Expansion of India’s Social Security Net

Syllabus: GS2/Governance; Social Issues

Context

• Recently, the Union Labour Minister highlighted that India has made remarkable strides in expanding its social security net, ensuring that a larger segment of the population benefits from welfare programs.

Overview of Social Security in India

• Social Security in India is a crucial aspect of economic and social policy aimed at providing financial and social protection to the country’s diverse population.
• It is primarily delivered through government initiatives, employer-based benefits, and social insurance programs. 
• The legal framework governing social security includes:
  • The Employees’ Provident Funds and Miscellaneous Provisions Act, 1952;
  • The Employees’ State Insurance Act, 1948;
  • The Maternity Benefit Act, 1961;
  • The Unorganized Workers’ Social Security Act, 2008;
  • The Code on Social Security, 2020.
• These laws and policies cover organized and unorganized sector workers, providing them with financial security and welfare benefits.

Global Perspective and Sustainable Development

• Social protection is a recognized human right, essential for achieving the Sustainable Development Goals (SDGs).
  • Goal 1 of the SDGs aims to end poverty by 2030 through national social protection systems, ensuring the coverage of vulnerable groups.
• Article 22 of the Universal Declaration of Human Rights emphasizes social security as a fundamental right, which is reaffirmed in the Social Protection Floors Recommendation by the ILO.

Key Social Security Schemes in India

• Pension and Provident Fund Schemes:
  • Employees’ Provident Fund (EPF): Managed by the EPFO under the Ministry of Labour and Employment, EPF is a mandatory savings scheme for employees in organizations with 20 or more workers.
    • Both employer and employee contribute 12% of the employee’s salary towards this fund.
  • National Pension System (NPS): A voluntary retirement scheme regulated by the Pension Fund Regulatory and Development Authority (PFRDA).
    • Available to both public and private sector employees.
    • Provides tax benefits under Section 80CCD of the Income Tax Act.
• Social Security for Unorganized Workers:
  • Pradhan Mantri Shram Yogi Maan-Dhan (PM-SYM): A pension scheme for unorganized sector workers earning less than ₹15,000 per month.
    • Requires a small monthly contribution (₹55-₹200), with a matching contribution from the government.
  • Pradhan Mantri Kisan Maandhan Yojana (PM-KMY): A pension scheme for small and marginal farmers aged 18-40 years.
  • Building and Other Construction Workers’ Welfare Scheme (BOCW): Provides health, education, and insurance benefits to construction workers.
  • Atal Pension Yojana (APY): A guaranteed pension scheme for low-income workers, encouraging financial security in old age.
  • Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY): Life insurance coverage of ₹2 lakh for individuals aged 18-50 at an annual premium of ₹436.
  • Pradhan Mantri Suraksha Bima Yojana (PMSBY): An accident insurance scheme covering ₹2 lakh for accidental death and disability.
• Health and Insurance Schemes:
  • Employees’ State Insurance Scheme (ESI): Provides medical and disability benefits to employees earning up to ₹21,000 per month.
    • Covers expenses related to sickness, maternity, disablement, and death due to employment injury.
  • Rashtriya Swasthya Bima Yojana (RSBY): A government-funded health insurance scheme for BPL (Below Poverty Line) families.
  • Ayushman Bharat – Pradhan Mantri Jan Arogya Yojana (PM-JAY): The world’s largest health assurance scheme providing free medical coverage of up to ₹5 lakh per family per year for economically disadvantaged groups.
• Maternity and Disability Benefits:
  • Maternity Benefit Act, 1961: Provides paid maternity leave of 26 weeks for women working in establishments with 10 or more employees.
  • Indira Gandhi National Disability Pension Scheme (IGNDPS): Provides financial assistance of ₹300-₹500 per month to disabled individuals below the poverty line.
• Employment and Labor Welfare:
  • Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA): Guarantees 100 days of wage employment to rural households, strengthening income security.
  • e-Shram Portal: A national database for unorganized workers, enabling targeted delivery of social security benefits.

Recent Expansions in Social Security

• Extending Benefits to Gig and Platform Workers: With the rise of the gig economy, the government has proposed bringing gig workers (such as food delivery agents and cab drivers) under the social security umbrella through platforms like e-Shram and the Social Security Code.
• Digital and Financial Inclusion: The Jan Dhan-Aadhaar-Mobile (JAM) Trinity has strengthened the delivery of welfare benefits, ensuring direct benefit transfers (DBT) to beneficiaries, reducing leakages, and improving transparency.
• Ration Card Portability under ‘One Nation, One Ration Card’ (ONORC): It enables migrant workers to access subsidized food grains anywhere in India.
• Strengthening Healthcare and Insurance for Informal Workers: The government has been pushing for the inclusion of informal workers in health schemes, ensuring access to PM-JAY and ESIC facilities.

Challenges in Expanding the Social Security Net

• Underestimation of Coverage: The ILO report does not account for in-kind benefits like food security and housing or state-administered schemes.
  • The actual coverage is expected to be higher once these factors are included.
• Low Coverage in the Unorganized Sector: Over 90% of India’s workforce is in the unorganized sector, yet only a small fraction benefits from social security schemes.
• Lack of Awareness and Accessibility: Many eligible beneficiaries remain unaware of existing schemes, leading to lower enrollment rates.
• Funding and Implementation Bottlenecks: The large financial requirement for social security programs poses budgetary constraints, while last-mile implementation remains a challenge, especially in rural areas.
• Fragmented Coverage: Despite multiple schemes, many workers—especially in the unorganized sector—remain outside the formal security net.
• Bureaucratic Hurdles and Corruption: Delays in processing claims and leakages in funds allocation reduce the efficiency of these programs.

Way Forward

• Integration of Schemes: A unified social security framework can enhance efficiency and accessibility.
• Technology-Driven Delivery: Expanding digital enrollment, biometric authentication, and mobile applications can improve outreach.
• Strengthening Public-Private Partnerships: Involving the private sector in providing pension and insurance solutions can enhance social security coverage.
• Formalizing the Unorganized Sector: Incentivizing employers to register workers in social security schemes.
• Simplification of Processes: Reducing paperwork and making enrollment procedures more user-friendly.

Source: TH