To
Smt Nirmala Sitharaman
Union Finance Minister
Dear Smt Sitharaman,
Kindly refer to my earlier letter of August 8, 2022, appealing to you to enhance the quantum of EPS-95 pension from a meagre Rs 1,000 per month to a reasonable level, keeping in view the high inflation rates that have eroded the value of money. A copy of my letter of 14-8-2022 is enclosed here.
A monthly pension of Rs 1,000 makes a mockery of the rationale underlying the EPS-95 scheme, which is to provide social security cover for pensioners in their old age when their medical needs multiply and they need society’s support. EPS-95 pensioners largely belong to very low-income groups.
Several Parliamentary Committees have time and again recommended enhancement of the pension and its indexation to the rate of inflation. More recently, the Parliamentary Standing Committee for Labour, in their 13th Report (2021-22) observed as follows:
“In view of the fact that Rs. 1000/- per month pension which was fixed eight years back appears to be grossly inadequate now, it becomes imperative on the part of the Ministry of Labour & Employment to pursue the matter with the Ministry of Finance for obtaining adequate budgetary support as recommended by the High-Empowered Monitoring Committee besides impressing upon the EPFO to make an actuarial assessment of all its pension schemes so that the monthly member pension is enhanced to a reasonable extent“
I understand that the Central Board of Trustees (CBT), the apex decision-making body of the Employee Provident Fund Organisation (EPFO), recently reviewed the reasonableness of the pension rates vis-a-vis the status of the funds available in its corpus and recommended doubling the monthly pension from the existing Rs 1,000 to Rs 2,000 by requesting the Ministry of Finance to provide additional budgetary support for the scheme. In my view, CBT’s recommendation is far too modest, as a monthly pension of even Rs 2,000 falls short of what would be needed to allow a pensioner to live in dignity.
From news reports (https://www.business-standard.com/economy/news/finmin-rejects-proposal-to-double-minimum-pension-amount-under-eps-124021100423_1.html), it appears that your Ministry has summarily rejected that proposal. I suppose that your Ministry’s justification for rejecting CBT’s proposal is that there are fiscal constraints that do not permit providing any additional budgetary support.
Let me remind your Ministry that the government’s undue attachment to big business houses has forced the Employee Provident Fund Organisation (EPFO) to invest its funds increasingly in dubious equity-linked funds, such as its exposure of Rs 2,500 Crores to Reliance Capital, which has eroded its corpus, making it difficult for the fund to allow higher payments to pensioners who happen to be the main stakeholders. Why should pensioners be penalised for the mismanagement of the way EPFO’s funds are deployed?
There are 7.6 million pensioners covered under the EPS-95 scheme out of whom 3.6 million get a monthly pension of less than Rs 1,000. Even if their monthly pension were to be doubled, the additional annual budgetary assistance required may not exceed Rs 4,000-5,000 crores. This is nothing compared to the annual loss in revenue of Rs 1,00,000 crores given to private industry. The effective tax rate applicable to business houses earning individual annual profits over Rs 500 crores is only a little over 19%, whereas the government ought to subject them to a much higher rate of taxation to minimise income inequities and concentration of wealth as mandated in Directive Principles of the Constitution. To say that the government cannot double the EPS-95 pension due to fiscal constraints is therefore unacceptable.
While the government is consistently obstinate in rejecting the enhancement of the EPS pension, it is ironic that when it comes to profit-earning private companies, it seems to behave in an unduly charitable manner. For example, in addition to huge tax concessions, in the guise of promoting “self-reliance”, the same decision-makers in the government have had no hesitation whatsoever in announcing a whopping open-ended package of incentives amounting to Rs 2 lakh crores over a 5-year time-frame to profit-earning private companies in the name of “Production-Linked Incentive” scheme!
How is it that your Ministry showed no reservation when such huge subsidies were proposed to be given to promoters of private industry?
There seems to be one set of fiscal rules for the helpless EPS pensioners and another for private corporates!
May I therefore demand that your Ministry revisit the CBT proposal and agree to double the pension as an interim measure of relief, pending a more elaborate assessment of the minimum level of pension needed for allowing a pensioner to have access to a social security cover that is consistent with what an aged pensioner needs?
I hope that you will act on this urgently.
Regards,
Yours sincerely,
E A S Sarma
Former Secretary to the Government of India
Visakhapatnam
12-2-2024
My letter dated 14-8-2022 on EPS-95 addressed to the Union Finance Minister
Kindly refer to my letters dated 22-9-2020 & 11-3-2021 addressed to you seeking revision of pension under EPS-95 scheme to bring it in line with the necessity of enabling the pensioners to live in dignity.
No action seems to have been taken by your government in spite of the compelling arguments in favour of revising the pension and indexing it with reference to the cost of living.
At the time of moving the necessary amendments to the Employees Provident Funds & Miscellaneous Provisions Act in the Parliament in connection with EPS-95, the then Union Labour Minister, Shri M Arunachalam, on persistent demands made by the BJP members sitting in opposition, assured the House that the scheme would be subject to periodic reviews. I have enclosed here a news report that appeared at that time on the subject. It is disappointing that this Parliamentary assurance continues to remain unfulfilled till date, that too, when the same BJP has been in power for the last eight years.
I wish to point out once again that the Rajya Sabha Committee on Petitions in its 147th Report dated 3-9-2013 considered a petition filed by Shri Prakash Javadekar, then a Member of the Rajya Sabha (till recently a Union Minister in the NDA government) seeking an amendment to the EPS-95and recommended that the minimum pension should be enhanced to Rs 3,000 per month and indexed to the cost of living. Based on this, the government should enhance the pension by adjusting Rs 3,000 in line with the increase in the cost of living since September, 2013 and adopt the approach recommended by that Committee hereafter.
On the basis of a pension linked to the minimum wage level and other cost-of-living arguments, the trade unions have been demanding a minimum pension of Rs 6,500 indexed to the cost of living and entitling the pensioners to ESI benefits to offset the increasing health costs. There is a strong case to consider that demand, as it is meant to provide a social security cover to the aging pensioners. In any progressive society, the government has the obligation to accord the highest priority to such social security measures.
In particular, the Directive Principles of the Constitution obligate the State to promote the welfare of the people, especially those who are vulnerable. Read with Article 21 (“Right to life”), this casts an obligation on the government to ensure that such vulnerable sections are fully brought under a reasonable social security cover, including a health cover.
During the first and the second waves of Covid virus and even at present when a third wave is sweeping across the country, the need for a strong social security cover for the vulnerable sections of the population, including pensioners like those covered under EPS-95, is felt like never before.
In the absence of a strong public sector healthcare system and inadequate regulation over private sector hospitals across the country, during the Covd crisis, many including the EPS-95 pensioners had to incur heavy expenses, which crippled their finances.
The usual argument put forward by the government against increasing its contribution to the EPS pension fund and enhance the pension rates is that it is fiscally unsustainable, an argument that has no force in the face of the huge tax incentives readily provided by the same government to big businesses and the extravagant expenses incurred from time to time on inessential, unproductive items of public expenditure. Considering that the items of social security cover including contribution to the EPS scheme represent more an obligation for the government than a choice, there is no other alternative for the government than to review its priorities in formulating the budget and revise the pension scheme suitably.
This is a matter on which the government cannot afford to delay its decision any longer. I hope that your Ministry, in consultation with the Union Labour Ministry, takes an urgent decision to enhance the minimum pension as indicated above.
Regards,
Yours sincerely,
E A S Sarma
Visakhapatnam
