Hours after the Congress dubbed the Centre's Atal Pension Yojana as a "poorly-designed scheme" that "hoodwinks and coerces" people into participating in it, Finance Minister Nirmala Sitharaman on Tuesday hit back at the grand old party accusing it of "hoodwinking" people in the name of vote bank politics.

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Congress general secretary Jairam Ramesh said the Atal pension scheme is a "fitting representation of the Modi Government's policy making: headline management, with few benefits actually reaching the people".

His attack came after a media report claimed that nearly one of three subscribers who dropped out of the Centre's pension scheme for unorganised sector, did so because their accounts were opened without their "explicit" permission. The report cited a recent sample study by the Indian Council of Social Science Research (ICSSR).

"The 'flagship' Atal Pension Yojana is a very poorly-designed scheme, a paper tiger that needs officials to hoodwink and coerce people into participating in it. It's a fitting representation of the Modi Government's policy making: headline management, with few benefits actually reaching the people!" Ramesh said in a post on X.

Sitharaman hit back, saying Ramesh, "who is known for using verbal sophistry to hide facts, is being malicious or is ignorant of the basic tenets of designing a good pension scheme".

She claimed that the Yojana is designed based on best practice choice architecture to automatically continue the premium payment unless the subscriber opts out.

"This is a deliberate and beneficial feature which is in the best interest of the subscribers. Instead of requiring people to decide each year to continue, they have to take a decision to discontinue. This makes many of them take the right decision and save for their retirement," she said.

The finance minister also cited the book titled "Nudge" authored by Richard Thaler (Nobel prize winner in Economics 2017) and Cass Sunstein (a professor who worked in the Obama administration), saying it explains the need for proper "choice architecture" in designing public schemes.

"Jairam Ramesh says that people are being 'hoodwinked and coerced' into participating! Hoodwinking is what the Congress does always — in the name of vote bank politics or minority appeasement. Coercion is what was used to make former Chairman of State Bank of India Shri RK Talwar resign because he refused to give loans to favourites of the dynasty," she said in a post.

"The elitist mindset of the dynasty and its minions who are constantly thinking of people in the higher echelons of society, perhaps, blinds them to this obvious truth. The Congress prefers that poor should not have pensions so that they are forced to rely on government hand-outs which keep them dependant on dynasty politicians," Sitharaman said, using the hashtag "#CongressforDynasty".

Ramesh again hit back with a series of posts on X, saying, "It is refreshing that the Finance Minister has admitted that the Atal Pension Yojana (APY) is coercive and forces people to enrol without their consent." He accused the Union minister of hiding this reality behind "verbal sophistry" like "best practice choice architecture" and various foreign academics, saying it is a community "often derided by her boss".

"While 'nudges' are certainly important, here's the catch: Nudges cannot be a synonym for 'non-consensual'. Nudges to keep APY recurring in subsequent years are fine. The Government can perhaps even make opening APY accounts the default. But doing so without the knowledge of the beneficiaries is beyond the pale.

"Bank officers who are made to meet quotas, are opening APY accounts even for those who do not have enough income to contribute regularly," Ramesh claimed.

"Just a day later, here's what emerged: Up to a third of the subscribers to this scheme were enrolled into the scheme without 'explicit permission' by officers seeking to meet their quotas," he said sharing the media report on X.

Atal Pension Yojana (APY), a pension scheme for citizens of India, is focused on the unorganised sector workers. Under the APY, guaranteed minimum pension of Rs 1,000 will be given at the age of 60 years and it may go up to Rs 5,000 per month depending on the contributions.

Sitharaman said the minimum return under APY is guaranteed by the government to be at least eight per cent, regardless of prevailing interest rates and returns.

As regards the majority of pension accounts being in the lower slabs, she said for a subsidised scheme intended for the poor and lower middle class, this is obvious.

Hitting back, Ramesh alleged, "Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY) and Pradhan Mantri Suraksha Bima Yojana (PMSBY) have illegally debited money from customers' bank accounts without their consent. Is the FM of the opinion that taking money from Indians without their consent is a 'nudge'?."

He said the finance minister claims that the rate of return is an "attractive 8 percent", and that therefore this is not a "fixed income" scheme.

"Keep in mind, a Rs 1,000 per month pension in 2035 is equivalent to just Rs 617 rupees per month in 2024 prices (assuming a continuation of Modi-era inflation rates). This is the kind of erosion of value that makes the APY a poorly-designed scheme," he claimed.

"The 'flagship' scheme is actually a 'sinking ship'," he alleged.