Modi plans to roll out insurance cover for poor under national social security and this can cost Govt over Rs 9,000 crore

Prime Minister Narendra Modi-led Indian Government had expressed its plans for a national social security system recently. Although the planning is at a nascent stage, the government is now thinking over giving an insurance scheme to the poor.

The Centre is planning to introduce Rs 2 lakh insurance cover for three years for those who have bank accounts under Pradhan Mantri Jan Dhan Yojana (PMJDY).

There are about 27 crore account holders under the PMJDY fiscal inclusion scheme and if the government rolls out accident and life insurance both, it would cost more than Rs 9,000 crore.

"There are various proposals that are being considered. One of them is to provide the insurance cover and the government will bear the premium cost for three years,” a government official, aware of deliberations, told ET.

There are three social security programmes running presently- Pradhan Mantri Suraksha Bima Yojana (PMSBY), the Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY) and the Atal Pension Yojana (APY). These were launched in 2014 to bring the poor into the fold of formal financial services.

As per the finance ministry, 3.06 crore people have been enrolled under PMJJBY and 9.72 crore under PMSBY.

Insurance penetration - the proportion of premiums to GDP - is low; it was 3.44% in 2015. The life insurance cover under PMJJBY is available for an upfront premium payment of Rs 330.

Accidental insurance under PMSBY costs Rs 12 annually and covers accidental death and disability.

"Banks have already been directed to educate Jan Dhan account holders about the existing social schemes. Since some money has come into these accounts after demonetisation, holders can be persuaded to buy basic insurance cover,” the official quoted above told ET.
So far, 44,720 claims have been registered under PMJJBY, of which 40,375 have been paid out. Of the 8,821claims under PMSBY, 5,878 have been paid.

(Image: Reuters)