How Jharkhand’s pension scheme is transforming rural lives

Jharkhand is one of India’s poorest states and yet it has made significant strides in expanding the coverage of pensions for the needy and vulnerable, setting an example for other states and the Union government.

In India, the National Social Assistance Programme, launched in 1995, provides non-contributory pensions to elderly, widows and persons with disabilities.

The programme is rooted in the Indian Constitution’s Directive Principles of State Policy, which say it is the government’s duty to offer public assistance to ensure basic standard of living to people in need. In a country like India, where millions face a lifetime of hardships, deprivation, and dependency on others, such interventions can go a long way in restoring human dignity.

However, the National Social Assistance Programme has been hobbled by severe underfunding by the Centre, which has not raised the monthly old age pension from Rs 200 per person since 2011. Additionally, the coverage of pensions has been poor and many needy people have not been able to access them.

Against this backdrop, Jharkhand has made notable progress. It began a set of reforms in 2019, which culminated in the unveiling of a comprehensive social security pension scheme called Sarvajan Pension Yojana in 2022. The number of pensioners in Jharkhand surged by over 200% between 2019 and 2022, jumping from 6 lakh to 20 lakh pensioners. Currently, there are over 40 lakh pensioners in the state.

Even in financial terms, the state’s contribution has risen to cover 90% of the cost. In 2023-’24, the Jharkhand government allocated Rs 3,639 crore for social security schemes, nine times the Rs 406 crore contributed by the Union government.

In this article, we explore the three progressive steps taken by Jharkhand which have transformed social security in the state. We also look at the implementation challenges the state has faced. And we propose the possible steps that the Union government can take to revamp the National Social Assistance Programme.

Reforming old-age pensions

India's elderly population is rising, with one-fifth expected to be above the age of 60 by 2050, according to the India Ageing Report 2023. Around 6 crore elderly belong to the poorest wealth quintile and an analysis of their work, pension, and income indicated that 18.7% of the elderly have no income.

With over 90% of the workforce in the informal sector lacking secure retirement, aging severely impacts the socially and economically vulnerable. The Longitudinal Ageing Study in India indicates a decrease in labour force participation among the elderly, with the decline starting at the age of 50.

In this context, Jharkhand is one of few states that have lowered the qualifying age for social security old-age pensions from 60 years to 50 years for Dalits, Adivasis and women. The state’s pension policy prioritises these groups as they report higher employment insecurity, higher marginalisation and lower life expectancy than the national average.

Universalising the coverage

While several states, particularly those in South India but also Rajasthan and Odisha, have expanded pension coverage by leveraging their own state funds and schemes, Jharkhand stands out as one of the very few states fully implementing universal coverage. This means that anyone who meets the eligibility criteria is entitled to receive the pension after verification.

Unlike central pension schemes, Jharkhand state pension schemes are not tied to any quota limitations – that is, the number of people who can get benefit of the scheme is not predetermined. Nor does the state rely on outdated data like the below-the-poverty line population figures based on the 2001 Census or other schemes such as ration cards under the National Food Security Act. This minimises exclusion errors where eligible individuals are unable to access their entitlements.

The state has streamlined the application process, with only two disqualifiers: neither the applicant nor their immediate family members should be income tax payers or permanent employees of the state, central government, or public sector undertakings. This reduction in the exclusion criteria has eased the application burden to some extent by minimising the need for documents and affidavits, resulting in fewer application rejections and a more straightforward process.

Additionally, the state has introduced a Rs 100-crore revolving fund to support this initiative to ensure timely payment of pension in case contribution from the central government gets delayed.

Vulnerable communities

The state has ensured that families belonging to Particularly Vulnerable Tribal Groups receive a monthly pension per household amounting Rs 1,000 irrespective of the demography of the household. Similarly, women without economic support – widowed, single, divorced, or abandoned – and transgender individuals receive a monthly pension of Rs 1,000.

This is in line with the initiatives taken by several other state governments to expand pension coverage among vulnerable communities. Andhra Pradesh, for example, has pension schemes for tribals, weavers, toddy tappers, among others. In Kerala, unmarried women aged 50 and above receive pensions, while Rajasthan has a pension scheme for transgender individuals. Punjab and Odisha provides pensions to widow and destitute women aged 30 and above.

Jharkhand has also made it easier to access disability pension by aligning it with the Rights of Persons with Disabilities Act, 2016. Anyone above the age of five with a disability level of 40% qualifies for the state disability pension scheme named Swami Vivekananda Nihsakt Swavlamban Pension Yojna. In contrast, the Indira Gandhi National Widow Pension Scheme has a disability level criteria of 80%.

The expansion of coverage shows up in the data. According to recent data on the National Social Assistance Programme website, the state government provides pensions from its own exchequer to over 28 lakh individuals accounting for 70% of state’s total pensioners. This figure is significantly higher than those supported by the Union government's contribution under the National Social Assistance Programme, which covers over 12 lakh pensioners in Jharkhand.

Challenges

The major reforms brought by the state are facing their own sets of challenges. The major hindrances in the path of effective delivery are information lag and people not having key documents like disability certificate, caste certificate, Aadhaar number. The other issues are banking challenges, like not having an account or having a dormant one, and technological glitches both at the time of application and the transfer of funds.

Jharkhand’s pension reform suggests the National Social Assistance Programme needs significant revamp to address the needs of India’s marginalised communities. The central contribution under the programme has remained stagnant both in terms of budgetary allocation and number of beneficiaries it supports. According to the 2023 report of the comptroller and auditor general, between 2017 and 2021, the Union government contributed only 24% of the total expenditure on the programme, with states spending an additional Rs 1,09,044 crores as top-up.

It is crucial for the Union government to show commitment to revamping the National Social Assistance Programme and providing additional resources for it. However, it is equally important that it acknowledges the reforms implemented by poorer states like Jharkhand, particularly the revision of pension amounts in response to inflation, simplification of the application process, improvements to old age pensions, and efforts to enhance and universalise coverage for marginalised and vulnerable communities.

By implementing similar reforms, it can ensure that social security pensions offer adequate minimum support for citizens to live with dignity.

The authors are associated with LibTech India, which is a consortium of academics, activists and technologists dedicated to studying social protection programmes in India, emphasising the promotion of transparency and accountability in governance systems.