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India’s Pension Scheme Lags in Terms of Coverage, Contribution
Context
- The Centre’s contribution to India’s flagship pension scheme has remained unchanged, while State governments have increased their top-up contributions.
- The Indira Gandhi National Old Age Pension Scheme (IGNOAPS), under the National Social Assistance Programme (NSAP), has remained largely unchanged since 2007.
Indira Gandhi National Old Age Pension Scheme (IGNOAPS)
Central Assistance
The Union Government provides:
- ₹200 per month for beneficiaries aged 60–79 years.
- ₹500 per month for beneficiaries aged 80 years and above.
State Contributions
States and Union Territories provide additional contributions ranging from:
- ₹150
- ₹2,000
Need for Revamp
Stagnant Central Contribution
- Central assistance has remained fixed at ₹200 since 2007.
- The pension amount has not been indexed to inflation.
Beneficiary Coverage
- Covers around 2.2 crore beneficiaries.
State-wise Pension Contributions (2023)
Highest Contributions
States contributing around ₹2,000:
- Telangana
- Andhra Pradesh
Other Examples
- Chhattisgarh: ₹150
- Total pension amount: ₹350
- West Bengal: Total pension amount of ₹250
No Additional Contribution
- Goa
- Manipur
Demand for Reform
Recommendations have consistently called for:
- Increasing pension assistance.
- Expanding beneficiary coverage.
- Linking pension assistance to inflation.
- Linking payments to Dearness Allowance revisions.
Official Recommendations
Ministry of Rural Development (MoRD)
- Recommendations made since 2013.
Public Accounts Committee (PAC)
Report (2025)
Based on an independent evaluation of NSAP commissioned by MoRD.
Findings
- Real value of ₹200 assistance has been significantly eroded by inflation.
- Pension amount should be increased to ₹353 to restore original purchasing power.
Impact of Inflation
Consumer Food Price Index (CFPI) Analysis
Findings
- Since 2013, the real value of ₹200 has fallen to about ₹99.
Implication
Beneficiaries can purchase only about half the quantity of food items compared to what ₹200 could buy in 2013.
Equivalent Requirement
- Beneficiaries would require approximately ₹400 to buy the same quantity of items purchasable with ₹200 in 2013.
Beneficiary Feedback
Survey Findings
The latest report found that:
Need for Pension Increase
- Over 95% of beneficiaries cited rising prices as the primary reason for demanding an increase.
Adequacy of Pension
- More than 80% stated that current pension amounts do not cover daily needs.
Coverage Gap
MoRD Estimates
Current Beneficiaries
- Nearly 17 crore eligible beneficiaries at present.
By 2030
- Around 20 crore eligible beneficiaries.
Comparison
- Nearly 10 times higher than present coverage of 2.2 crore people.
Chart 1: Monthly Pension Offered by States (2023)
Components
- Centre’s share (₹200)
- State top-up offered as of 2012
- Increase in State top-up since 2012
Observation
- Union Government contribution remained unchanged.
- Increase in pension amounts mainly driven by State governments.
Chart 2: Erosion of ₹200 Pension Value
Observation
- Real value of ₹200 steadily declined between 2013 and 2025.
- Amount required to maintain equivalent purchasing power rose progressively.
Chart 3: Beneficiaries vs Elderly Population
Observation
- Number of beneficiaries remained almost constant.
- Elderly population continued to increase significantly.
Projected Population (60+ Age Group)
- Around 10 crore (2011–12)
- Around 16 crore (2024–25)
Beneficiaries
- Around 2 crore throughout the period.
Chart 4: Beneficiary Assessment of Pension Adequacy
States Surveyed
- Bihar
- Chhattisgarh
- Gujarat
- Haryana
- Jammu & Kashmir
- Uttar Pradesh
- Assam
- Andhra Pradesh
- Telangana
- Tamil Nadu
Finding
- Less than 10% of respondents in nine out of ten States considered the pension “fully adequate.”
- Majority considered it only “somewhat adequate.”
Chart 5: Reasons for Increasing IGNOAPS Assistance
| Reason | % Respondents |
|---|---|
| Prices of essential items have increased | 96.5 |
| Not enough to meet daily needs | 82.2 |
| Household income is very low | 68.2 |
| To improve quality of life of elderly persons with disabilities | 44.5 |
| No or very little savings to rely on | 42.4 |
| To reduce dependence on family or others | 25.3 |
Key Findings
- Central pension assistance has remained unchanged since 2007.
- Inflation has substantially eroded the real value of the pension.
- State governments account for most increases in pension support.
- Beneficiary coverage has remained stagnant despite rapid growth in the elderly population.
- Multiple official reports have recommended increasing pension amounts and expanding coverage.