senior citizens is “extraordinarily stingy” and it should increase the funding immediately, a group of 60 economists and public policy experts told Finance Minister Arun Jaitley in a letter on Wednesday. Almost 2.4 crore pensioners could get Rs 300 more per month with an additional allocation of Rs 8,600 crore, they said.

In the letter, the economists also asked Jaitley to raise the Centre’s funding for pension for widows and maternity benefits. The letter pointed out that maternity benefits, as mandated by the National Food Security Act, 2013, had not yet been fully rolled out.

These are “urgent priorities” ahead of the Union Budget, which the government is likely to announce in February, the letter, which is signed by Abhijit Banerjee, Ajit Ranade, C Rammanohar Reddy, Himanshu, Jayati Ghosh, Jean Drèze, Mihir Shah and Rohini Pande among others, read. The Union Budget, traditionally presented in Parliament on the last working day of February, was advanced to February 1 from 2017.

Here is the full text of the letter:

Dear Mr Jaitley

We are writing to draw your attention to two urgent priorities for the forthcoming Budget.

  1. Social security pensions: The central government’s contribution to old-age pensions under the National Old Age Pension Scheme (NOAPS) scheme has remained at a measly Rs 200 per month since 2006. This is extraordinarily stingy. It is also a missed opportunity: NOAPS is a good scheme (with low leakages and administrative costs) that reaches some of the poorest members of society. The central government’s contribution should be immediately raised to Rs 500 (preferably more) at the very least. This requires an additional allocation of Rs 8,640 crore or so, based on the current NOAPS coverage (2.4 crore pensioners). Similarly, widow pensions should be raised from Rs 300 per month to Rs 500 at the very least. This would cost just another Rs 1,680 crore.
  2. Maternity entitlements: Maternity benefits of Rs 6,000 per child are a legal entitlement of all Indian women (except those already covered in the formal sector) under the National Food Security Act, 2013. For more than three years, the central government did virtually nothing about this. On December 31, 2016, Prime Minister Narendra Modi finally announced that maternity benefits would be provided very soon. One year later, however, (1) the new scheme framed for this purpose (Pradhan Mantri Matru Vandana Yojana) is yet to be operationalised, (2) the provision made for it in the Union Budget 2017-18 (Rs 2,700 crores) is barely one third of what is required based on NFSA norms; and (3) in flagrant violation of the Act, PMMVY restricts the benefits to Rs 5,000 for just one child per woman. The Union Budget 2018-19 should provide for full-fledged implementation of maternity entitlements as per NFSA norms. This requires at least Rs 8,000 crore, based on a 60:40 ratio for centre:state contributions. 

Along with this, it is very important to streamline payment systems so that pensions and maternity benefits reach the recipients on time every month, e.g. by the 7th day of the month as directed by the Supreme Court in its order of November 28, 2001.  

We hope that these recommendations are useful.