7 PM | Pradhan Mantri Shram-Yogi Maandhan | 7 February, 2019

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The government, in the interim budget has announced Pradhan Mantri Shram-Yogi Maandhan, a pension scheme for workers in the unorganised sector.

Unorganised sector in India

The Indian Economy is characterized by the existence of a vast majority of informal or unorganized labour employment. According to National Sample Survey Organisation (NSSO) survey, 2011-2012, nearly 90% of the total workforce is in the unorganized sector and about 50% of the GDP is accounted for by the unorganised Sector (National Commission for Enterprises in the Unorganized Sector)

Vulnerability among Unorganised workers:

The unorganised sector workers suffer from the problems of poverty, low educational status, and low productivity as compared to formal sector, lower wages, poor working conditions, uncertain and seasonal employment, no stability in profit or gains and lack of access to sufficient and reliable social security.

Pension Schemes for Unorganised Sector:

In 2010, NPS Swavalamban was launched by the central government for all the unorganised workers in the age group of 18-60 years. More recently, in 2015, Atal Pension Yojana (APY) scheme was launched which replaced the Swavalamban pension scheme.

The Pradhan Mantri Shram-Yogi Maandhan

  • Under the scheme, an assured monthly pension of Rs. 3000 rupees per month will be provided to workers in the unorganised sector, whose income is up to Rs 15,000 per month, after 60 years of age.
  • To avail the scheme, workers have to contribute an amount ranging from ₹55 to ₹100 each month, depending on their age, at the time of joining the scheme and equal contribution would be paid by the government.
  • The scheme is expected to benefit 10 crore workers and would be implemented from this fiscal itself.
  • The new pension scheme will run alongside the existing Atal Pension Yojana which provides a defined pension, depending on the contribution, and its period.
  • The scheme will be enforced through the Unorganised Workers’ Social Security Act, 2008, (UWSS Act) that gives a legal framework for providing social security benefits to workers in the unorganised sector.
Social security for the unorganised workers:
In order to provide social security benefits to the workers in the unorganised sector, the Government of India enacted the Unorganised Workers’ Social Security Act, 2008. The act stipulates formulation of suitable welfare schemes for unorganised workers on matters relating to: (i) life and disability cover, (ii) health and maternity benefits, (iii) old age protection.


Limitations of the scheme:

  • The government has allocated ₹500 crore for the scheme and critics have raised concerns that funds for the scheme would undermine finance for National Social Assistance Programme (NSAP) which is a social security and welfare programme for poor aged persons, widows and disabled persons.
  • Critics have also raised concerns over the effectiveness of the scheme given that the informal sector workers might refrain from voluntarily contributing to the scheme as their salaries are low.
  • As majority of informal sector workers are outside banking net, assuring regular monthly worker contribution in the scheme would be a major challenge.
  • Targeting beneficiaries is a major challenge as income data to ascertain informal workers earning less than Rs 15,000 a month is missing.
  • The scheme is silent about what happens when an informal sector worker misses a contribution or if an informal sector worker migrates to formal employment.


The Pradhan Mantri Shram-Yogi Maandhan scheme is a proactive step toward alleviating the economic and social insecurities of the largest and most vulnerable section of the economy. However, the efficacy of the scheme would largely depend on streamlining the sources of funds, objective selection of beneficiaries as well as bringing the informal sector workers into the banking net.

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