The Narendra Modi government is seeking to regulate India’s booming gig economy by bringing lakhs of workers hired by food delivery firms, Swiggy and Zomato, and ride hailing firms, Uber and Ola, under a social security scheme.

The move forms a key part of the new ‘Code on Social Security’ drafted by the government and is aimed at ensuring the social security needs of gig workers, but it could create a furore among gig economy giants, which have made freelance workers the backbone of their business.

“The Central Government may formulate and notify from time to time suitable social security schemes for gig workers and platform workers on matters relating to life and disability cover; health and maternity benefits; old age protection; and any other benefit as may be determined by the Central Government,” the government wrote in the Code on Social Security in the section dealing with social security for unorganised workers.

Every such scheme formulated and notified may provide for the manner of administration of the scheme; the agency or agencies for implementing the scheme; the role of aggregators in the scheme; the sources of funding of the scheme and any other matter as the Central Government may consider necessary for the efficient administration of the scheme, according to the draft Code on Social Security.

India’s tech-enabled gig economy is currently largely unregulated with drivers and delivery boys working with little job security and few benefits. The gig economy companies have built their businesses on inexpensive and independent labour that offers no social security, insurance or other benefits.

In the gig economy, workers take up short-term contracts or freelance work and get paid for the gigs they do. There is no formal contract signed between the employer and the employee.

An estimated 56 per cent of new employment in India is generated by the gig economy companies, across both the blue-collar and white-collar workforce, according to TeamLease.

While there are calls to introduce radical changes in India’s labour laws, some policy experts argue that regulating emerging start-ups would cause turmoil.

Regulating the gig economy has caught the world’s attention after law makers in California passed a landmark bill on September 10 that threatens to reshape how companies do business.

The legislation, known as Assembly Bill 5, would require gig economy workers to be reclassified/ treated as employees instead of contract workers.

The Centre of Indian Trade Unions (CITU), the trade union arm of the Communist Party of India (Marxist), has dubbed the Modi government’s move as a “fraud”.

“It is a fraud because without an employee-employer relationship, you first try to establish that these people are working for them, then you think about social security. Otherwise, how are you talking of social security for those working on the street. Any ordinary citizen, anybody can go for a social security scheme, you need not be a worker,” said A. K. Padmanabhan, Vice-President of CITU.

“If gig workers are recognised as workers, everybody will be happy, but here they are only talking of the social security part, whether it is a gig worker or beedi worker or auto rickshaw driver, everybody is a worker and they can be brought under a social security scheme but whether there is an employee-employer relationship and whether you are going to agree to it, that is the only question,” he said.

“If they are recognised as workers of an employer – for instance, if the Uber management is responsible for Uber drivers, like what happened in California, if that is there, then I am happy. Here, Uber drivers have to enrol themselves in a social security scheme, what is that,” he asked.