• Nitish’s Universal Pension Scheme: An Act of Political Braggadocio

    Bihar Government’s old-age pension scheme has been extended beyond the BPL category, but it bears several fault lines that are yet to be addressed.

    Ujjawal Krishnam

    July 2, 2019

    Image courtesy NDTV

    The Bihar Government on June 14 launched the Mukhyamantri Vridhajan Pension Yojna (MVPY), an old-age pension scheme that targets people above 60 years of age. The scheme brought under the Direct Benefit Transfer (DBT) programme has two slabs for pension disbursement — Rs. 400 per month for those in the 60 to 79 years age group and Rs 500 per month for the elderly above 80 years.

    The scheme has been termed ‘universal’ because under this, the pension is no longer limited to the elderly that are identified under the BPL (Below Poverty Line) section.

    The announcement of the scheme could not receive proper media coverage and discussion, because of the suspected Acute Encephalitis Syndrome (AES) outbreak in Muzaffarpur district of Bihar. Some even believe that the launch of the scheme amid the Muzaffarpur crisis was a stunt by Chief Minister Nitish Kumar to divert the attention from the tragedy to this act of self-patter. However, unnecessarily glib commentary is of no use.

    It is imperative to analyse this scheme as it is for the first time that any government in India has launched a universal pension scheme.


    Adequate pension to the elderly is an economic right and it must characterise all the rights of citizens, say eminent economists such as Prabhat Patnaik. Prof Patnaik emphasises on India’s need for universal pension scheme.

    According to Patnaik, a minimum amount of Rs 3,000 per month must be provided to the old-age pension beneficiaries. In contrast, the union government provides an absurd monthly sum of Rs 200 each to the BPL population and it has remained unchanged since 2006.

    The Bihar Government — while sanctioning a sum of Rs 384 Crore from Bihar Contingency Fund for the payment of the universal old age pension scheme for 2019-20 — has failed to index the pension amount to inflation.

    India like many other developing countries follows Consumer Price Indices (CPI) to measure in general change over time in the level of prices of goods and services that households acquire for the purpose of consumption. CPI numbers are widely used as an indicator of inflation, as a tool for indexing dearness allowance to increase in prices for employees. Data on State Level Consumer Price Index (Rural/Urban) accessed by the author from the Ministry of Statistics and Programme Implementation under the National Data Sharing and Accessibility Policy (NDSAP) highlight some grim figures about Bihar.

    The Consumer Price Index (CPI) on base 2010=100 for Bihar in April 2018 was 139.5 [139.7 in rural area and 133.3 in Urban area], one of the highest among Indian states. Bihar’s CPI has taken a strident jump from 105 in January 2011 but the pension amount, earlier allocated for BPL families, has remained as good as stagnant so far. As this scheme has now been universalised, the inflation index must be annexed.


    States and UTs like Andaman & Nicobar Islands, Delhi, Goa, Kerala, and Puducherry provided Rs 2,000 monthly amount entitled to the elderly in the age group of 60 to 79 years. Bihar metes out one of the lowest, with only states like Odisha, Nagaland, Mizoram, Lakshadweep, Chhattisgarh and Manipur stumbling behind.

    The scheme in Bihar receives a paltry contribution of Rs 200 per month from the Indira Gandhi Old Age Pension Scheme (IGNOAPS), adding a matching contribution of Rs 200, a final measly sum of Rs 400 is released. Bihar has an elderly population of 77,07,000 (according to 2011 census), out of which only 43,57,164 have been receiving the pension benefits.

    This is just 57% of the eldery who are beneficiaries of social pension. The conversion of BPL pension scheme into universal pension scheme has only narrowed the beneficiary line.

    Since the announcement of universal pension scheme in February, Bihar government had received 2 lakh applications, of which 67% were found to be eligible for the benefit.

    Bihar is one of the poorest states in India — with one of the highest population densities. The government of Bihar may not self-fund the complete scheme; the help from central government is very much required for this huge programme to materialise. Instead of opening the scheme for all classes, the pension amount could be enhanced for the BPL people, who seriously need this opportunity.

    The people Below Poverty Line mainly come from the unorganised labour sectors, where there is no scope of pension in old age.

    The Bihar government is also expected to subsume an extra annual expenditure of Rs 2,000 crore to support the fulcrum. This is an uncalculated step as government has not surveyed the recent numerical addition to the old-age group, the census data are a decade old. This may even stall the benefits meant for eligible BPL sections.


    Corruption in Bihar stretches from fodder to education, from shelter home to ‘Srijan’ (scam). Nitish Kumar was voted to power for his stand against then CM Lalu Yadav, whom the Nitish-led opposition bloc targeted as a scammer. After a decade of Nitish’s susashan (good governance), Bihar is no better.

    Corruption is prevalent in government offices, beneficiaries-to-be are not aware of government schemes. In rural areas, village heads are grabbing a huge amount of money for approving pension and housing funds.

    The Social Welfare Department’s perfidy in Bihar — as well as across the country — is cordoning off the poor from schemes meant for them and that they are entitled to. There is no monitoring system for benefits like pension scheme; an online grievance portal in Bihar remains a dream. This opacity has marginalised the economically deprived. Illiteracy is also a reason behind the failure of government schemes in Bihar. Semi-literate and illiterate population fails to fill up simple forms and applications, let alone understand the notifications issued by the government. The middlemen in government offices rob the poor in return for providing basic expected help like filling forms, issuing notarial certificates.

    The Bihar Government, in spite of knowing the state of literacy, in the region has not hired officials in appropriate numbers to spread awareness about the programmes. CM Nitish Kumar and his government need to ponder this.


    Nitish’s universal pension scheme is a product of ‘populism’ with legs. It may run for a long time being a political incentive, but the actual benefit will be far less than imagined.

    The fate of the universal pension scheme appears no different from Srijan Scam, Toilet Scam, Paddy Scam, Scholarship Scam, Dam Scam, MGNREGA Scam, Uterus Scam, Medicine Scam, Recruitment Scam, and BPSC Scam on which Nitish Kumar is still maintaining deafening silence. It is hoped that the other states don’t follow such sedentary routes to laugh on the faces of lamenting poor.


    First published in Newsclick.

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