Social Security Schemes in India: Empowering the Deprived?

By Prakhyati Upadhyay, GLC Mumbai.

India’s social security system draws its inspiration from Articles 41, 42, 43 and 47, as enshrined in the Directive Principles of State Policy of our Constitution, which contain all the ingredients obliging the State to move towards the realization of socio-economic rights and in effect, meet the income security aspirations of all its citizens. Broadly, social security can either be a non-contributory and State-funded social assistance mechanism aimed at directly benefiting the vulnerable sections like children, mothers, elderly, invalids and disabled, or a contributory social insurance mechanism, comprising contributions both from beneficiaries and employers/State. Nonetheless, both these mechanisms appear well dispersed amongst both sectors-the organized and the unorganized.

The organized sector includes workers employed by the government, State owned enterprises and private sector enterprises. In this sector, employees get assured work. Whereas, the unorganized sector consists of informal units engaged in the production of goods and services and they operate on a small scale. Contrary to the former sector, employees are not assured of getting work in this sector.

The government has put in place a comprehensive health insurance and medical benefit mechanism by guaranteeing the statutory creation of a financial corpus under The Employees’ State Insurance (ESI) Act, for meeting not only the medical care requirements of employees and their families but also for dispensing cash benefits during sickness and maternity needs, and monthly payments in case of death or disablement for those working in factories and establishments with 10 or more employees. Similarly, uninterrupted and continuous services rendered by an employee are acknowledged and rewarded in the form of monetary benefits or gratuity as has been mandated by the Payment of Gratuity Act, 1972. However, this benefit can be availed of, only after completion of a minimum 5 years of continuous service, subject to certain other stipulations.

With a prospective view in mind, the government also actuates and manages compulsory retirement savings, whereby salaried employees contribute a portion of their salaries into a provident fund, with an equal contribution by their employers and the funds thus saved are paid out to the retirees for leading an independent and comfortable (remaining) life. This in a way, fosters a better and self-sufficient society bereft of any deprivation and poverty.

The unorganized sector, of late, has caught the government’s attention, especially in relation to the  payment of adequate and reasonable minimum wages in order to help the workers subsist in a respectable manner. As a consequence, the National Floor Level Minimum Wages are subjected to regular revision, with the present minimum having been fixed at Rs.176/- per day in July 2017. In order to bring the unorganized workers under one comprehensive ambit, a National Social Security Board (NSSB) was constituted and three major social security schemes, the RSBY (Rashtriya Swasthaya Bima Yojana), AABY (Aam Aadmi Bima Yojana), and IGNOAPS (Indira Gandhi National Old Age Pension Scheme-for old age protection) meant for the unorganized workers were converged into a single smart card platform based on a single unified database. The Central legislature has also begun prioritizing the unorganized workers in the building and construction sector and as express measures thereto, it has not only enacted a specific statute to properly regulate their employment and conditions of service, but has also mandated that every construction establishment which employs 10 or more workers in any building or other construction work is to be compulsorily levied a cess on, for all constructions, at a rate of 1% of the total cost incurred by the employer and the proceeds so collected are to be deposited into a welfare fund with the Building and Other Construction Workers’ Welfare Board,  which is the nodal body governing the welfare schemes for such workers.

The government has also devised means to protect and secure the rights and economic interests of inter-State and intra-State migrant workers by mandating a strict regulation of their employment and conditions of service. Similarly, the rehabilitation of working children in labour endemic districts has been undertaken at a war footing under the National Child Labour Project Scheme (NCLP), thus ensuring expeditious withdrawal of children from hazardous work environments and their smooth transition into special training centers, where they are provided with bridge education, vocational training, mid-day meals, stipend, health-care facilities, etc. and are finally mainstreamed into the formal education system.

The government’s flagship National Social Assistance Programme (NSAP) encompasses five different schemes, each ensuring disbursal of adequate economic security to disparate deprived groups. While the Indira Gandhi National Old Age Pension Scheme (IGNOAPS) provides monthly pension to BPL (Below Poverty Line) 60 plus senior citizens, the Indira Gandhi National Widow Pension Scheme (IGNWPS) entitles monthly financial security to widows of the 40-59 years age group. Similarly, the Indira Gandhi National Disability Pension Scheme (IGNDPS) secures the group of persons afflicted with severe and multiple disabilities by providing monthly assistance. BPL households suffering untimely loss of their breadwinners are also provided with lump sum assistance under the National Family Benefit Scheme (NFBS). The destitute senior citizens, who, though eligible, remain uncovered under the IGNOAPS, are being socially secured through the Annapurna scheme, under which food grains are provided free of cost every month. And the icing on the cake is the Atal Pension Yojna (APS), which solicits contributions from citizens in the 18 to 40 years age group in order to render them eligible for receiving different monthly benefits automatically into their Pradhan Mantri Jan Dhan Yojana (PMJDY) bank accounts, after they have reached the age of 60 years.

Enhanced and compulsory provisioning of social security benefits has begun assuming greater significance with governmental benevolence reaching its zenith after the latest historic announcement of a never before insurance cover of as much as Rs 5 lakhs each for a hundred million poor and vulnerable families, the biggest such public initiative, worldwide.

Though there is no dearth of social security schemes in our country, many legitimate beneficiaries remain deprived of their benefits partly due to recurrent administrative bottlenecks and partly owing to the rampant financial bunglings and unbridled leakages. To stem this rot, the government needs proactive adoption of stricter labour law implementation strategies complemented with greater budgetary allocations, securer information technology infrastructure and easier cashless transfers to the actual beneficiaries. Public-private partnerships and symbiotic collaborations with reputed NGOs too would help to bring these schemes off the ground. Such telescopic merger of the aforesaid multi-pronged initiatives is in all likelihood, expected to provide not only a renewed acceleration to the efforts at broad basing digital literacy, as envisioned in the government’s bellwether Digital India initiative launched in 2015, but also a comprehensive panacea for all the systemic maladies and in effect, helping inculcate social empathy among all the stakeholders.

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