Social security policy shifts in India

For most of us in India, government / employer-sponsored “social security” is a concept which is available only to a privileged few.

The International Labour Organisation (ILO), the standard-setting body for employee welfare across the globe, supports globally-agreed minimum standards for nine branches of social security: medical care; sickness benefit; unemployment benefit; old-age benefit; invalidity benefit; survivors' benefit; employment injury benefit; family benefit; and maternity benefit.

The ILO, as well as the national governments, would ideally like total and uniform social security coverage. However, there are coverage gaps due to reasons of affordability and want of administrative sophistication.

The challenge of extension of social security is on two fronts — not all sections of the working population are covered, and those who are covered are not protected against all the nine types of social insecurities.

INDIAN SCENARIO

The Indian labour market is marked by a preponderance of informal sector workers who do not have a recorded and verifiable employer-employee contract. Consequently, it has been argued that there is a large coverage gap of 90 per cent, as the informal workers do not have access to credible social security arrangements.

For the ten per cent of privileged workers who are in the organised sector, there are two pre-eminent social security organisations — namely, the Employees' Provident Fund Organization (EPFO) and the Employees' State Insurance Corporation (ESIC). Between them, they cover the majority of the nine branches of social security enshrined in the ILO conventions.

The Government of India introduced a new category of workers called ‘International Workers' (IWs) in the Employee Provident Fund Scheme, 1952 (EPF Scheme) in October 2008. IWs include expatriates (foreign citizens) working for an employer in India, and the Indian employees working overseas in countries with which India has signed a Social Security Agreement (SSA).

The expatriates working in India at companies covered under the EPF & MP Act are now required to make PF contributions on full salary (as defined in the EPF & MP Act) without any cap, unless they are covered under an SSA between India and their home country.

Rashtriya Swasthya Bima Yojana (RSBY) has been started by the government to give health insurance cover to the Below Poverty Line (BPL) families. The aim of RSBY is to protect the BPL households against financial hardships emanating from health problems that require hospitalisation.

The beneficiaries under RSBY are entitled to hospitalisation coverage of up to Rs 30,000 for most of the diseases that need hospitalisation. The scheme has already enrolled 23 million of the 50 million BPL families in India. This is indeed a revolution at the bottom of the pyramid.

To bridge the coverage gap for pension, the Pension Fund Regulatory and Development Authority has launched a voluntary New Pension Scheme for all citizens of India aged between 18 and 60. The scheme, launched in May 2009, facilitates the participation of self-employed people and others in building a retirement corpus. Individuals can choose their own investments in equity, corporate bonds and government securities. NPS can become a good second avenue for those who want to get higher pensions than what is obtained under the Employees' Pensions Scheme run by EPFO.

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