["This is where the element of fraud comes in. These three ["social security"] schemes do not receive any government input nor is there any budgetary support provided. The Union finance minister's 2015 Budget speech did not have a word on these." (Excerpted from, and highlighted in, sl. no. II below.)
"Though the exact benefits for workers are still unclear, the schemes could buoy the banks participating in the Pradhan Mantri Jan Dhan Yojana. People opening accounts under this financial inclusion scheme do not necessarily have to put any money into them. But if they avail of these new schemes, they will be required to have certain minimum balances. For banks, this may make maintaining Jan Dhan bank accounts financially more feasible, said Srivastava." (Excerpted from, and highlighted in, sl. no. III below.) So these "social security" schemes are meant more to help the banks participating in the Jan Dhan Yojana, mostly with nil balance and thereby unviable, than poor Indians.] I/III. http://www.ndtv.com/india-news/truth-vs-hype-jan-dhans-half-empty-promise-763720?pfrom=home-lateststories On the Jan Dhan Yojana website, nearly 70 per cent of accounts opened under the scheme are shown as dormant MEWAT/ALWAR: In Nizampur village in Haryana's Mewat district, they show us their new Jan Dhan passbooks. The NDA government's marquee financial inclusion scheme was launched here last September; many signed up, lured by the promise that they would receive government benefits - pension, insurance, gas subsidies - directly into their bank accounts. Some of them were also drawn by potent rumours. "We were told each of us would get Rs. 5,000 in our accounts from black money seized from abroad," said one man. We had heard the same rumour in Alwar in Rajasthan, where residents of Rawana village told us they had signed up for bank accounts because of the promise of "kala dhan" (black money ) that the BJP had promised it would repatriate to India. RELATED Union Home Minister Rajnath Singh Launches Social Security Schemes in Lucknow PM Narendra Modi Launches 3 Social Security Schemes Home Minister Rajnath Singh Bats for Social, Financial Security of Society The local bank that serves Nizampur, the Bank of India, says they met their target of opening 600 accounts. Since its launch in August last year, the Jan Dhan Yojana claims to have opened 15 crore no-frills bank accounts across India, beating the previous UPA government's record of opening 10 crore accounts to make payments under its flagship job scheme, NREGA. Six months later, the accounts in Nizampur are empty; not a single rupee of government benefits has come. On the Jan Dhan Yojana website, nearly 70 per cent of accounts opened under the scheme are shown as dormant. In New Delhi, officials in the Department of Financial Services, which oversees the Jan Dhan Yojana argue that this is an improvement - a reduction from an earlier figure of 80 per cent dormant accounts. But even if the money starts trickling in, it's unclear whether India's banking systems are equipped to ensure it will reach the poor. At Nizampur, the local bank is a six-kilometre trek away. A bank official admitted they did not have the manpower to handle the potential deluge of new customers. "There are just three of us to service 600 Jan Dhan accounts and another 2,400 savings accounts," said HK Soni, General Manager of Bank of India. Data from the Reserve Bank of India shows that the spread of rural banks has fallen by seven per cent between 2006 in 2013. Diwakar Gupta, former Managing Director of the State Bank of India told us that no-frills banking "will never be profitable for banks. SBI has opened 3.6 crore accounts and the balance in them is Rs. 1,400 crore. So, it's an average of Rs. 400 per account. The bank on Rs. 400 a year will make Rs. 12. The cost of just putting it (the account ) on the core banking system, answering few questions, depositing, withdrawing, paying, reconciling all are significantly higher." MG Vaidyan, Deputy Managing Director of State Bank of India, sounded confident. But when we asked him what additional hiring SBI had done to cope with its new accounts, he deflected the question, pointing to the bank's existing capacity. "We have got something like more than three lakh outlets in the form of branches, then our ATMs and also we have got these portable ATM machines all across the country, so it is not necessary today that all our customers have to come to the branches", he said. But the use by banks of business correspondents or BCs - young men and women armed with a backpack of cash, and portable biometric readers - to cover areas outside the reach of formal banking has had mixed results. As we had reported last year, Haryana experimented with this model to make welfare payments, but was forced to abandon it. Ashok Khemka, the Haryana bureaucrat who made headlines for taking on businessman Robert Vadra's land deals was in charge of financial inclusion. According to him, the two main reasons why the model didn't work was that a "huge number of beneficiaries - close to 25 per cent - were not authenticated using fingerprints as biometrics." The second, he said, was because "banks were treating direct benefit transfers to the poorest of the poor as a revenue model." Haryana went back to distributing cash through the panchayats. But now, it will revert to using the bank-BC model to distribute benefits. Sowmya Kadambi, Director of the Hyderabad-based Society for Social Audit, Accountability and Transparency, an organisation that audits social welfare schemes in Andhra Pradesh for the state government, says "introducing the newer schemes does not necessarily help the poor. Where is the question of choice? As a labourer, I should be given the choice whether I want to take my money from the post office or from the bank. It should be according to my convenience and not according the convenience of the government." In Rawana village, in Rajasthan's Alwar, welfare payments and subsidies are made through the post office, a system that several we spoke to were not unhappy with. "We get the money at our doorstep, quite often on time." Even if government benefits were getting delayed, we asked them why they were not depositing their savings into their new bank accounts. They gestured towards their fields. "Where do we have the money?" they said. "There has been hail, crops have been damaged. Whatever cash we make, should we use it to feed ourselves or put in a bank?"Story First Published: May 17, 2015 08:39 IST II/III. http://www.deccanchronicle.com/150512/commentary-op-ed/article/social-security-or-fraud Social security or fraud? DC | Mohan Guruswamy | May 12, 2015, 08.05 am IST Prime Minister, Narendra Modi launching the "Pradhan Mantri Jeeven Jyoti Bima Yojana", Pradhan Mantri Suraksha Bima Yojana", and "Atal Pension Yojana", at Nazrul Manch, in Kolkata (Photo: PTI) ***A good businessman is one who will have you part with your money for a product or service and then have you believe that he gave you something worth a lot more than the money you've paid. Gujaratis have business in their veins and Prime Minister Narendra Modi is no exception. He is in fact a champion who can sell you a ping-pong ball and make most believe it's a football!*** [Emphasis added.] On May 8, 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 unorganised sections, people 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 them. Out of a population of 1.2 billion, only 150 million have bank accounts, and of these a good one-third don't have any credit balance. Pointing out the necessity for such schemes, Mr 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? Eighty to 90 per cent of the 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 to 90 per cent of the population does not have bank accounts, the Prime Minister's new "social security" schemes do not apply to them. So what is he talking about? The Pradhan Mantri Suraksha Bima Yojana (PMSBY) will offer a renewable accidental death-cum-disability cover of Rs 2 lakh for a premium of Rs 12 per annum. The Pradhan Mantri Jeevan Jyoti Yojana (PMJJY) will offer a renewable one year life cover of Rs 2 lakh for a premium of Rs 330 a year. The Atal Pension Yojana (APY) will focus on the unorganised sector and provide subscribers a fixed minimum pension of Rs 1,000, 2,000, 3,000, 4,000 or 5,000 per month, starting at the age of 60, depending on the contribution option exercised between 18 and 40 years of age. The period of contribution by any subscriber under APY would be 20 years or more. Very simply put, this means that you will get back what you invest. One cannot say you will get back more than you invest because in all such schemes you will get only a part of what your money would amount to after interest is factored in. ***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 Union finance minister's 2015 Budget speech did not have a word on these.*** [Emphasis added.] 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 these. The schemes by themselves are quite good, but neither are they new nor is there any budgetary input from the government. It is your money that will be returned to you. Then how can the government and the Prime Minister claim ownership of these schemes? One can understand the Prime Minister naming a scheme after himself or any of his mentors, when the government provides the financial support for it. The previous UPA 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, the National Rural Employment Guarantee Act, which was named after Mahatma Gandhi. The National Democratic Alliance government during its previous term in office had introduced the Varishtha Pension Bima Yojana (VPBY) as a pension scheme for senior citizens. Under the scheme 3.16 lakh annuitants are being benefited 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 schemes launched with so much fanfare on May 8 are government funded. Nowhere in his 253 paragraphs long Budget speech did the finance minister make any mention of these three "new" schemes. Let us take each one of these three schemes one by one. The PMSBY entails an annual premium of Rs 12 to provide a cover of Rs 2 lakh in case of accidental death, and fraction 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 Yojna have no balance in them, this scheme is clearly meant for the 10 crore who have bank accounts and money in their 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 Rs 1,440 crore -- not an outlandishly large sum for a nation with the world's third largest GDP based on purchasing power parity. The government doesn't provide even a single paisa but it claims ownership of the schemes. 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 total life expectancy in India is just 65.5 years, the policyholder will, on an average, benefit for only 5.5 years from what he pays for over his complete working age, which could be anywhere between 30 and 40 years. Any actuarial life table -- a table that shows for each age what the probability is that a person of that age will die before his or her next birthday or the probability of death -- will give the insurer a pretty good idea of how many in an age cohort, 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. And the government benefits 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 from his contribution. Clearly, the more the number of those insured, the greater the state's benefits. Mr Modi is habituated to claiming what is not his, as his as his claim over Sardar Patel, a man who abhorred the Rashtriya Swayamsevak Sangh all his life and even banned it, shows. The government is giving nothing to us but wants us to believe that what we give is theirs to give. The writer held senior positions in government and industry, and is a policy analyst studying economic and security issues. He also specialises in the Chinese economy. III. http://scroll.in/article/726529/modi-rebrands-pension-insurance-schemes-but-will-they-really-be-more-effective-this-time SOCIAL SAFETY NET Modi rebrands pension, insurance schemes but will they really be more effective this time? Anumeha Yadav · May 11, 2015 · 09:43 pm The government has not yet set out the administrative mechanisms for implementing these initiatives. Will giving poor people bank accounts also ensure social security for them? That's what the government seems to believe. At a function in Kolkata on Saturday, Prime Minister Narendra Modi launched three initiatives that provide pension and insurance benefits for the 12.5 crore people who have taken advantage of the Pradhan Mantri Jan Dhan Yojana, which aims to get more households to open bank accounts. The effort, Modi said, was to go from jan dhan or financial inclusion to jan suraksha - social protection. The three schemes - the Atal Pension Yojana, the Pradhan Manti Suraksha Bima Yojana and the Pradhan Mantri Jeevan Jyoti Bima Yojana - build on existing central initiatives for workers in the unorganised sector. In their new avatar, the schemes offer increased coverage. In addition, since they will be operated through a single bank account, it is expected that they will be easier to sign up for. Yet, pressing questions remain, since the government has not yet described the administrative mechanisms for implementing these schemes. Besides, though Finance Minister Arun Jaitley first announced these three schemes in his budget speech on February 28, there is no word yet on budgetary allocations and targets for them. The schemes will be effective from June 1. Pensions in unorganised sector The Atal Pension Yojana will provide pensions to workers in the unorganised sector who are not covered by other pension or provident fund schemes. Workers will get a minimum payout of Rs 1,000 per month and a maximum of Rs 5,000 per month at the age of 60 years, depending on how much money they put into the scheme over 20 years. For instance, to get a monthly pension of Rs 1,000, an 18-year old worker will have to contribute at least Rs 42 a month for the next 42 years. A worker who joins when she is older, say at the age of 42, must contribute Rs 291 a month for 18 years to get a Rs 1,000 pension when she turns 60. If workers enroll in the scheme before the end of the year, the government will match their monthly contributions for five years. Swavlamban 2.0 The Atal Pension Yojana's provisions mirror those of the existing Swavlamban pension scheme started in 2010, which aims to encourage workers in the unorganised sector to save for the future. For workers who enrolled in the scheme before 2013, the government had agreed to pay a total of Rs 3,000 over three years with workers paying a minimum contribution of Rs 1,000 per year and maximum contribution of Rs 12,000. So far, the Swavlamban scheme has not been very effective. Till 2014, it had only 30 lakh beneficiaries, a fraction of the 43.7 crore workers in India's unorganised sector. So, will Swavlamban version 2.0 do better? "The choice to enroll in the three schemes will be available when beneficiaries get a Jan Dhan Yojana bank account," said a senior official involved with implementing these schemes. "This will make the schemes easier to access than previous schemes." He added that contributions made into the schemes will be invested to give a return of at least 8% per year, which will protect workers' funds. "Previously, there was no clear guarantee of return," said Dr Nishant Jain, Deputy Programme Director of the Indo-German Social Security Programme. "Now the government has announced a minimum amount of Rs 1,000 as pension if workers contribute regularly. This guarantee may potentially encourage more people to opt for the scheme." Despite this, the assumed rate of return may not be adequate to attract workers to sign up, economist Dr Ravi Srivastava said. As per a back-of-the-envelope calculation by Srivastava, a member of the National Commission for Enterprises in the Unorganised Sector set by the United Progressive Alliance government, the scheme calls for a total contribution of Rs 70,000 over 20 years for a beneficiary to receive a pension of Rs 1,000. "Workers may not see any benefits in this as their focus is on present needs more than future consumption," he said. "For the working poor to opt in to contribute over 20 years will require building trust that this will pay out to their benefit." ***Though the exact benefits for workers are still unclear, the schemes could buoy the banks participating in the Pradhan Mantri Jan Dhan Yojana. People opening accounts under this financial inclusion scheme do not necessarily have to put any money into them. But if they avail of these new schemes, they will be required to have certain minimum balances. For banks, this may make maintaining Jan Dhan bank accounts financially more feasible, said Srivastava.*** [Emphasis added.] Insurance for the poor Two of the schemes announced on Saturday will provide insurance benefits. Under the Pradhan Manti Suraksha Bima Yojana, all Jan Dhan bank account holders can get accident insurance with a sum assured of Rs 2 lakh at a premium of only Rs 12 a year. Under the Pradhan Mantri Jeevan Jyoti Bima Yojana, beneficiaries below age of 50 can get a life insurance cover of Rs 2 lakh at an annual premium of Rs 330. The scheme will be offered through the Life Insurance Corporation of India, as well as other insurers willing to tie up with banks for this. Both schemes build on the existing Aam Aadmi Bima Yojana started in 2007 to extend insurance to landless agriculturists and workers in 46 other trades in the unorganised sector, such as beedi workers, fishermen, weavers through LIC. The new schemes, however, increase the insurance cover significantly from the previous limits of Rs. 30,000 for natural death, and Rs. 75,000 in case of death due to accidents based on a premium of Rs 200 per person per year. However, the financial feasibility of these new schemes is not clear. As the Business Standard reported, with prices so very low, insurers and banks have stated they will not be able to earn significant revenue from these schemes, or even cover the service costs. -- Peace Is Doable -- You received this message because you are subscribed to the Google Groups "Green Youth Movement" group. To unsubscribe from this group and stop receiving emails from it, send an email to [email protected]. To post to this group, send an email to [email protected]. Visit this group at http://groups.google.com/group/greenyouth. For more options, visit https://groups.google.com/d/optout.
