UPSC PRELIMS 2019: Centre notifies pension scheme for small traders

Centre notifies pension scheme for small traders

Topic : Centre notifies pension scheme for small traders

Topic in Syllabus: Indian Economy



Centre notifies pension scheme for small traders

The Centre’s pension scheme for small traders named ‘Pradhan Mantri LaghuVyapariMaandhan Yojana’ 2019 has been notified and is being introduced on a trial basis.


About the Pradhan Mantri LaghuVyapariMaan-dhan Yojana:

  • The scheme gives the subscribers ₹3,000 a month after they turn 60, once they have contributed to the scheme every month from the time of enrolment and till that age.
  • The Central Government will make matching contribution (same amount as subscriber contribution) i.e. equal amount as subsidy into subscriber’s pension account every month.
  • For example, an 18-year-old would have to pay ₹55 a month, while a 40-year-old would need to pay ₹200 a month.
  • The scheme is based on self-declaration as no documents are required except bank account and Aadhaar Card.


  • Small traders between 18 and 40 years of age, having an annual turnover of less than ₹1.5 crore would qualify to apply for the scheme.
  • Applicants should not be covered under the National Pension Scheme, Employees’ State Insurance Scheme and the Employees’ Provident Fund or be an Income Tax assessee.


The Code on Wages Bill, 2019 Introduced in Lok Sabha

The Minister of State (I/C) for Labour and Employment introduced The Code on Wages Bill, 2019 in Lok Sabha to amend and consolidate the laws relating to wages and bonus and matters connected therewith.

Highlights of Code on Wages 2019:

  • The Code on Wages, 2019 seeks to regulate wage and bonus payments in all employmentswhere any industry, trade, business, or manufacture is carried out.
  • The Code replaces the following four laws: (i) the Payment of Wages Act, 1936, (ii) the Minimum Wages Act, 1948, (iii) the Payment of Bonus Act, 1965, and (iv) the Equal Remuneration Act, 1976.



  • The Code will apply to all employees.  The central government will make wage-related decisions for employments such as railways, mines, and oil fields, among others. State governments will make decisions for all other employments.

Floor wage

  • The central government will fix a floor wage, taking into account living standards of workers. Further, it may set different floor wages for different geographical areas.

Fixing the minimum wage: 

  • The Code prohibits employers from paying wages less than the minimum wages.  Minimum wages will be notified by the central or state governments.
  • The minimum wages will be reviewed at an interval of not more than five years.  While fixing minimum wages, the central or state governments may take into account factors such as: (i) skill of workers, and (ii) difficulty of work.


  • The central or state government may fix the number of hours that constitute a normal working day. 
  • In case employees work in excess of a normal working day, they will be entitled to overtime wage which must be at least twice the normal rate of wages.


  • Under the Code, an employee’s wages may be deducted on certain grounds including fines, absence from duty etc. which should not exceed 50% of the employee’s total wage.

Determination of bonus: 

  • All employees whose wages do not exceed a specific monthly amount will be entitled to an annual bonus.
  • The bonus will be at least: (i) 8.33% of his wages, or (ii) Rs 100, whichever is higher.

Gender discrimination: 

  • The Code prohibits gender discriminationin matters related to wages and recruitment of employees for the same work or work of similar nature.


Advisory boards: 

  • The central and state governments will constitute advisory boards. One-third of the total members on both the Boards will be women.
  • The Boards will advise the respective governments on various issues including: (i) fixation of minimum wages, and (ii) increasing employment opportunities for women.



  • The Code specifies penalties for offences committed by an employer, such as (i) paying less than the due wages, or (ii) for contravening any provision of the Code, with the maximum penalty being imprisonment for three months along with a fine of up to one lakh rupees.



  • In India, labour is included in the concurrent listwhich implies that both the central government and state governments can make laws regarding this subject.
  • Currently, there are over 40 state and central laws regulating various aspects of laboursuch as resolution of industrial disputes, working conditions in factories, and wage and bonus payments.
  • The Second National Commission on Labour (2002)had recommended that existing labour laws should be classified into broader groups for easier compliance, such as (i) industrial relations, (ii) wages, (iii) social security, (iv) safety, and (v) welfare and working conditions. This would also allow for uniformity in the coverage of various labour laws that are in force.
  • In this context, the Code on Wages, 2017was introduced in Lok Sabha in 2017 which seeks to regulate wage and bonus payments in all employments where any industry, trade, business or manufacturing is carried on.


Significance of Code on Wage 2019:

  • It universalizes the provisions of minimum wages and timely payment of wagesto all employees irrespective of the sector and wage ceiling.
  • It simplifies the definition of wages.
  • It seeks to increase the legislative protection of minimum wage to 100 per cent of the workforce.
  • At present, many States have multiple minimum wages. The Code fixes the minimum wages by doing away with ‘type of employment’as a criterion. Rather, the minimum wage will be fixed primarily based on geography and skills.


Key Issues and Analysis:

  • Central government may set a national minimum wage. Further, it may set separate national minimum wages for different states or regions. In this context, two questions arise: (i) the rationale for a national minimum wage, and (ii) whether the central government should set one or multiple national minimum wages.
  • States have to ensure that minimum wages set by them are not lower than the national minimum wage. If existing minimum wages set by states are higher than the national minimum wage, they cannot reduce the minimum wages. This may affect the ability of states to reduce their minimum wages if the national minimum wage is lowered.
  • The time period for revising minimum wages will be set at five years. Currently, state governments have flexibility in revising minimum wages, as long as it is not more than five years. It is unclear why this flexibility has been removed, and five years has been set for revision.
  • The Equal Remuneration Act, 1976, prohibits employers from discriminating in wage payments as well as recruitment of employees based on gender. While the Code prohibits gender discrimination on wage-related matters, it does not include provisions regarding discrimination during recruitment.



  • It de-links the process of fixing the minimum wage from a scientific calorie-based formulaand allows the Centre to ‘arbitrarily’ fix the wage.
  • Without the complain of ‘appropriate authority’as described in bill, no court can take cognisance of any offence under the proposed legislation. The government ignored suggestions of the Standing Committee with regard to strengthening this enforcement mechanism.
  • The use of the term ‘Facilitator’ instead of ‘Inspector’in the Code restricts the inspection which is the lifeline of enforcement. The word ‘Facilitator’ should be substituted by ‘Inspector’. However, the bill used the term ‘Inspector-cum-facilitator’.
  • The Code lacked consistency in its use of both ‘worker’ and ‘employee’terms and underlined that since minimum wage is a matter of right for every working person, a common definition of the employee/worker needs to be given in the Code. However, in the Bill retained the definition as it is.


Sample Question:

Who among the following can join the National Pension System (NPS)?
(a) Resident Indian citizens only
(b) Persons of age from 21 to 55 only
(c) All State Government employees joining the services after the date of notification by the respective State Governments
(d) All Central Government employees including those of Armed Forces joining the services on or after 1st April, 2004


Answer: C