Fraud risk, boat journeys, biometric errors: Digital pension payments leave many behind in Odisha

Following an outcry, the state government reverted to cash disbursements but pensioners supported by the Centre still struggle to access their due.

Since 2013, Gasi Korrai, an Adivasi septuagenarian from Odisha’s Koraput district, has been receiving his monthly old age pension of Rs 500. Until September 2022, Korrai would collect his pension on the 15th of every month from the panchayat office during the public assembly of pensioners.

The panchayat officer would pay him his pension in full public view and make an entry in the pension book. Gasi could collect his pension from the office without incurring any expenses – such as for travel. When unwell, he would request his ward member – an elected member of the panchayat – to collect the pension on his behalf.

The Odisha government’s pension cash disbursement system, in place since 2008 in the current form, was designed to promote transparency and accountability. Panchayat officers disbursed pensions during public assemblies, which effectively minimised the risk of errors and corruption.

Pension books were used to keep track of payments, providing an added layer of accountability while pensioners did not have to incur expenses to receive their due.

Odisha has 48.5 lakh pensioners, necessitating such a reliable and convenient system. Of these pensioners, 20.5 lakh are supported by the Centre’s National Social Assistance Programme for the elderly, disabled and widows. The other 28 lakh are pensioners under the Odisha government’s Madhu Babu Pension Yojana. The state scheme supports those older than 60 years of age, widows, leprosy patients, the disabled, single women among others.

Switch to bank transfers

In April 2022, the Odisha government switched from paying pension in cash to transferring it to the bank accounts of pensioners to improve transparency and reduce corruption. This followed the state government’s decision in January 2020 to link pension accounts with Aadhaar.

Since the order, 81.3% of pensioners in the state have transitioned from cash payments to direct bank transfers. An outcry followed as civil organisations and media coverage highlighted how pensioners were suffering due to bank transfers. The state government retracted its decision and decided to revert to the cash disbursement system from June 2023.

However, the 20.5 lakh pensioners under the National Social Assistance Programme are still receiving their pensions through bank transfers for the state as well as Centre’s shares of the amount.

The bank transfer of pensions can be cost-effective as it reduces logistical hurdles. But it has resulted in hardships, including costs, for pensioners like Korrai, who has had to travel across the Jalaput river by boat for 45 minutes to collect his pension from the banking correspondent in Jalaput village. It can cost Korrai between Rs 150- Rs 200 every month to make the trip and collect an amount of Rs 500.

Sometimes Korrai has to make multiple trips to collect his pension due to biometric failures, as was the case in January 2023 when he ended up spending the entire amount in just accessing his pension. Korrai also fears for his safety every time he makes the trip. “I’m always worried that I might not return,” he said.

At the same time, the transition has helped some pensioners, for instance, providing them with the opportunity to withdraw their pension at the date, time and banking facility of their convenience. But at the same time it has created difficulties for many unlettered pensioners, like Korrai, who do not have access to banking infrastructure or possess basic digital literacy.

Banking correspondents, appointed by the state government in rural areas, have helped improve banking infrastructure in the past five years but the benefits have not reached small Adivasi villages that need such services the most. Most appointments have instead been for villages with a population of up to 2,000.

A survey in May 2023 by the Right To Food Campaign, Odisha in 10 districts found that pensioners struggle to access their pensions since the shift to bank payments. One of the authors of this article is associated with the Right To Food Campaign.

For instance, Pangi Mutthai from Kalahandi has not received her pension for about 20 months since there was a transition to bank transfers. No officials at the panchayat level have been able to explain why.

Similarly, Pangi Ramanadh from Malkangiri district filed complaints with panchayat officials in July 2022 when he did not receive his pension for three months. It was later discovered that the money was transferred to the wrong bank account.

There were also cases of pensioners with multiple bank accounts who did not know to which account the transfer had been made.

Banking correspondents were also found to be charging unreasonable commissions and defrauding unlettered pensioners. Those who made withdrawals through banking correspondents did not receive receipts while the elderly faced more hurdles due to the failure of biometrics.

The lack of awareness about banking rights among pensioners, combined with the absence of a robust mechanism to monitor customer service points and business correspondent fraud, is exacerbating the problem.

The lack of transparency and accountability is a significant concern with bank transfers as tracking payments, identifying errors and addressing grievances can be difficult, leading to the denial of benefits for entitled pensioners.

Additionally, bank transfers, as seen in the case of the Centre’s rural guarantee scheme and other cash transfer programmes, are marred by poor internet connectivity, high transaction costs to the pensioners and inadequate banking infrastructure.

It is laudable that the Odisha government responded to the plight of poor pensioners and reverted to cash disbursements. But the Union government, too, must understand that state governments, which are responsible for the last-mile delivery of schemes and services, should be allowed to choose the best mode of disbursement.

By unilaterally deciding on the mode of transfer, the Centre is infringing on the rights and authority of state governments, which goes against the spirit of cooperative federalism as described by the Constitution. The Centre can benefit from a lesson often mentioned by justice-seeking activists: “By listening to those who are most affected, we can develop solutions that benefit everyone.”

Sameet Panda is associated with the Right to Food Campaign-Odisha.

Chakradhar Buddha is a Researcher affiliated to LibTech India.