NSAP pensions unchanged since 2012 despite 45% inflation erosion

An evaluation commissioned by the Union Ministry of Rural Development revealed that the real value of fixed cash transfers under NSAP has 'significantly eroded' by around 45% due to inflation. As reported by The Indian Express, when adjusted to the current Consumer Price Index, a pension of ₹200 should cost ₹353 to retain its original purchasing power. The research firm Academy of Management Studies noted that an average inflation of about 5% annually has significantly eroded the real value of these fixed cash transfers. Based on the CPI increase, the pension amounts should have proportionately risen from ₹200 and ₹500 to ₹382 and ₹955, respectively. The study also highlights that CPI increased from 100 in 2012 to 191 in 2024, demonstrating the substantial erosion in purchasing power. A government-commissioned study submitted to the Union Ministry of Rural Development has found that the Centre's old age pension under the National Social Assistance Programme (NSAP) has lost nearly 45% of its real value since 2012 due to inflation.

While the Centre maintains stagnant pension amounts, significant variations exist across states due to different fiscal capacities. As per the latest study, states such as Andhra Pradesh, Telangana and Haryana provide substantial top-ups, resulting in better income stability and improved well-being for beneficiaries. However, poorer states with limited fiscal capacity offer lower top-ups, creating unequal social protection across India. This disparity compounds the impact of inadequate central pension amounts, with elderly persons, widows and disabled citizens often having limited earning capacity and high healthcare costs. The study highlighted that states offering higher pension contributions in addition to the Centre's share demonstrated better social outcomes, with states such as Andhra Pradesh, Telangana and Haryana found to have improved income stability and overall well-being among beneficiaries due to larger state-level pension top-ups.

Launched in 1995, NSAP currently covers five key schemes with substantial beneficiary numbers. According to The Indian Express, the Indira Gandhi National Old Age Pension Scheme (IGNOAPS) covers over 221 lakh beneficiaries, while the Indira Gandhi National Widow Pension Scheme (IGNWPS) serves more than 67 lakh beneficiaries. The Indira Gandhi National Disability Pension Scheme (IGNDPS) covers 8.8 lakh beneficiaries, and the National Family Benefit Scheme provides ₹20,000 one-time assistance to families after the death of a primary breadwinner. The Annapurna Scheme provides 10 kg of food grains per month to eligible senior citizens not receiving old-age pension. Currently, the old age pension scheme reportedly covers more than 221 lakh beneficiaries, while over 67 lakh widows and around 8.8 lakh persons with disabilities receive support under the respective schemes.

To address the declining value of social security pensions, the evaluation report has recommended introducing an inflation-linked National Floor Pension to ensure minimum financial security across states. The report suggests that the pension amounts should be linked to the Consumer Price Index (CPI) and automatically adjusted with inflation, including annual revisions based on cost-of-living changes. Additionally, the study recommends that states should provide transparent and uniform top-ups over the central contribution to reduce regional disparities in pension benefits. The report emphasizes that stronger state support can significantly improve the effectiveness of social assistance programmes and reduce financial vulnerability among the elderly and disadvantaged groups. The inadequate pension amounts disproportionately affect vulnerable populations, particularly women-headed households, with since women constitute the majority of widows and many elderly poor, low pension amounts disproportionately affect female-headed households and reinforce feminization of poverty.