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Closing India's Social Security Gap: Urgent Reforms



  Aug 28, 2023

Addressing India's Social Security Gap: A Call for Comprehensive Reforms


Introduction:

Social security encompasses a range of government programs and policies designed to provide financial assistance, healthcare, and other forms of support to individuals and families facing various life challenges. It aims to alleviate poverty, ensure access to basic needs, and promote economic and social stability. Social security programs can include pensions for retirees, unemployment benefits, disability support, healthcare coverage, family allowances, and more. These initiatives play a vital role in enhancing the well-being of citizens, protecting vulnerable populations, and fostering a more equitable society by providing a safety net during times of need.
 
In India, a staggering 53% of the salaried workforce faces a crucial gap in their employment benefits - the absence of social security coverage. This disparity, highlighted in the Periodic Labour Force Survey Annual Report 2021-22, underscores a pressing need for transformative reforms in the country's social security landscape. From the lack of access to provident funds and pensions to the absence of health care and disability insurance, the implications of this deficiency are profound. Let's delve into the critical aspects of this issue and explore potential avenues for change.
 

Gaps in Coverage for Different Strata:

The report's findings reveal a stark reality: merely 1.9% of the poorest quintile of India's workforce has any form of social security support. Even gig workers, constituting about 1.3% of the labor force, find themselves in a precarious position with limited access to social security benefits. This prevailing scenario points to a considerable failure in safeguarding the interests of the most vulnerable segments of the population.
 

Comparative Analysis with Other Nations:

Notably, India's social security system languishes in global rankings. According to Mercer CFS, the country's system is ranked 40th out of 43 countries assessed in 2021. This raises concerns about the efficacy and reach of the existing social security initiatives.
 

Budgetary Constraints and Utilization Woes:

While policies aiming to bridge this gap have been introduced, their effectiveness remains hampered by inadequate budgetary allocation and underutilization. The inception of the National Social Security Fund in FY11, designed to support schemes for unorganized sector workers, exemplifies this trend. An allocated amount of just ₹1,000 crore fell far short of the required ₹22,841 crore, ultimately leading to schemes being left largely inactive.
 

The Case for Comprehensive Reforms:

For meaningful change, a holistic approach is imperative. Firstly, there must be a concerted effort to expand contributions under the Employees' Provident Fund Organization (EPFO) for formal workers, supplemented by encouraging informal enterprises to contribute. This can ensure a more inclusive support system.
 

Embracing Universal Social Security:

The road to effective change lies in providing social security coverage for all workers, regardless of their employment status. Policymakers should explore innovative solutions, such as a nationwide labor force card, to encompass a broader range of workers. Initiatives like the Building and Other Construction Workers Schemes could be extended to additional worker categories.
 

Empowering Vulnerable Workers:

Acknowledging the unique challenges faced by female domestic workers and migrants is paramount. Expanding coverage to include services like childcare and creating organized networks for domestic workers can offer a safety net to these individuals.
 

Laying the Foundation for a Secure Future:

The transformation of India's social security landscape requires a multifaceted approach. By consolidating existing schemes, fostering awareness campaigns, and embracing universal coverage, the nation can bridge the chasm in social security. As the nature of work evolves and new challenges emerge, equitable growth and security must be the cornerstone of India's social security efforts.
 

 Major Programs of Social Security in India

India's social security landscape encompasses a range of programs designed to provide protection and support to its diverse workforce. These programs aim to address various needs, from financial security during old age to healthcare coverage. Here are some of the major social security initiatives in the country:
 
Employees' Provident Fund (EPF): EPF is one of India's most significant social security programs. It is a contributory fund where both employees and employers make regular contributions. The fund accumulates over time and provides financial support to employees after retirement.
 
Employees' State Insurance Scheme (ESIS): ESIS offers medical and cash benefits to employees in case of sickness, maternity, injury, or disablement arising out of employment. It includes medical services, sickness cash benefits, maternity benefits, and more.
 
Atal Pension Yojana (APY): APY is a pension scheme aimed at unorganized sector workers. It provides a fixed monthly pension to individuals based on their contributions and age at the time of joining.
 
Pradhan Mantri Suraksha Bima Yojana (PMSBY): PMSBY offers accidental death and disability insurance coverage to individuals at a nominal premium. It provides financial protection to the insured and their families in case of accidental events.
 
Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY): PMJJBY is a life insurance scheme that provides a life cover to individuals at an affordable premium. In the event of the insured's death, a sum assured is paid to the nominee.
 
National Pension System (NPS): NPS is a voluntary, long-term retirement savings scheme. It allows individuals to invest and accumulate funds for retirement. The scheme offers a range of investment options and allows partial withdrawals.
 
Ayushman Bharat Pradhan Mantri Jan Arogya Yojana (PM-JAY): PM-JAY, also known as the Ayushman Bharat scheme, aims to provide health insurance coverage to economically vulnerable families. It covers hospitalization expenses for various medical treatments.
 
National Social Assistance Programme (NSAP): NSAP provides financial assistance to the elderly, widows, and disabled individuals living below the poverty line. It includes schemes like the Indira Gandhi National Old Age Pension Scheme (IGNOAPS) and others.
 
Building and Other Construction Workers Welfare Cess Fund: This fund is directed towards the welfare of construction workers. It provides financial assistance, healthcare, and other benefits to workers in the construction industry.
 
Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA): While not traditionally classified as a social security program, MGNREGA guarantees a certain number of days of employment to rural households, providing them with a source of income and economic security.
 
Pradhan Mantri Kisan Samman Nidhi (PM-KISAN) is an Indian social security program designed to provide financial assistance to small and marginal farmers. Eligible farmers receive ₹6,000 annually in three installments, aiding agricultural expenses. Direct bank transfers ensure transparency, but challenges like data accuracy persist. Despite hurdles, PM-KISAN plays a crucial role in uplifting rural livelihoods and ensuring economic stability for farmers.
 
These programs, among others, play a crucial role in ensuring a degree of financial stability, healthcare access, and social protection for India's workforce. However, there remains a need for further expansion, effective implementation, and broader coverage to bridge the existing gaps in the social security framework.


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