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GS Paper: Government Scheme/Policies

  • Rythu Bandhu Scheme suspended ahead of Elections

    Central Idea

    Rythu Bandhu Scheme: Key Facts

    • The Rythu Bandhu scheme is also known as Farmer’s Investment Support Scheme (FISS).
    • It is a welfare programme for farmers started in 2018 by the Telangana government.
    • Under the scheme, the state government provided the 58 lakh farmers in Telangana with ₹5,000 per acre of their land as a farm investment for two crops.
    • There is no ceiling on the number of acres held by a farmer.
    • So, a farmer who owns two acres of land would receive Rs 20,000 a year, whereas a farmer who owns 10 acres would receive Rs 1 lakh a year from the government.
    • This investment is made twice a year, once for kharif harvest and once for Rabi harvest.
    • It is the country’s first direct farmer investment support scheme where cash is paid directly to the beneficiary.

    Reasons for suspension

    • The election commission had allowed the disbursement of funds for the rabi harvest this season, provided they are not publicised, in accordance with the model code of conduct.
    • However, the model code was violated after the state finance minister made a public announcement of the same.

  • PM-PVTGS Development Mission launched

    pvtgs

    Central Idea

    • Prime Minister launched Pradhan Mantri PVTG Development Mission worth Rs 24,000 crore for the development of Particularly Vulnerable Tribal Groups (PVTGs) during.

    PM PVTGS Development Mission

    • Objective: This Rs 24,000-crore initiative is dedicated to the holistic development of PVTGs.
    • Focus Areas: It aims to provide essential amenities like road and telecom connectivity, electricity, housing, clean water, sanitation, improved education, healthcare, nutrition, and sustainable livelihoods.
    • Multi-Ministerial Approach: Multiple ministries will collaborate to implement development projects, including Pradhan Mantri Gram Sadak Yojana, Pradhan Mantri Gramin Awas Yojana, and Jal Jeevan Mission.

    Who are Particularly Vulnerable Tribal Groups (PVTGs)?

    • Unique Characteristics: PVTGs are a subset of tribal groups in India characterized by primitive traits, geographical isolation, low literacy, zero to negative population growth rate, and economic backwardness.
    • Dependency on Hunting: These tribes often rely on hunting for sustenance and employ pre-agricultural technology.
    • Historical Background: The distinction for Primitive Tribal Groups (PTGs) was introduced in 1973 by the Dhebar Commission.
    • Expansion: In 1975, the Centre identified 52 tribal groups as PTGs, and this list expanded by 23 groups in 1993.
    • Renaming as PVTGs: In 2006, these groups were renamed as Particularly Vulnerable Tribal Groups (PVTGs).

    Current status of PVTGs

    • Population and Distribution: India is home to 2.8 million PVTG members, belonging to 75 tribes, residing in 22,544 villages across 220 districts in 18 states and Union Territories.
    • Statewise Population: States with significant PVTG populations include Odisha (866,000), Madhya Pradesh (609,000), and Andhra Pradesh (including Telangana) (539,000).
    • Largest PVTG: The largest PVTG is the Saura community in Odisha, numbering 535,000.

    Try this PYQ:

    Q.Consider the following statements about Particularly Vulnerable Tribal Groups (PVTGs) in India:

    1. PVTGs reside in 18 States and one Union Territory.
    2. A stagnant or declining population is one of the criteria for determining PVTG status.
    3. There are 95 PVTGs officially notified in the country so far.
    4. Irular and Konda Reddi tribes are included in the list of PVTGs.

    Which of the statements given above are correct? (CSP 2019)

    (a) 1, 2 and 3

    (b) 2, 3 and 4

    (c) 1, 2 and 4

    (d) 1, 3 and 4

     

    [wpdiscuz-feedback id=”m9e0nli45f” question=”Please leave a feedback on this” opened=”1″]Post your answers here.[/wpdiscuz-feedback]

  • Kerala’s Pension Dilemma: A Review of the Contributory Pension Scheme

    Central Idea

    • A report on Kerala’s contributory pension scheme (introduced in 2013) has been released after a recent Supreme Court verdict.
    • This scheme, introduced in 2013, has sparked a debate due to its financial impact on the state.
    • Let’s take a closer look at the National Pension System (NPS), Kerala’s pension scenario, and the findings of the review committee report.

    NPS: A Quick Recap

    • What is NPS? The National Pension System (NPS) is a contributory pension scheme initiated by the Indian government in 2004, extending to various states, including Kerala.
    • How It Works: Under NPS, a fund is built from contributions made by employees and employers during their employment. Unlike the previous pension scheme funded by the government, NPS involves purchasing an annuity scheme at retirement, providing the pensioner with an annuity.

    Kerala’s Pension Scenario

    • Pension Challenges: Kerala faces rising pension liabilities, mainly due to a high life expectancy post-retirement and an increasing number of employees enrolled in NPS.
    • Budget Impact: The state allocates a significant portion of its budget to committed expenditure, including salaries, pensions, and interest payments. Pension accounts for 21% of this expenditure.
    • Contributions: Employees who joined after April 2013 contribute 10% of their salary (including dearness allowance) to the NPS corpus.

    The Review Committee Report

    • No Revocation Recommended: The review committee did not recommend scrapping the NPS, stating it was legally sound.
    • Alternative Recommendations: It suggested raising the state government’s contribution from 10% to 14% and including dearness allowance at 14%. The report also proposed allowing death-cum-retirement gratuity for NPS subscribers.

    Why the Report Supports NPS?

    • Long-Term Perspective: The committee viewed pension matters from a long-term perspective, stating that continuing NPS would eventually reduce pension outgo as a share of the state’s GDP.
    • Reducing Revenue Deficit: As pension outgo decreases, the share of revenue deficit also falls, freeing up resources for capital spending and social services.

    Arguments against NPS in Kerala

    • Low Annuities: Retirees under NPS have reported receiving meager annuities compared to the old pension scheme.
    • Market Risks: Concerns exist about the impact of stock market crashes on NPS investments, as contributions are invested in various assets.
    • Demand for Reintroduction: Some states have reintroduced statutory pension schemes due to employee demand.

    Conclusion

    • The review report favors retaining NPS in Kerala, emphasizing its long-term financial benefits.
    • However, concerns about low annuities and market risks persist, prompting some states to consider returning to the old pension scheme.
    • The debate over Kerala’s contributory pension scheme continues amid financial and welfare considerations.

  • Best case scenario for BJP in state polls — it will only win Rajasthan

    Central idea

    The article scrutinizes various Union government welfare schemes, citing issues in health insurance, education, water mission, nutrition, financial inclusion, and minority scholarships. It urges corrective measures to rectify identified challenges, emphasizing the reassessment of budget allocations for improved transparency and program efficacy.

    Key Highlights:

    • Critique of BJP’s welfare schemes, questioning their effectiveness and highlighting discrepancies.
    • Examination of schemes like Ayushman Bharat, Beti Bachao Beti Padhao, Jal Jeevan Mission, PM POSHAN, Jan Dhan Yojana, and Minority Scholarships.
    • Mention of the Comptroller and Auditor General (CAG) report exposing issues in Ayushman Bharat, including fraudulent practices.
    • Emphasis on the allocation and utilization of funds in schemes like Beti Bachao Beti Padhao and PM POSHAN.
    • Challenges in the implementation of Jal Jeevan Mission, particularly the slow progress in providing functional tap connections.
    • Criticism of the decrease in allocation for PM POSHAN despite the persisting issue of child malnutrition.
    • Statistics revealing issues in Jan Dhan Yojana, including a high percentage of zero-balance accounts and decreased claim settlements.

    Key Phrases for mains marks enhancement:

    • “Hype than substance” in describing BJP’s welfare schemes.
    • “Glaring discrepancies” in the Ayushman Bharat scheme, as highlighted by CAG.
    • “Measly budget allocation” for Beti Bachao Beti Padhao and structural barriers to girls’ education.
    • “Certified” villages under Jal Jeevan Mission and the slow progress in providing tap connections.
    • “Decrease in allocation” for PM POSHAN despite the prevalence of child malnutrition.
    • “Zero balance accounts” and “dormant or inoperative” Jan Dhan accounts.
    • “Discontinuation” and “reduction of funding” for Minority Scholarships, impacting educational opportunities.

    Analysis:

    The article critically examines several welfare schemes launched by the BJP government, questioning their impact and effectiveness. It highlights discrepancies in implementation, allocation, and utilization of funds in schemes related to healthcare, education, water supply, nutrition, and financial inclusion. The analysis draws attention to issues such as fraudulent practices, slow progress in achieving objectives, and reductions in budget allocations despite persistent challenges.

    Key Data:

    • 5 lakh beneficiaries linked with a single cell phone number in Ayushman Bharat.
    • 80% of Beti Bachao Beti Padhao funds spent on media campaigns.
    • Only 35% of villages under Jal Jeevan Mission certified for providing drinking water.
    • Rs 11,600 crore allocation for PM POSHAN in 2023, a 9% decrease from the previous year.
    • Over 8% of Jan Dhan accounts as zero balance, and 18% either dormant or inoperative.
    • Discontinuation of the Maulana Azad Fellowship scheme and reduction of funds for Minority Scholarships.

    Ayushman Bharat:

    • Challenges: Glaring discrepancies highlighted by the CAG, including fraudulent practices and data manipulation.
    • Analysis: The scheme faces credibility issues due to these discrepancies, raising questions about its transparency and effectiveness.
    • Way Forward: Implement corrective measures based on the CAG report findings to ensure transparency and accountability.

    Beti Bachao Beti Padhao:

    • Challenges: Heavy spending on media campaigns (80%), structural barriers hindering girls’ education.
    • Analysis: Allocation concerns and structural barriers indicate shortcomings in achieving the scheme’s objectives.
    • Way Forward: Reevaluate budget allocations, focusing on direct implementation and addressing barriers to girls’ education.

    Jal Jeevan Mission:

    • Challenges: Slow progress in providing functional tap connections, only 35% of villages certified.
    • Analysis: Concerns about achieving objectives by the 2024 deadline due to slow progress and incomplete certifications.
    • Way Forward: Intensify efforts to expedite tap connections and ensure the certification of remaining villages.

    PM POSHAN:

    • Challenges: Decreased budget allocation (9% reduction), persisting child malnutrition issues.
    • Analysis: Despite the prevalence of child malnutrition, reduced funding raises concerns about the scheme’s impact.
    • Way Forward: Reconsider budget decisions to align with the magnitude of challenges and enhance the effectiveness of nutritional interventions.

    Jan Dhan Yojana:

    • Challenges: High percentage of zero-balance accounts (8%) and decreased claim settlements.
    • Analysis: Issues with inactive accounts and declining claim settlements indicate challenges in the scheme’s implementation.
    • Way Forward: Enhance outreach and awareness programs to ensure the effective utilization of financial inclusion schemes.

    Minority Scholarships:

    • Challenges: Discontinuation of Maulana Azad Fellowship, reduction of funds for educational opportunities.
    • Analysis: Discontinuation and reduced funding impact educational opportunities for minorities.
    • Way Forward: Reconsider decisions to discontinue or reduce funding, supporting educational opportunities for minorities.

  • Bharat Atta: Subsidized Wheat Flour Scheme

    Bharat Atta

    Central Idea

    • In a bid to maintain stability in food prices during the festive season, the Indian government has unveiled a subsidized packaged wheat flour initiative accessible to all consumers.
    • Termed “Bharat Atta,” the scheme aims to release a quarter of a million tonnes of state-owned wheat to various cooperative outlets and federations.

    Bharat Atta

    • Distribution Channels: The government has chosen Kendriya Bhandar, a network of cooperative general stores, along with the National Agricultural Cooperative Marketing Federation and National Cooperative Consumers’ Federation, as the primary channels for distributing Bharat Atta.
    • Reduced Price: Bharat Atta is offered at a reduced price of ₹27.50 per kilogram, which is lower than the earlier rate of ₹29.50 at Kendriya Bhandar.
    • Expansion: To ensure accessibility, the subsidized flour will be available at Kendriya Bhandar, NAFED, NCCF, government cooperative outlets, and food vans operated by NAFED and NCCF.
    • Government Support: The government is facilitating this scheme by milling the wheat through firms selected through a tender process, thereby minimizing the milling cost, which is approximately ₹1.80 per kilogram for large wheat millers.

    Why such move?

    • Free Cereals: PM recently announced that cereals would be provided free of cost to 800 million beneficiaries entitled to subsidized food for the next five years.
    • Price Controls: The government has implemented various measures such as banning wheat and rice exports, setting a floor price for onion exports, and reducing import duties on pulses to combat rising food prices.
    • Election Context: These anti-inflation measures come as India faces key assembly elections in five states and a general election in the near future.

    Challenges in implementation

    • Cereal Inflation: Despite a significant wheat harvest, India continues to grapple with high cereal inflation, which has persisted for over a year, reaching double digits.
    • Record Foodgrain Production: The fourth and final round of estimates for the 2022-23 crop output indicates a record high in foodgrain production. However, wheat production slightly decreased from initial estimates.
    • Positive Outlook: Despite minor fluctuations, wheat production remains higher than the previous year, reflecting a positive outlook for addressing food price concerns.

    Conclusion

    • The government’s subsidized wheat flour initiative, Bharat Atta, exemplifies its dedication to ensuring that the joy of the festive season is not marred by soaring food prices.

  • PM Garib Kalyan Anna Yojana (PMGKAY) extended for 5 Years

    Central Idea

    What is PMGKAY?

    • PMGKAY is a food security welfare scheme announced by the GoI in March 2020, during the COVID-19 pandemic in India.
    • The program is operated by the Department of Food and Public Distribution under the Ministry of Consumer Affairs, Food and Public Distribution.
    • The scale of this welfare scheme makes it the largest food security program in the world.

    Targets of the scheme

    • To feed the poorest citizens of India by providing grain through the Public Distribution System to all the priority households (ration card holders and those identified by the Antyodaya Anna Yojana scheme).
    • PMGKAY provides 5 kg of rice or wheat (according to regional dietary preferences) per person/month and 1 kg of dal to each family holding a ration card.

    At what rate are food grains provided under the NFSA?

    • NFSA beneficiaries are entitled to receive food grains at highly subsidised rates.
    • Under the food law, rice is provided at Rs 3 per kg, wheat at Rs 2 per kg, and coarse grains at Re 1 per kg.

    Success

    • Pandemic mitigation: It was the first step by the government when pandemic affected India.
    • Wide section of beneficiaries: The scheme reached its targeted population feeding almost 80Cr people.
    • Support to migrants: It has proven to be more of a safety net to migrant people who had job and livelihood losses.
    • Food and Nutrition Security: This has also ensured nutrition security to children of the migrant workers.

    Limitations of the scheme

    • Corruption: The scheme has been affected by widespread corruption, leakages and failure to distribute grain to the intended recipients.
    • Leakages: Out of the 79.25 crore beneficiaries under the National Food Security Act (NFSA), only 55 crore have so far received their 5 kg.
    • Inaccessibility: Many people were denied their share due to inability to access ration cards.
    • Low consumption: Livelihood losses led to decline in aggregate demand and resulted into lowest ever consumption expenditure by the people owing to scarcity of cash.
    • Resale of subsidized grains: This in turn led to selling of the free grains obtained in the local markets for cash.

    Back2Basics: National Food Security (NFS) Act

    • The NFS Act, of 2013 aims to provide subsidized food grains to approximately two-thirds of India’s 1.2 billion people.
    • It was signed into law on 12 September 2013, retroactive to 5 July 2013.
    • It converts into legal entitlements for existing food security programmes of the GoI.
    • It includes the Midday Meal Scheme, Integrated Child Development Services (ICDS) scheme and the Public Distribution System (PDS).
    • Further, the NFSA 2013 recognizes maternity entitlements.
    • The Midday Meal Scheme and the ICDS are universal in nature whereas the PDS will reach about two-thirds of the population (75% in rural areas and 50% in urban areas).
    • Pregnant women, lactating mothers, and certain categories of children are eligible for daily free cereals.

    Key provisions of NFSA

    • The NFSA provides a legal right to persons belonging to “eligible households” to receive food-grains at a subsidised price.
    • It includes rice at Rs 3/kg, wheat at Rs 2/kg and coarse grain at Rs 1/kg — under the Targeted Public Distribution System (TPDS).
    • These are called central issue prices (CIPs).

  • Gyan Sahayak Scheme for Contractual Teachers

    Gyan Sahayak Scheme

    Central Idea

    • The Gyan Sahayak Scheme, introduced by the Gujarat state government, has stirred controversy, facing opposition from various quarters of society.

    Why discuss this?

    • The scheme seeks to address teacher vacancies in government schools through contractual appointments until regular appointments are finalized.
    • Many states in India have opted for the contractual filling of govt job vacancies ever since the regime change in 2014.

    Understanding the Gyan Sahayak Scheme

    • Interim Solution: The scheme aims to temporarily fill teaching positions in primary, secondary, and higher secondary government schools until regular appointments could be made.
    • Basis in National Education Policy (NEP) 2020: The scheme draws inspiration from the NEP 2020, which emphasizes the need for teachers with interdisciplinary skills, beyond traditional academic subjects.

    Scope of the Scheme

    • Applicability: The Gyan Sahayak Scheme is applicable to government and grant-in-aid schools, particularly Mission Schools of Excellence.
    • Vacancy Statistics: The government announced the hiring of 15,000 Gyan Sahayaks for primary schools and 11,500 for secondary and higher secondary schools.
    • Salary Structure: Gyan Sahaks receive varying monthly salaries based on their school level: Rs 21,000 for primary, Rs 24,000 for secondary, and Rs 26,000 for higher secondary.
    • Vacancy Context: Gujarat reports an estimated 32,000 teaching vacancies in government and grant-in-aid schools, primarily affecting primary and secondary schools. Some secondary schools rely on Pravasi teachers to meet staffing needs.

    Eligibility Criteria

    • Primary Gyan Sahayak: Candidates must have cleared the Gujarat Examination Board’s Teachers Eligibility Test (TET)-2.
    • Secondary and Higher Secondary Gyan Sahayak: Candidates should have cleared the Teacher Aptitude Test (TAT).
    • Age Limit: Both primary and secondary school Gyan Sahayaks must be under 40 years of age, while higher secondary school Gyan Sahayaks can be up to 42 years old.
    • Merit-Based Selection: Selection involves the preparation of a merit list based on percentile ranks from TET-2 results, followed by the allocation of Gyan Sahayak positions to School Management Committees (SMCs) through district education officers.

  • Aligning higher education with the United Nations SDGs

    What’s the news?

    • Though it has been eight years since the inception of these goals, the SDGs Report 2023 flagged slow progress and painted a grim picture.

    Central idea

    • The SDGs Report 2023 highlights sluggish progress exacerbated by the lingering effects of COVID-19, climate change impacts, geopolitical conflicts, and a fragile global economy. This universal struggle is particularly pronounced in the least developed countries, including India. Despite India’s resilience in facing global crises, achieving the SDGs remains a challenge.

    About SDGs

    • The United Nations Sustainable Development Goals (SDGs) represent a global commitment to address pressing socio-economic and environmental challenges.
    • These 17 goals with 169 targets, unanimously agreed upon by all 193 UN member states, aim to eradicate poverty, enhance education, reduce inequality, and stimulate economic growth by 2030.

    NEP 2020 and Its Alignment with SDGs

    • India’s commitment to realizing the SDGs is evident through recent actions and policies.
    • The National Education Policy (NEP) 2020 in India closely aligns with the United Nations Sustainable Development Goals (SDGs), particularly SDG4, which focuses on quality education.

    Here’s how NEP 2020 aligns with the SDGs:

    • Quality Education and Lifelong Learning (SDG4): NEP 2020 emphasizes quality education for all in India, addressing disparities and promoting inclusivity, in alignment with SDG4. It also recognizes the importance of lifelong learning, supporting SDG4’s objective of inclusive and equitable quality education throughout one’s life.
    • Gender Equality (SDG5): The policy promotes gender equality in education, ensuring equal opportunities for girls and women. It aims to eliminate gender-based discrimination and stereotypes in education, aligning with SDG5’s objective.
    • Employability and Skills Development (SDG8): NEP 2020 focuses on equipping students with practical skills and knowledge, making them more employable. This aligns with SDG8’s goal of promoting sustained, inclusive, and sustainable economic growth, full and productive employment, and decent work for all.
    • Environmental Sustainability (SDG 13): The policy acknowledges the significance of environmental education and sustainability. It encourages eco-friendly practices and awareness of environmental issues among students, aligning with SDG 13’s objective of combating climate change.
    • Research and Innovation (SDG9): NEP 2020 underscores the importance of research and innovation in higher education. It seeks to foster a culture of innovation and entrepreneurship, aligning with SDG 9’s goal of promoting inclusive and sustainable industrialization and fostering innovation.
    • Global Partnerships for Development (SDG17): The policy promotes international collaboration in higher education and research. It aims to establish partnerships with global institutions, foster knowledge exchange, and align with SDG17’s objective of strengthening global partnerships for sustainable development.

    Enhancing the Role of Universities

    • Research-Teaching Nexus: Universities should strengthen the connection between research and teaching in higher education. By bridging the gap between research and teaching, universities can provide students with real-world insights and solutions to global challenges.
    • Multidisciplinary and Interdisciplinary Education: Universities should promote multidisciplinary and interdisciplinary approaches to education. Such systems produce well-rounded individuals capable of conducting research and finding innovative solutions to complex issues.
    • Innovative Solutions and Start-ups: Collaboration with private companies and the development of innovative solutions and start-ups should be encouraged. Universities can serve as hubs for innovation and entrepreneurship, contributing to SDG 9 (Industry, Innovation, and Infrastructure).
    • Value-Based Education (VBE): Introducing value-based education can help instill a sense of responsibility in citizens towards themselves, society, and the planet. This values-based approach can align with SDG 15 (Life on Land) by fostering a deeper connection between individuals and the environment.

    Suggestions for the Universities

    • Mapping Operations with SDGs: NEP 2020 should guide Indian higher education institutions to align their daily operations with the SDGs.
    • Ranking according to SDGs: While ranking universities based on SDG achievement is commendable, it should be bolstered with comprehensive measures to meet the SDG deadline.
    • Stakeholder Education and Orientation: All stakeholders in higher education should be educated and oriented to ensure no activities neglect the SDGs. Collaboration among the 56,205 higher educational institutions and universities in India is essential.
    • Community Engagement: Universities should actively engage with their local communities, focusing on community health, energy conservation, efficient resource allocation, waste reduction, and skill development. Sharing resources and infrastructure with other universities and external partners should become the norm.
    • Institutional Strategies: Sustainability and SDGs should be integrated into the core institutional strategies of universities, influencing daily administration, teaching, and research.
    • Socio-economic Integration: Higher education must be closely integrated with socio-economic development to ensure meaningful and multiple impacts on the SDGs. Universities should contribute directly to the well-being and nation-building of every citizen.

    Conclusion

    • India’s commitment to the SDGs, particularly in higher education through NEP 2020, is a positive step towards achieving the 2030 agenda. To accelerate progress, universities must embrace sustainability as a guiding principle and incorporate the SDGs into their daily operations. By doing so, they can play a pivotal role in addressing pressing global challenges and ensuring a better future for all.

  • Centre hikes LPG Subsidy for Ujjwala Beneficiaries to ₹300 per Cylinder

    Central Idea

    • The Union Cabinet has approved an increase in the subsidy provided on LPG cylinders under the Ujjwala scheme, raising it from ₹200 to ₹300.
    • The subsidy increase applies to up to 12 refills per year for beneficiaries.

    Why such move?

    • The decision to enhance the subsidy comes ahead of crucial Assembly elections in five states: Madhya Pradesh, Rajasthan, Telangana, Chattisgarh, and Mizoram.

    Pradhan Mantri Ujjwala Yojana (PMUY)

    • PMUY, introduced by the Ministry of Petroleum and Natural Gas, aims to provide clean cooking fuel, such as LPG, to rural and disadvantaged households, reducing their reliance on traditional fuels like firewood, coal, and cow dung cakes.
    • Phases of PMUY:
    1. Phase I: Launched on May 1, 2016, with a target to release 8 Crore LPG connections by March 2020, achieving a significant increase in LPG coverage.
    2. Ujjwala 2.0: This phase aimed to release an additional 1 crore LPG connections, a target achieved in January 2022, subsequently expanded to release an additional 60 lakh LPG connections under Ujjwala 2.0.

    Key Features

    • Provides ₹1600 financial support for each LPG connection to Below Poverty Line (BPL) households.
    • Offers deposit-free LPG connections, including the first refill and a free hotplate for beneficiaries.
    • Benefits for beneficiaries include:
    1. Eligible beneficiaries receive a free LPG connection.
    2. Subsidy on the first six refills of 14.2 kg cylinders or eight refills of 5 kg cylinders.
    3. Option to use EMI facility for stove and first refill costs.
    4. Opportunity to join the PAHAL scheme for direct subsidy transfers to bank accounts.

  • Andhra Pradesh’s Guaranteed Pension System

    pension

    Central Idea

    • Andhra Pradesh’s Guaranteed Pension System (GPS) blends elements from both old and new pension schemes, offering the advantages of a guaranteed pension while not overly straining the state’s finances.
    • This innovative system holds the potential to preserve India’s hard-won pension reforms.

    What is the Andhra Pension System?

    • A Hybrid Approach: The Andhra Pradesh Guaranteed Pension System Bill, 2023, recently approved by the state assembly, introduces a unique blend of the Old Pension Scheme (OPS) and the New Pension Scheme (NPS) implemented in 2004.
    • Contributory Guarantee: This system ensures government employees a monthly pension equivalent to 50% of their last-drawn salary, including dearness allowance relief.
    • Reason for Introduction: Andhra Pradesh introduced GPS as a response to resistance against NPS, which was viewed by many as inferior to the earlier scheme. The return to OPS was considered fiscally unsustainable, with the potential to drive the state’s fiscal deficit to 8% by 2050.

    Breakthrough created

    • Long-standing Pension Reforms: India struggled for over a decade to implement pension reforms that led to the introduction of NPS in 2004.
    • Growing Discontent: Over time, public sentiment favored those receiving pensions under the old scheme, leading to discontent.
    • Political Promises: Political parties capitalized on this discontent, pledging to return to the old scheme if elected.
    • Andhra’s Middle Path: Andhra Pradesh’s GPS offers a middle ground, preventing a regressive return to the old scheme while addressing concerns about NPS.

    How does the Andhra System work?

    • Enhancing Attractiveness: The contributory system guarantees a pension equivalent to 50% of the last drawn salary.
    • Balancing Financial Burden: Any shortfall in NPS returns is covered by the government.
    • Current NPS Pensions: Presently, NPS pensions amount to around 40% of an employee’s last drawn salary. Therefore, the government only has to fund the remaining balance.

    Alternative to NPS

    • Contributory Nature: NPS is a contributory scheme, with both employees and employers contributing to a corpus invested for returns.
    • Uncertainty: In NPS, the pension amount is not guaranteed, as it depends on corpus returns influenced by market conditions.
    • Ignoring Inflation: NPS does not consider inflation or pay commission recommendations.
    • Market Dependency: Opposition to NPS is fueled by fears of further reductions in pension due to adverse market conditions.

    Why not revert to the Old Pension Scheme?

    • Budgetary Constraints: Under OPS, pensions were financed through the budget.
    • Unsustainable Growth: Pension liabilities for all states saw a compound annual growth rate of 34% for a 12-year period ending in 2021-22.
    • Budgetary Impact: In 2020-21, pension outgo accounted for 29.7% of states’ revenues.
    • Development Challenges: A return to OPS would strain government funds, hindering development efforts and operational financing.
    • Competitiveness Concerns: Such a shift could negatively impact India’s ease of doing business and overall competitiveness.