In the interim Budget, the government has unveiled two programmes providing economic assistance to the needy sections of society. These include the income support scheme for small farmers and a new pension scheme for low-earning workers in the unorganised sector. Under the Pradhan Mantri Kisan Samman Nidhi (PM-KISAN), the government will be providing direct income support at the rate of Rs 6,000 per year to vulnerable landholding farmer families having cultivable land up to 2 hectares. PM-KISAN is expected to cover 120 million small and marginal farmers and cost Rs 75,000 crore annually. For the unorganised sector workers with a monthly income of up to Rs 15,000, the government has unveiled a mega pension scheme called Pradhan Mantri Shram-Yogi Maandhan. This pension policy will provide them an assured monthly pension of Rs 3,000 from the age of 60 on a monthly contribution ranging from Rs 55 to Rs 100 during their working age.
However, both these programmes are likely to face serious implementation hurdles. In the PM-KISAN payout, for instance, the key element is land ownership records. According to figures on the website of the Union Department of Land Resources, just 15 states and Union territories have completed over 95 per cent digitisation of land records. So over half the states are likely to struggle in implementing the scheme. Moreover, in most states, updating these land records continues to be a major problem. It is well known that poor land records, including benami property, are an endemic problem in most states. If, as expected, the government pushes through two instalments of PM-KISAN, of Rs 2,000 each, before the general elections in May this year, one cannot rule out considerable exclusion and inclusion errors. This will lead to predictable discontent. Also, linking farm income support to land ownership will lead to excluding landless labourers and tenant farmers, potentially creating further social tensions.
Similarly, there are practical problems in implementing the Pradhan Mantri Shram-Yogi Maandhan as well. For one, identifying the beneficiary is a complicated process. While the government has said it will depend on self-certification, verifying the correctness of claims will be a humongous task. To prevent misuse of the scheme, the government, which has to make a matching contribution to the pension fund, has to put in a mechanism to properly identify the beneficiaries. Moreover, what happens when a beneficiary who is earning less than Rs 15,000 per month now starts earning more than the threshold in the future? Another tricky aspect is that the monthly pension is pegged at Rs 3,000, which is double the minimum pension in the organised sector. As such, the scheme puts the workers in the formal sector at a disadvantage and creates a disincentive towards formalisation of the economy. Given the hurdles in identifying beneficiaries, it is unclear why the government could not channel this help via the Public Provident Fund scheme instead of launching a scheme. The redeeming feature, however, is that the government did not give in to the ultra-populist pressure from the Rahul Gandhi-led Congress party, which has announced a minimum income guarantee scheme for all Indians if it came to power after the Lok Sabha elections.
via Implementation worries | Business Standard Editorials