Assessing India’s Social Security Programs: Progress and Challenges
Kartavya Desk Staff
#### GS2/ GS3 Paper
Syllabus: Government Policies and Interventions
Source: IE
Context: The article evaluates welfare and social protection programs in India, noting progress but also highlighting shortcomings
What is Social Security?
Social security is a system implemented by societies/governments to provide individuals and households with financial assistance and support during times of need or vulnerability. It ensures access to healthcare and guarantees income security, especially in situations such as old age, unemployment, sickness, disability, maternity, or loss of a breadwinner.
Status of Social Security:
• Global: Almost 53% of the population in the world has no social protection (56% in the Asia-Pacific) (as per ILO: World Social Protection Report 2020-22)
• India: In India over 76% have no social protection (Bangladesh has a higher % of people under social protection than India)
• Spending on social protection: The world average is about 13%, while that in India is just 8.6%(eight points six) (Economic Survey 2021-22)
• India’s social security spending: Lower than 5% of GDP per capita
• Around 53% of all of the salaried workforce does not have any social security benefits in India, according to the Periodic Labour Force Survey Annual Report 2021-22
• Only about 2% of the poorest 20% of India’s workforce have access to social security benefits
Issues with the Social Security in India:
Issues | Description
Lack of adequate budgetary allocation | The National Social Security Fund and other schemes suffer from insufficient initial allocations, leading to a lack of resources to meet the needs of vulnerable populations.
Policy Issues | E.g., The Social Security Code 2020 remains unimplemented even today
Lack of Competition | Monopolies like EPFO and ESI in work-related social security payments breed issues like high costs for employers, mistreatment of employees, and incentivize informality over formality.
Poor Fund Utilization and Management | E.g., The CAG audit found that ₹1,927 crore in the National Social Security Fund remained unused, while about 94% of the cess collected for construction workers’ social security in Delhi went unspent.
Corruption and Leakage | E.g., In Haryana, the CAG found about ₹99 crore transferred to accounts of deceased beneficiaries, indicating loopholes in beneficiary identification and delivery mechanisms for social security benefits.
Inadequate Coverage and Benefits | E.g., The Centre’s contribution to old-age pension schemes has remained stagnant at ₹200 per month since 2006, falling below the daily minimum wage.
Restrictive eligibility criteria exclude many deserving beneficiaries, leaving out elderly individuals facing economic hardship
Budgetary Cuts | E.g., Reductions in budget allocations for programs like MGNREGA
Digital Divide | As of recent data, around 50% of India’s population still does not have access to the internet
Informal Labour Sector | Over 90% of India’s workforce works in the informal sector
Steps taken by India
Schemes/ Policies | Details
Pradhan Mantri Shram Yogi Maan-Dhan Yojana (PM-SYM) | Voluntary and contributory pension schemes; 50% monthly contribution by beneficiary, equal matching contribution by Central Government
Ayushman Bharat-Pradhan Mantri Jan Arogya Yojana (AB-PMJAY) | Coverage of Rs. 5 lakhs per family per year for secondary and tertiary care hospitalization
Pradhan Mantri Awaas Yojana – Gramin (PMAY-G) | Aim to construct about 3 crore pucca houses with basic amenities by March 2024; Assistance of 1.2 Lakhs in plain areas, 1.3 Lakhs in Hilly Areas
Public Distribution System (PDS) | Provides 35 kg of rice or wheat monthly for households below the poverty line; Entitlements adjusted under ONORC for migrant workers
Atal Pension Yojana | Pension scheme offering Rs. 1000-5000 or accumulated sum after death
Pradhan Mantri Suraksha Bima Yojana (PMSBY) | Rs. 2 lakh coverage for accidental death and full disability; Premium at Rs. 20 per year
Pradhan Mantri Jeevan Jyoti Yojana (PMJJBY) | Rs. 2 lakh coverage on death due to any cause; Premium at Rs. 436 per year
Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) | Allocation of Rs. 60,000 crores in Budget Estimate 2023-24; Recently notified new wage rates for unskilled manual workers for FY 2024-2025
Code on Social Security, 2020 | Consolidates and simplifies nine previous laws related to social security; Covers employees in both organized and unorganized sectors
Employees’ Provident Fund Organisation (EPFO) | Administers Employees’ Provident Fund Scheme, Employees’ Pension Scheme, Employees’ Deposit Linked Insurance Scheme; Provides retirement pension, provident fund, and life and disability insurance
Employees’ State Insurance (ESI) | Self-financing social security scheme providing medical care and cash benefits; Covers employees in organized sector earning below a certain threshold
National Pension System (NPS) | Voluntary, defined contribution pension scheme for retirement savings; Open to all citizens of India, including those in the unorganized sector
National Social Assistance Programme (NSAP) | Provides support to aged persons, widows, disabled persons, and bereaved families; Belonging to below-poverty-line households
Steps for Social Security in India:
• Universal Coverage: Implement universal social security to cover the entire labour force, consolidating existing schemes and ad hoc measures.
• Linking EPFO contributions to Aadhaar numbers enhances effectiveness by enabling traceability, portability, and accessibility.
• Expand EPFO Contributions: Increase contributions to the Employees’ Provident Fund Organisation (EPFO) for formal workers, involving both employers and employees.
• Offering EPFO products to self-employed and gig workers, addressing challenges of contractual employment.
• Government Support: Provide subsidies or social assistance to vulnerable workers unable to contribute due to unemployment, underemployment, or low earnings.
• Digitization and e-Shram Platform: Invest in digital platforms for streamlined registration, verification, and delivery of social security services, extending coverage and efficiency.
• Mandatory Social Security for Employers: Enforce mandatory social security entitlements for employees by their employers to foster formalization esp. for Gig Workers.
• Pan-India Labour Force Card: Introduce a nationwide labour force card for simplified registration and expanded coverage beyond specific sectors.
• Administrative Simplification: Simplify the administrative framework of social security programs to reduce complexity and ensure better implementation.
• Raising Awareness: Conduct awareness campaigns to inform more workers about available social security benefits, leveraging organizations like the Self-Employed Women’s Association (SEWA) for outreach.
States Experience: The Madhya Pradesh Unorganised Workers Welfare Act offers a model for raising resources while strengthening existing schemes like EPF, ESI, and NSAP is vital.
International Experience:
• Brazil: Brazil’s extensive social security system, covering over 90% of the population, offers valuable lessons for India. Brazil’s General Social Security Scheme is contribution-based, providing income replacement for workers and their families in partial or full loss situations. It includes unemployment insurance funded by worker support funds and health care through the Unified Health System.
• Germany: Germany’s robust social security system, founded on social insurance principles with contributions from both workers and employers, offers pensions, healthcare, unemployment benefits, long-term care, and family allowances. India can benefit from emulating Germany’s social insurance model.
• Singapore: Singapore’s unique social security system promotes personal savings through a central provident fund for retirement, housing, healthcare, and education. India could adopt this approach to foster personal responsibility and flexibility for workers.
Conclusion:
To accelerate the formalization of social security in India, reforms are essential. Advocacy for competition, championed by former finance minister Arun Jaitley, suggests allowing employee choice in contributing to either EPFO or NPS. Migrant data collection and the proposed Social Security Fund under the Social Security Code, 2020, would further bolster efforts towards universal social security.
Insta Links:
• ILO–UNICEF joint report on social protection for children
• Programmes for Social Security Cover
Prelims Links:
What is/are the facility/facilities the beneficiaries can get from the services of Business Correspondent (Bank Saathi) in branchless areas? (UPSC 2014)
• It enables the beneficiaries to draw their subsidies and social security benefits in their villages.
• It enables the beneficiaries in rural areas to make deposits and withdrawals.
Select the correct answer using the code given below.
(a) 1 only
(b) 2 only
(c) Both 1 and 2
(d) Neither 1 nor 2
Answer: C
Both statements are correct