Social Security Schemes for Unorganized

Workers in India: An Assessment

Presentation by

Dr. Subba Lakshmi Tirukoti

Assistant Professor

Department of Economics,

Dr.SRK Govt Arts College,

Yanam, UT of Puducherry

E-mail:-tslakshmi1986@gmail.com

National Seminar on “Unorganised Sector and Public Policy Initiatives in India” 25-26th March 2019
 Scheme of Presentation

 Introduction
 Need of Social Security Schemes for Unorganized Workers
 Major Social Security Schemes in India
 Government expenditure on Social Security Schemes in India
 An Assessment of Social Security Schemes in India
 Conclusion and Suggestions
 Introduction
 Wealth inequality continues to plague India: in 2017, the poorest half of the population—
witnessed only one percent increase in their wealth, while the richest one percent absorbed
73 percent of the national income (Oxfam International, 2018).

 About 22 percent of India’s population live below the poverty line.

 Chronic poverty and wealth inequality persist because marginalised populations face
vulnerability impelled by factors such as unemployment, social exclusion, ailment,
disability and market fluctuation (Satpathy, 2018).

 India's workforce comprises nearly 94 per cent in the unorganized segment, with the entire
farm sector falling under the informal category, while only one-fifth of the non-farm
workers are found in the organised segment (NSSO, 2004-05) .
 Contd.,

 Providing income security to the poor and vulnerable, they address multiple facets of
poverty by building resilience against socioeconomic crises and shocks, e.g health
hazards, disability, unemployment and old age.

 Through mechanisms such as social insurance, direct cash-transfer schemes and public
work programmes, social protection provides safety nets for the poor and helps them
mitigate risks.

 According to the World Bank (2015), social safety nets reduce the poverty gap by 15
percent and the poverty headcount rate by eight percent.

 As highlighted by the International Labour Organisation (ILO) and the G20 forum
(2017) , social-protection systems act as self regulating economic stabilisers, boost
employability and fortify aggregate domestic demand, thus facilitating the transition
into a more formalised economy .
 Need of Social Security Schemes for Unorganized Workers

 The unorganised sector workers in India are facing serious problems ranging from the uncertainty
of employment to hazardous conditions at work.

 Social-protection policies and programmes are paramount in tackling these issues.

 Social protection is crucial in tackling extreme poverty and ensuring equitable development
(Satpathy, 2018).

 Social security is the protection which society provides for its members against the economic and
social distress.

 The strategies for providing social security include the preventive, mitigating, and coping aspects.

 International commitments and constitutional obligations bind the government to provide social
security benefits to all citizens (Fasih.
 Contd.,
 Recognizing the need of providing social security to unorganised workers, irrespective of their
informal or formal capacity, the Government has enacted the Unorganised Workers’ Social
Security Act 2008.

 The Act provides for constitution of National Social Security Board to recommend social
security schemes viz. life and disability cover, health maternity benefits, old age protection and
any other benefits as may be determined by the Government for unorganized workers.

 Social-security programmes dedicated to the economy’s unorganised sector, such as the Public
Distribution Scheme or the Mahatma Gandhi National Rural Employment Guarantee Act, are
primarily promotive in nature. Although they strive to provide income and nutritional security
to workers, they do not prepare them for contingencies and threats.
 Objectives

The objectives of the present study are as follows:

 To highlight the existing major social security schemes available to the unorganised
workforce of India;

 To examine the pattern of Government expenditure on major social security schemes;

and

 To assess the performance of these major social security schemes

 Methodology and Data Sources

 The inductive methodology has been used in this study to accomplish the objectives.

 The study is based on secondary data collected from various sources viz., NSSO
Reports, respective scheme websites, Ministry of Labour and Employment, published
sources and indiastat.com etc.
 Social Security Schemes for Unorganised Workers in India

Sl. Name of the Scheme Year Unit of Contribution Premium Covered

No. Enrolment of beneficiary in Rs. Per amount
annum in Rs.
1. Pradhan Mantri Jeevan Jyothi Bima Yojana 2015 Individual Yes 330 2,00,000
2. Pradhan Mantri Suraskha Bima Yojana 2015 Individual Yes 12 2,00,000
3. Atal Pension Yojana 2015 Individual Yes 500 or 5000 per
1000 per month
month after age
60
4. Aam Admi Bima Yojana 2007 Individual No No 30000
5. Rashtriya Swasthya Bima Yojana 2008 Family No No 30000
6. National Social Assistance Progrmme 1995 Individual No No ---
Source: Compiled from various sources
 Government Expenditure on Social Security Schemes

 The unorganized sector is entirely dependent on public expenditure. India currently

spends a meagre 1.3 percent of its GDP on public social-protection programmes
(excluding healthcare), which is significantly lower than the global average (World
Social Protection Report 2017–19, International Labour Organisation, 2017).

 Successful welfare economies, such as European social democracies, spend at least 20

percent of their GDP on social protection, in addition to their significant expenditure on
healthcare. Further, India is amongst the lowest spenders within Asian countries.
 Figure 1: Government expenditure on social security
schemes(excluding health) in Asian countries as a percentage of
GDP

Source: World Social Protection Report 2017–19, International Labour Organisation

 Figure 2: Global Govt. Expenditure on Social Security
Schemes (Excluding Health) as a Percentage of
GDP

Source: World Social Protection Report 2017–19, International Labour Organisation.

 Figure 3: Total Union Budget Outlay for Major Social Security
Schemes in India

Sources: Union Budget Analysis Tool 2017–18, Centre for Budget and Governance;
Accountability and Budget Provisions, Net of Receipts and Recoveries, 2018–19.
 Contd.,
Pradhan Mantri Jeevan Jyothi Bima Yojana (2015) :

 As of 30th May 2018, 5.33 crore people have already enrolled for this scheme.

 60,422 claims have been disbursed against 63,767 claims received.

 According to Business Standard (2015) the banks have been complaining that revenue
received will be very low. They claim that the amount they are receiving is not
sufficient to cover the service cots.
 Contd.,
Pradhan Mantri Suraksha Bima Yojana (2015) : Pradhan Mantri Suraksha Bima Yojana
is one of the best social security schemes. It provides life protection to those of lesser
means without hurting their savings significantly.

According to Jan Suraksha (2017)

 As of 24th April 2017, 10 crore people have already enrolled for this scheme.

 9,705 claims have been disbursed against 12,975 claims received.

 A rising loss ratio has forced general insurers to urge the government to hike the
premium for the scheme (Financial Express, 2017).
 Contd.,
Atal Pension Yojana (2015):

 The subscriber base in APY has grown manifold to reach the current position and APY
is offered by all the banks and post offices.

 Across the country, 1.60 lakh branches which include 20 thousand post offices offer the
services of opening APY account for their customers.

 Out of this branch network, nearly 90% of the branches have mobilised one or more
APY account in the last 3 years.

 Till date Rs. 3950 crore of contribution has been collected under the APY Scheme.

 The Scheme has generated around 9.10 % CAGR since its inception till March 2018.
 Contd.,
 Rashtriya Swasthya Bima Yojana (2008): The scheme aims to provide health
insurance coverage to the unorganised sector workers belonging to the BPL category
and their family members shall be beneficiaries under this scheme.

 Initially, RSBY was a project under the Ministry of Labour and Employment. Now it
has been transferred to Ministry of Health and Family Welfare from 1st April , 2015.

 As of September 2016, more than 41 million health cards (signifying enrolment in

RSBY) had been issued, covering almost 150 million poor people, with nearly 460
districts participating in the programme (Karan et al., 2017).

 Although the share of eligible households enrolled in the program (enrolment ratio) was
57% nationally.
 Contd.,
 The study by Sinha (2018) shows that RSBY did not achieve its objective of improving
care-seeking and providing financial security to the enrolled households, and more
importantly to the economically weaker sections of the society.

 Other studies have also found that one of the factors for high out-of-pocket expenditure
in health is a weak public health delivery system which forces people to seek care from
private providers.

 Hence, it is important for the policymakers to critically evaluate whether such insurance
models will actually ensure better financial security for the households from excessive
health expenditure and whether strengthening the existing public health delivery system
would be a better option.
 Contd.,
National Social Assistance Programme (NSAP): The NSAP has been in operation since 1995 to
provide social security to the vulnerable sections of the society like old persons, widows and disabled
falling in the BPL category. The scale of Central Assistance under NSAP through its 5 components is
as follows:
1. Indira Gandhi National Old Age Pension Scheme (IGNOAPS): Rs. 200/- per month per
beneficiary to BPL persons who are in the age group of 60-79 years and Rs 500/-per month to 80
years and above.
2. Indira Gandhi National Widow Pension Schemes (IGNWPS): Rs. 300/- per month per beneficiary
who are BPL and in the age group of 40-79 years.
3. Indira Gandhi National Disability Pension Scheme (IGNDPS): Rs. 300/- per month per beneficiary
who are in the age group of 18-79 years.
4. National Family Benefit Scheme: Rs. 20000/- to the bereaved household in case of the death of
primary bread winner of the family. The eligibility criteria are BPL person who is primary bread
winner of the family and in the age group of 18-59 years.
5. Annapurna Scheme: 10 kg of food grain (wheat or rice) per month per beneficiary to those who
are not covered under IGNOAPS. For the year 2018-19, an amount of Rs. 9975 crore has been
allocated to NSAP schemes.
 Contd.,
MGNREGA
 Since its inception, MGNREGA has emerged as a major social safety net, augmenting rural
employment as evident in the fact that it has generated more than 2615.29 crore person-days of work
at a total expenditure of over Rs. 471273.41 crore as on 20.07.2018.

 As against the norm of 33 per cent, women’s participation in the scheme was 53.46 per cent in 2017-
18 while SC and ST participation rate stood at 21.48 and 17.6 per cent respectively.

 The average days of employment provided per household was 45.77 days during 2017-18. An
allocation of Rs. 55000 crores has been made in the budget of 2018-19 under MGNREGA.

 The works undertaken through Mahatma Gandhi NREGA give priority to activities related to water
harvesting, groundwater recharge, drought-proofing, and flood protection.
 Contd.,

Performance Pradhan Mantri Awaas Yojana (2016) scheme:

 Of the total 4.72 lakh beneficiaries identified across the country, only 56,694 have been
allotted land.

 Among the best performing states in terms of land allotment are Sikkim, Madhya Pradesh
and Uttar Pradesh.

 States like Goa, Kerala and West Bengal have drawn a blank in terms of allotment of land
to beneficiaries.
 Conclusions and Suggestions
 The move towards defined contributory schemes away from defined benefit schemes of pension
funds is fraught with danger.

 Therefore, it is argued that given the poor affordability and lack of an institutional mechanism, any
design of social security that relies heavily on a contributory basis is bound to fail dismally.

 A greater integration of non-contributory scheme (where the funds can be sourced from levy and
collection of cesses) with the contributory ones— especially for pension plans—can encourage
more registrations by guaranteeing a basic level of financial cushion for those who cannot afford
to save for contributory funds.

 As per the World Bank’s Global Financial Inclusion Database (2018), 11 percent of adults in India
do not have bank accounts, and almost half of the existing bank accounts were inactive in 2017
(Vipul, 2017).

 Moreover, as the informal sector is predominantly cash-based, most workers prefer liquidity.
Often, many are incapable of operating their bank accounts despite having one (Sengupta, 2017).
 Contd.,
 To realise the benefits of direct cash transfers, it is crucial to impart financial literacy to
informal worker through structured educational programmes.

 There should also be due diligence to ensure the utilisation of bank accounts. Further, it
is important to leverage alternative avenues for disbursements such as cashless
treatments in hospitals.

 To encourage enrolments and expand the coverage of programmes, the schemes must
incentivize workers and disseminate information constructively.

 The government must employ advanced-monitoring and performance-evaluation

techniques to track the progress of schemes and ensure that all relevant data regarding
their implementation is available in the public domain.

 The integration of technology-enabled data-collection systems—such as remote

sensing, GIS and mobile applications—with effective analytics and an online database
can ensure that the updates on programme developments are timely and accurate.
Any Queries and Suggestions
Thank you for kind cooperation