23/05/2020 - Government Policies

KEY POINTS

·         The real problem is  that most of migrants had near-zero savings. With little or no money to fall back on, they just couldn’t afford food or rent, even for a few days, under lockdown.

·         If their current savings behaviour remains unchanged, we will witness an exponentially larger and more sustained social and fiscal crisis—when they permanently drop out of the workforce in their old age.

·         If on the other hand, a 25-year old migrant in Delhi had opened a National Pension Scheme (NPS) account in 2010, and begun saving just Rs 20 a day, she could have accumulated nearly Rs 120,000 by March 2020.

·         When the lockdown was announced, she could have simply withdrawn Rs 30,000 from her NPS account (as per PFRDA rules). This would have allowed her to stay on in Delhi for another three to four months, wait for the lockdown to lift, and for her work to resume.

·         Without experiencing any economic stress or depending on cash or food transfers. In the long run, she would have saved enough by age 60 for a secure and dignified old age, with a lifelong pension of around `10,000 a month.

·         The government has already laid the foundation. We have universal Aadhaar coverage, nearly 400 million Jan-Dhan accounts, over 500 million smartphone users, around 100 million UPI users, and the NPS—one of the most efficient pension systems in the world.

·         Ideally, any Indian with an Aadhaar, bank account and a mobile, should be able to easily open a digital NPS or liquid mutual fund account.

·         A simple, convenient and flexible digital saving solution is both feasible and essential. Subcontinent-scale adoption will however require a gigantic effort on digital literacy. This will be challenging given modest literacy levels, diverse languages and low financial literacy. This will be even more difficult with social distancing.

·         Even rural India is seeing a sharp rise in digital communications and payments. For example, Mission Shakti in Odisha uses WhatsApp to communicate directly with its 75,000 Aanganwadi workers, who manage 7 million women SHG members in remote rural locations.

·         This may be an especially powerful strategy for pension inclusion—given that over 80% of India’s WhatsApp users are not eligible for a pension, and need to start saving for their retirement as soon as they resume work.

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Currently, along with COVID-19 pandemic, India has been facing "migrant exodus issue", due to a nationwide lockdown.

>>> Factors responsible for current migrant exodus issue :

- Near-zero savings : A sudden loss of livelihoods due to nationwide lockdown cannot be the primary cause but the real problem is "near-zero savings" which means

 migrants just couldn’t afford food or rent, even for a few days, under lockdown.

- Spread of Fake news : This is also one of the reason, due to lack of access of true infromations about the real facts.

- Lack of social safety net : Unfortunately, most of the migrants are not eligible for a pension or any other social safety net which pushed them to move towards their home villages.

             "Dignified humans do not stand and wait for charity". So, the thing which is required in this current situation is to enhance the coverage of social safety net to these migrant workers. One such social safety net is  "National Pension Scheme(NPS)"- regarded as one of the most efficient pension systems in the world.

>>> NPS : a solution for the current migrant exodus issue -

- encourages and enable people to save for retirement and emergencies (like present situation), so that they can afford even food or rent in such crisis like situation.

- act as a protective gear from exponentially larger and more sustained social and fiscal crisis.

- will set us up for voluntary thrift and self-help at scale- which is a step towards self -reliant nation.

- should not require any additional KYC norms and enable people to open a ",digital NPS or liquid mutual fund account". Importantly, most informal sector workers appreciate the importance of NPS, as it requires only Aadhaar, bank account and a mobile number.

-  is a "simple, convenient and flexible digital saving solution"  for non-salaried workers like construction workers, street vendors, farmers, domestic helpers, rickshaw pullers, fishermen or contract workers.

>>> What needs to be done to make "NPS - a better solution ?

- provide enabling ecosystem, savings demand, and easy, frictionless access of this digital saving platform to all.

-   A gigantic effort on digital literacy is required for subcontinent- scale adoption.

>>> Conclusion :

We need strong political leadership, proper implementing authority and regulatory support to overcome the current friction to comprehensive pension and savings inclusion. NPS will also be a giant step towards a truly "Atmanirbhar Bharat".

Sir/Madam....its our humble request, please start posting questions from static portion, Ethics and  Essay along with their links.