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Well-intentioned, but...

THOSE CAUGHT IN abject poverty and with no social security cover whatsoever, should find some cheer in the decision to introduce `Janashree Bima Yojana', a group insurance scheme. The scheme, approved by the Union Cabinet, is expected to offer i nsurance cover to the poorest of the poor and is a fulfillment of one of the promises made by the Finance Minister, Mr. Yashwant Sinha, while presenting the 2000-01 Budget.

Outlining the scheme, Mr. Sinha had then said that as ``more than one-third of our population still lives below the poverty line...there is an imperative to extend some social security cover to the poorest sections...'' Under the scheme, open to all aged 18-60 in the BPL (below poverty line) category in the rural and urban areas, and in groups of 25 or more -- perhaps for administrative and functional ease -- beneficiaries will get an insurance cover of Rs. 20,000 in case of natural death, Rs. 25,000 for partial permanent disability due to an accident, and Rs. 50,000 in case of accidental death or total permanent disability. The premium, fixed on actuarial basis, would be Rs. 200 per person per annum, of which only Rs. 100 i s to be paid by the beneficiary. The balance will be borne by the Government out of LIC's Social Security Fund, created in the late 1980s. The corpus of this fund, currently at about Rs. 302 crores, is said to be adequate to meet the commitmen ts towards the scheme for the next two years at the least. The corpus had not been fully utilised over the years primarily because it was not marketed well enough. That handicap could well haunt this new arrangement. If LIC's network of branches a nd agents could not enlist beneficiaries under the scheme, it is questionable whether a governmental apparatus will be any more successful. It would need special efforts on the lines of the polio-eradication campaign to extend the reach.

The scheme will also require some finetuning before implementation. There should be no insistence on the group size. Whether collectively or as individuals, it should be able to enroll, provided some eligibility criteria are met. The insurance scheme is intended to benefit the BPL category which in 1993-94 comprised 320.30 million people or nearly 36 per cent of the population. Various studies have shown that the incidence of poverty has actually increased over the years of liberalisation, with the bene fits of reforms not reaching out far enough. Evidently, the insurance cover is a small step towards stringing a safety net.

Here lies the rub. It is a historical fact that more than 50 per cent of the people in the BPL category are accounted for by States in the eastern region -- Uttar Pradesh, Bihar, Orissa and West Bengal. After two years, when the burden of paying 50 per cent of the premium (Rs. 100 per person annually) may fall on the State governments, the scheme is likely to run aground as the finances of these States are in a mess. And as a consequence, the disparity is likely to increase.