India farmers' joy at pension plan 

By Amarnath Tewary, BBC

September 13, 2006

More than 50,000 farmers have signed up for pensions (Photos: Prashant Ravi)

Dairy farmer Surendra Rai says he has always worried about making ends meet after he stops working.

This was until recently - when he and others like him were offered the chance to take part in a ground-breaking pension scheme in Bihar, one of India 's poorest and most backward states.

Mr Rai will be able to contribute as little as 100 rupees ($2.20) every month and in return will receive a decent pension when he is 58.

"I have always thought that only government workers get a pension. But it now seems we can get it too," he told the BBC .

Mr Rai is among more than 50,000 Bihar dairy farmers who are set to join the pension scheme, set up by one of India 's leading state-run banking and investment companies, Unit Trust of India ( UTI ).

Experts say this is the first time that large numbers of farmers - India's largest unorganised workers' sector - have signed up for a pension scheme.

Most of the farmers belong to the districts of Patna and Ara in Bihar .

Enthusiasm

The scheme is open to dairy farmers belonging to the state's milk producers' co-operative between the ages of 18 and 55.

The monthly contribution of 100 rupees will mature to provide anything between one and two million rupees ($22K-$43K) on retirement at 58.

UTI officials say the accumulated money could be withdrawn in parts every month, every quarter, or once or twice a year.

 
I had never thought of getting any pension when I stop working. But now I too can get a lot of money when I grow old
Ashok Kumar Singh (right)

Balram Bhagat, a senior UTI manager in Bihar , said the company plans to invest 60% of the farmers' money in debt and the remainder in equity to minimise the effect of stock market fluctuations on the returns.  

The pension scheme is part of the UTI Mutual Fund company, which claims to be India 's largest mutual fund company with over six million investors and 53 domestic schemes.

Enthusiasm among diary farmers to embrace the pension scheme is high.

"I had never thought of getting any pension when I stop working. But now I too can get a lot of money when I grow old," says villager Ashok Kumar Singh.

UTI has been helped by the fact that the dairy farmers of Bihar who have accepted the scheme belong to a large and successful cooperative, which has more than 260,000 members in 24 districts.

UTI hit upon the idea of a pension scheme for the country's unorganised workers in April when more than 2,000 self-employed women working with an NGO in the western state of Gujarat joined.

Now the company plans to target fertiliser industry workers. By October, UTI expects to sign up about 100,000 farmers from five districts for the pension scheme.

India has a poor record of pension schemes for its working population - by one estimate only 12% of its workers, mostly employed by the government, are entitled to pensions.