Interim Budget 2024: FM allocates ₹2,39,612 crore to pension, up 0.65% from last year
Upstox
3 min read • Updated: February 1, 2024, 10:00 PM
Summary
Summary: In the Interim Budget 2024, Finance Minister Nirmala Sitharaman allocates ₹2,39,612 crore to pensions for FY 2024-25, a 0.65% increase from the previous year. A significant portion goes to the Atal Pension Yojana (APY), providing a monthly pension to unorganised sector workers upon turning 60, based on their contributions. The scheme guarantees a minimum pension, with deficits covered by the government, aiming to ensure financial security for retirees amidst rising living costs.
Key Takeaways:
- ₹2,39,612 crore is allocated to pension in the financial year 2024-25.
- Under Atal Pension Yojana, a monthly minimum pension ranging from ₹ 1,000 to ₹ 5,000 will be paid to a subscriber of this scheme once they attain the age of 60 years.
- For the minimum guaranteed pension, if the returns on pension contributions are less than the presumed returns, the deficit shall be met by the government under the Atal Pension Yojana.
FM Nirmala Sitharaman in the interim Budget 2024 announced the government has allocated ₹2,39,612 crore to pension in the financial year 2024-25 (FY25). This spend is 0.65% higher than the ₹2,38,049 crore allocated to Pension in FY24.
The overall gross budget support allocated to the pension of ₹2,39,612 crore will be used by the ministry to pay the pensions of various retired government employees and towards Atal Pension Yojana (APY) introduced by the government on 9th May 2015. The APY scheme has already seen a growth of 40% from FY 2019-2020 to FY 2021-22, which indicates the immense success of this scheme.
What is Atal Pension Yojana?
The government of India introduced a pension scheme called Atal Pension Yojana (APY) for those who are categorised as unorganised sector workers. Under this scheme, a monthly minimum pension of ₹1,000, ₹ 2,000, ₹3,000, ₹4,000, or ₹5,000 will be paid to a subscriber of the APY once they attain the age of 60 years, depending on the contributions made by them. For a citizen of India to join APY, the following eligibility criteria should be met:
- The subscriber’s age must be between 18 and 40 years.
- The subscriber must have a post office savings bank account or a savings bank account.
Why is Atal Pension Yojana Introduced?
The APY is introduced for unorganised sector workers to ensure that they can have a dignified life in old age. A Pension provides people with a monthly income when they are no longer earning. Some of the key reasons for which APY is introduced are as follows:
- The earnings decrease potentially with age.
- The cost of living has continuously increased in past decades.
- Pension ensures increased longevity.
- Pensions offer an assured monthly income in old age.
- With keeping these factors in mind, the APY has been introduced to ensure that every citizen of India who subscribes to this scheme can enjoy an independent life in their golden years.
Benefits of Atal Pension Yojana
Under Atal Pension Yojana, the minimum pension is guaranteed by the government of India. That is to say, if for the minimum guaranteed pension, the actual returns on pension contributions are lower than the returns assumed for a period of contribution, the deficit shall be met by the government.
On the contrary, for minimum guaranteed pension, if the actual returns obtained for the pension contributions are more than the returns assumed for the contribution period, the excess amount shall be credited to the account of the subscriber.
Conclusion
The government of India has undertaken the Atal Pension Yojana for the betterment of all the people. This undertaking can provide support to a lot of Indians in their golden years.