Aman Gupta IIT Kanpur
Kishlay Kumar IIT Kanpur
Prabhat Yadav IIT Kanpur
Vikash Shankar IIT Kanpur
Kanhaiya Lal Chaurasiya IIT Kanpur
Where India Stands?
Sweden Germany UK Japan USA Brazil Russia Srilanka China India
Fig 1: Expenditure on Unorganized Sector
(World Labour Report 2000)
ILO Direction ~ 5%
What it means?
• The overall security for a person in the family,
workplace and society.
• A system to meet the basic needs as well as
contingencies of life in order to maintain an
adequate standard of living.
• Minimum social security package comprises life
and disability insurance, health and maternity
benefit and old age pension for all unorganised
workers/ occupational groups irrespective of
whether they belong to APL/BPL category.
But in India
• Majority of workers in the unorganized sector
are not in a good financial condition.
• At any time catastrophic spending or loss (such
as death of working member, loss of working
assets) push them below poverty line and in
• They are neither motivated nor supported to
complain against any injustice or exploitation
being done to them.
•Work for longer hours in harsh
•No access to an adequate level of
•Violation of right to minimum
•Squatter settlements of them are
regarded illegal by the municipal
corporation; leads to eviction of
•This is blatant violation of their right
to shelter as well as human rights of
migrants in cities.
Women in Informal sector
•Unequal payment as compare to
their male counterpart.
•Various forms of harassments at
• Inefficacy in
Schemes and Laws
schemes to the
due to non
to all the
process due to
funding due to
•Labor regulation in India is
archaic and has become
•With about 47 union laws
and 157 state regulations
that overlap, budding
regulatory confusion and
are forced to remain small
and informal to avoid the
•Workers also end up with
low-quality livelihoods and
limited social security
• Contracting of Service
Providers and Insurance
• Target Beneficiaries
• Awareness Creation
• Mobilization for
• Grievance Redressal ,
strictly observing the
complaints filed by
• Defining scheme
• Provide Clarity on Roles and
Responsibilities and act as a Point of
• working with the various
stakeholders (government, industry,
and academic representatives) to
design and enforce the
• Monitoring ,evaluation & Record
• Financial Management: Managing
national level social security fund.
• Research and Development.
(National Social Security Administration)
owns the scheme at national
level,controlling vehicle and not an
operating vehicle, a single trust for
unorganised sector that owns the
scheme at national level. It comprises of
ministers relevant to various schemes
chaired by PM.
• Its responsibilities will be
on the lines of the state
• Monitoring and Ensuring
implementation of social
• Liaise with and facilitate
the functioning of WFC
and address grievances
(District-level Social Security
representatives of workers,
civil society organizations
(State Social Security
autonomous body, similar
to NSSA, at the state level
that works with the state
govt., the NSSA,
“We recommend a single window architecture, governed by a single entity, will
help eliminate the inefficiencies associated with multiple purchase points.”
Maximum awareness can be created while surveying
Awareness programs may be organized at the place
of work itself (e.g. construction work sites, market
places in the case of street vendors etc.), these
programmes will be organised by the facilitation
centre under the jurisdiction of which lies the area.
Care will be taken so that the timing of the
awareness programmes does not conflict with the
worker’s working time. Lunch intervals and holidays
can be utilised for increasing awareness
Diversified means for awareness-building like
electronic media ,newspapers wall writings
hoardings in regional languages etc. for spreading
awareness can be proved very useful.
The workers will be encouraged to go the nearest
WFC and get themselves registered .
Workers in the unorganised sectors may be mentally
not inclined to undergo the hassles for availing the
benefits of the schemes, being poor, illiterate and
belonging to lower strata of the society may not
have the mental and physical courage to demand for
their entitlements. This situation leads to the need
for persuading, encouraging and providing legal aid
and assistance to such people.
It’s the job of aggregators and WFC to arrange a
proper team to survey the households and collect all
relevant data of households depending on the
unorganised sector for their livelihood, within the
jurisdiction of that WFC.
For the purpose of survey help of NGO’s can be
taken, facilitation centres can hire some school or
college students or people from local areas, who are
willing to do such works, for the purpose and should
divide the work to avoid imposing pressure on the
students and affecting their studies.
Surveys will be conducted in the phased manner
gradually covering the entire area under the
jurisdiction of that Workers’ facilitation centre (WFC).
The job of persuasion and encouragement will be
done while surveying and at awareness programs .
details to fund
will go to
Smart card and
will be captured
in POS and receipt
will be issued.
manger A/C in
•Link between workers and schemes.
•Equipped and funded to take undertake registration, information dissemination, education
and delivery of essential social security packages as well as handling grievances
•Spreading awareness among the workers and enrolling them as beneficiaries of the schemes.
•Monetary transactions under various schemes will be done through WFC.
•To collect information and statistics by conducting surveys at regular intervals.
•Proper mechanism of grievance redressal
- Workers have to file complaints against exploitation, unethical payments etc.
•To constitute employment exchange for workers.
- In changing economy widespread employments are available, WFC will try to get someone a better job.
•Marketing linkages to the workers especially-craftsmen, pottery makers, artisans, weavers, sculptors etc.
• Workers get themselves registered at
• Once surveyed workers will not be
asked for documents such as birth
certificates, identity proofs etc.
• Workers will be provided with bio-
metric enabled smart card containing
their fingerprints and photographs as
their identity proof containing a unique
identification number. Same identity
card will be valid in every state (this will
be helpful especially for migrant workers,
who represent almost 20% of the
• Migrant workers will be registered at
their native place and the home state
will take the responsibility of providing
social security to them.
• It will comprise various SHGs, NGOs,
public sector insurance companies ,
registered workers unions, civil society
organizations, different educational
institutions and any other category as
identified by NSSA.
• Management of WFC at block level.
Reaching doorsteps each households for
survey and collecting relevant
information about households and
• Try to unionize the working class
wherein union leader will be
the facilitator and union office would be
facilitation centre to educate working
class about their rights, duties and
availability of various government
welfare schemes .
• This approach will lead to formation
of Trade Unions in association with
SHGs of Unorganized Workers, where
worker would get platform to raise their
voices and regain dignity.
The current coverage
provided for natural death
under current life
insurance schemes is
` 30,000 which according
to the “human capital
calculations” does not
provide adequate cover
for even a 50 year old in
the lowest income
Each Individual will
be informed that life
insurance cover under
ensures only a
capital cover. It must
be the duty of the
facilitators to inform
the beneficiary about
the value of her/his
By two approaches:-
• The actuarially fair
premium-Based on market
mortality rates laid out by
IRDA, the actuarially fair
premium for AABY-JBY is
• The market price for life
insurance- Based on price
points provided by the
financial services firm,
price for an actual life and
accident cover similar to
that by AABY-JBY is ` 123.
As the claims ratio
appears too high for the
extent of cover
provided.Hence, there is
a need of opening up the
product premium for
competitive bidding from
life insurance companies
in the market, similar to
the model currently
followed by Rashtriya
Swasthya Bima Yojana
(RSBY) for health
Fig 2: Incidence ratio
(As per actuarial table published by IRDA)
Fig 3: Claims ratio
We recommend that the current RSBY scheme should extend its benefit to unorganized sector.
Health Insurance companies have to enrol all the workers registered at WFC, they don’t have to bother about
reaching households, as Insurance companies have an incentive to target healthier families, as they are less likely
to make claims, and have less incentive to reach out to the remote household.
Health facility must be offered through the Unorganized-Worker-Smart Card Platform.
The hospitals and medical facilities will be located closer to citizens who lack access .
“An analysis of the RAS45 reveals that there is severe inequity in the geographical distribution of hospitals in each
district and that beneficiaries are therefore expending additional cost and time in accessing medical services – 52%
of beneficiaries spend money out-of-pocket on transportation in order to access medical services under RAS..“
Catastrophic care insurance schemes for households below the poverty line.
- Following the lead of Andhra Pradesh and Tamil Nadu, we recommend that all state governments take the lead in
providing tertiary insurance cover for their citizens.
- A combination of secondary and tertiary care will enable complete health insurance coverage for households.
Developing preventive hospitalization for Cardiovascular Disease in RSBY –
“According to the World Health Organization (WHO), cardiovascular disease (CVD) will be the largest cause of death
and disability in India by 2020. Diabetes, high cholesterol, and hypertension along with obesity (measured with the
help of body-mass-index) are the main drivers of CVD risk.”
However, CVD is an ailment that can be identified and prevented by using cost-effective techniques as highlighted in
the NAC report on universal health cover37 and proved by many studies.
• Pension schemes and maternity benefits schemes facility must be offered through the Unorganized-Worker-Smart
Card Platform( as in RSBY scheme).
• Many workers, being poor and illiterate are unable to think about their old age, they don’t bother about getting
themselves enrolled as a beneficiary, also they find the procedures very complicated. We have placed our
suggestions keeping these things in notice.
• As per the report of CRIISP notes there is strong economic logic to extend the matching contribution from GOI for
perpetuity. Any contribution from the government lends immense credibility to the scheme and serves as an
incentive for those hesitant to contribute.
• There will be provision for Catastrophic loss (apart from physical loss) insurance policies for all unorganized workers.
• Labor laws should move from concurrent list to state list-
- Individual states are better at tweaking labor laws to balance flexibility and security with respect to their political
- States should allow flexible labor laws to give choices and opportunities for employees by allowing, for instance
flexibility in working hours, night shifts for women, etc.
Completing Social Security Package
• The proposed system may pose some initial challenges
- The whole system may take extra expenditure initially (which is fixed cost ), which might cause inability to
depreciate the dereliction nature of government, in our developing economy, towards the people of unorganized
sector. But, once established its widespread benefits and sustainability will outweigh its cost.
-In the vast geographically diverse extent of India, it may be a challenging task to establish the system through out
• Traditional mindset of Indian people (like suppressed thinking of workers and poor ) may cause hindrance in
functioning of the system.
• System irregularities, like corruption, carelessness in taking responsibilities, are ubiquitous.
• 1: Incident ratio is defined as the ratio of total claims in a year to total number of policies issued in
• 2: Claims ratio is defined as the ratio of total value of claims settled in a year to the total value of
• AABY – Aam Aadmi Bima Yojna
• APL – Above Poverty Line
• BPL – Below Poverty Line
• CRIISP – Committee to Review Implementation of Informal Sector Pension
• CVD – Cardiovascular Disease
• DSSC – District-level Social Security Committee
• GOI – Government Of India
• ILO – International Labour Organisation
• IRDA – Insurance Regulatory and Development Authority
• JBY – Janshree Bima Yojna
• NSSA – National Social Security Administration
• RAS – Rajiv Aarogyashree Scheme
• RSBY – Rashtriya Swasthya Bima Yojna
• SHG – Self-Help Group
• SSSA – State Social Security Administration
• WHO – World Health Organisation
• As per actuarial table published by IRDA. Source:
• In the absence of data on yearly renewal rates of AABY, the analysis assumes a renewal rate of 70%.
(The only available data source for AABY renewal rates is data from the Andhra Pradesh government.
The aggregate renewal rate for Andhra Pradesh as on July 2, 2013 is 71.4%.
Source: http://18.104.22.168/aaby/AABY_renewal_report.aspx ).
• World Health Organization. (“The World Health Report 2002 - Reducing Risks and Promoting Healthy
Life” 2002) .
• http://www.world-heart-federation.org/cardiovascular-health/cardiovascular-disease-risk-factors .