Poor Response to Pradhan Mantri Shram Yogi Maandhan Yojana

The Pradhan Mantri Shram Yogi Maandhan Yojana (PM-SMY) is a contributory pension scheme aimed at providing financial security to unorganised workers in India. Recent reports indicate a disappointing uptake of the scheme. A Parliamentary Committee has brought into light the challenges faced by these workers, which have hampered their ability to contribute to the pension fund.

Overview of the Scheme

The PM-SMY targets unorganised workers aged 18 to 40. Participants contribute a monthly amount based on their age at entry. The central government matches these contributions. Upon reaching 60 years, beneficiaries receive a monthly pension of Rs 3,000. If a participant dies before 60, their spouse may join or exit the scheme.

Current Performance Metrics

As of FY 2023-24, only 5 million workers have enrolled against a target of 100 million. Budget allocations for the scheme have decreased, reflecting a lack of engagement from potential beneficiaries. Actual expenditure has also fallen short of expectations.

Challenges Faced by Workers

The unorganised sector suffers from inconsistent employment opportunities, exacerbated by the Covid pandemic. Many workers earn too little to afford the monthly premiums, which range from Rs 55 to Rs 200. The absence of formal employer-employee relationships further complicates their ability to contribute.

Recommendations for Improvement

Experts suggest enhancing awareness and mobilising potential beneficiaries. The e-Shram portal can serve as a vital tool for registration and outreach. It currently holds records of approximately 305 million unorganised workers. Expanding the entry age to 50 and merging PM-SMY with other pension schemes could also attract more participants.

Government Initiatives

The government has extended the PM-SMY until 2025-26 to reassess and improve the scheme’s attractiveness. Suggestions include creating a direct benefit transfer plan for those unable to afford premiums. This would differentiate between social assistance and social security, enabling better fund allocation.

Future Prospects

The ongoing revisions aim to make the PM-SMY more appealing to unorganised workers. The focus is on ensuring accessibility and affordability, which are critical for increasing enrolment and providing financial stability to this vulnerable workforce.

Questions for UPSC:

1. Examine the impact of the Pradhan Mantri Shram Yogi Maandhan Yojana on the lives of unorganised workers in India.
2. Discuss the challenges faced by unorganised workers in contributing to pension schemes. What solutions can be proposed?
3. Critically discuss the role of the e-Shram portal in enhancing the socio-economic conditions of unorganised workers.
4. Analyse the implications of merging various pension schemes for unorganised workers in India.

Answer Hints:

1. Examine the impact of the Pradhan Mantri Shram Yogi Maandhan Yojana on the lives of unorganised workers in India.

1. PM-SMY aims to provide financial security to unorganised workers aged 18-40 through a contributory pension scheme.
2. Participants contribute monthly, and the government matches these contributions, leading to a pension of Rs 3,000 after 60.
3. Only 5 million workers enrolled against a target of 100 million, indicating low uptake and awareness.
4. The scheme’s limited impact is compounded by inconsistent employment and low income among the target demographic.
5. Overall, the scheme has not improved the financial stability of unorganised workers due to these barriers.

2. Discuss the challenges faced by unorganised workers in contributing to pension schemes. What solutions can be proposed?

1. Lack of regular employment opportunities makes it difficult for workers to afford monthly contributions ranging from Rs 55 to Rs 200.
2. Adverse effects of the Covid pandemic have worsened financial conditions, leading to reduced earnings for many workers.
3. Absence of formal employer-employee relationships complicates the ability to contribute consistently to pension schemes.
4. Proposed solutions include raising awareness, simplifying the enrollment process, and using the e-Shram portal for better outreach.
5. Direct benefit transfer plans could alleviate financial burdens by covering premiums for low-income workers.

3. Critically discuss the role of the e-Shram portal in enhancing the socio-economic conditions of unorganised workers.

1. The e-Shram portal aims to create a comprehensive database of unorganised workers, facilitating access to government schemes.
2. It has registered approximately 305 million workers, providing a platform for better outreach and enrollment in pension schemes.
3. Ensures that workers without proper documentation can still access social security benefits.
4. Experts recommend that all social security services for unorganised workers be channeled through the e-Shram portal.
5. By improving registration and awareness, the portal can enhance the socio-economic conditions of unorganised workers.

4. Analyse the implications of merging various pension schemes for unorganised workers in India.

1. Merging PM-SMY with other schemes like Atal Pension Yojana could streamline benefits and reduce administrative complexities.
2. It may attract more participants by offering a unified approach to old age security and social protection.
3. Consolidation could enhance financial sustainability and improve the overall effectiveness of pension schemes.
4. However, careful consideration is needed to ensure that the unique needs of unorganised workers are met in a merged scheme.
5. The government would need to address funding reallocations to maintain the viability of merged programs.