Time to extend a helping hand to the poorest under NFBS of NSAP

An insight into the NSAP and NFBS, and why they need a rejuvenation urgently

Time to extend a helping hand to the poorest under NFBS of NSAP

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• The story: When a young migrant worker from Jharkhand died in Kerala, his family's problems grew sharply, as they fell into poverty. The social security pension for his widow may take years to materalise, as she would keep struggling. Clearly, the death of a breadwinner is the biggest challenge for a poor household.
• NFBS: In 1995, the National Family Benefit Scheme (NFBS) was launched under the NSAP (National Social Assistance Programme). The goal was to help such families, but the scheme has suffered in execution - too many formalities, only Rs.20000 emergency compensation and help only for BPL families. Most never make it!
• NSAP neglected deliberately: The governments have neglected the NSAP over the years. Central contribution to old age pension is just Rs.200 per month, for 15 years. Total NFBS budget is stagnant, so coverage could not be raised. Central expenditure went from Rs.862 cr (2014-15) to Rs.481 crore (2020-21). The scheme is dying down. Sadly, this is when Covid-19 has ravaged lakhs of families.
• Contributory schemes being pushed: It is clear that NSAP (incl. NFBS) is being killed to promote contributory schemes like the Atal Pension Yojana (APY). But they are not at all attractive for the poor and poorest. APY needs them to be able to save (they cannot) and go through formalities (they cannot) and trust the government with their money (they may not). The Mihir Shah task force 2013 recommended many good things, but was largely not implemented.
• Easy to revive NFBS: Four steps can easily revive the NFBS, in this crucial period.

1. Raise the emergency assitance amount - The initial sums of Rs.10,000 (later Rs.20000) were based on a per cent of per capita GDP. That has grown a lot now. Make it at least Rs.1 lakh. 
2. Remove the BPL restriction - BPL lists are outdated, unreliable and full of exclusion errors. Many schemes are now universal (not BPL list based), like school meals. Some are self-targeted, eg. MGNREGA. Some are exclusion based, e.g. PDS (rich are excluded, others are included). This is best for NFBS.
3. Simplify the formalities - The beneficiaries are first to be identified by the Gram Panchayat or Municipalities, which is good. But the later bureaucracy kills the entire process. Tracking of applications is impossible. Poor keep languishing. Delays must get compensated.
4. Raise the budget - If 7.2 lakh families are to be targeted from 3.6 lakh per year, then at Rs.1 lakh per family, a budget of Rs.7200 cr is needed. For a national scheme of vital importane, this is doable.

• Summary: The poorest of households do not have any form of life insurance working for them. Revamped NFBS is the way forward. 
• EXAM QUESTIONS: (1) Explain the various ways the grieving households at the bottom of the social pyramid - in the event of death of breadwinners - can be helped by the government of India. Take reference of the NFBS of the NSAP. (2) What is "beneficiary identification" all about? What are inclusion and exclusion errors? Explain. (3) What are the reasons the poorest will never benefit from schemes like Atal Pension Yojana (APY)? List and explain.

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#NSAP #NFBS #poorinsurance #deathofbreadwinner

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