1. 20 I August 2015 www.governancetoday.co.in
Needle in haystack
Social security of India has failed to reach who needed it most
Ritika Bisht
SOCIAL SECURITY DEFINES as
monetary assistance from the state for
people with an inadequate or no income.
Sounds pretty simple to understand
but when taken in Indian context, the
concept gets lost halfway through.
The concept of social security was
first introduced by US President Frank-
lin Roosevelt in 1935 that changed the
course of American economy. Social
security encouraged Americans to in-
novate and take entrepreneurial risk that
resulted in technology boom and thus
excelling its economic powers over the
decades. Also, during the crisis, social
protection systems in many countries
have played an important role as stabi-
lizers to sustain the impact of the eco-
nomic downturn.
Upon witnessing India’s growth
story in last two decades, one thing
that attracts attention is that even after
rising insecurities there is a divide over
whether the gain should be used to en-
sure social security for all. Social security
is supposed to provide financial protec-
tion to everyone against vulnerability
and deprivation but in India people see
it as something linked to job benefit that
is provided by the employer.
In the Indian Constitution, Article
41 of Directive Principles asks every
state to, “within the limits of its eco-
nomic capacity and development, make
COVER STORY
Workers in the unorganized sector have virtually no social security cover and they live under poor conditions

2. www.governancetoday.co.in August 2015 I 21
effective provision for securing the right
to work, to education and to public assis-
tance in cases of unemployment, old age,
sickness and disablement, and in other
cases of undeserved want.” Then Article
42 directs states to make provisions for
securing just and humane conditions of
work and for maternity benefits.
However, directives mentioned in
the Indian Constitution do not appear
to hold any significance as India is yet
to recognize a national minimum social
security cover.
Agony of Unorganized Sector
India’s social security schemes
cover social insurances namely, pension,
health insurance and medical, maternity,
gratuity and disability. Where organized
sector is already covered through social
security legislations (like the Employees’
Provident Funds and Miscellaneous
Provisions Act, 1952 and the Employees
State Insurance Act, 1948), the
unorganized sector, due to its scattered
nature of establishment, could not get
the support of Unorganized Workers’
Social Security Act.
Unorganized Workers’ Social Securi-
ty Act, on its part, formulated especially
for unorganized sector fails to provide
the necessary benefit also becasue this
sector is marred by seasonal and tem-
porary nature of occupations, lack of
labor law coverage, labor mobility and
lack of organizational support. In 2004,
the UPA government appointed the Na-
tional Commission for Enterprises in the
Unorganized Sector (NCEUS) to survey
the livelihood conditions and social se-
curity of those working under organized
and unorganized sectors.
NCEUS found that while only for-
mal sector reaped the benefits of social
security, the sector made up for only
eight percent of country’s total work-
force. And the remaining that does
not have access to social security ben-
efits, make up for over 91 percent of
workforce.
According to NCEUS findings, 79
percent of workers in the unorganized
sector make less than Rs. 20 a day. Fol-
lowing research, NCEUS proposed leg-
islation for a national security package
for workers in unorganized sector. This
package covered social insurance, health
cover, social assistance for life, old age
benefits to all workers for a period of
five years which could have been fi-
nanced by the central and state govern-
ments, employers and workers at a cost
of less than 0.5 percent of GDP after
five years.
However, UPA rejected this pro-
posal and instead suggested setting up
for National and State Social Security
Advisory Boards but only 14 states fol-
lowed it. The fragmented structure and
the lack of coordination among the dif-
ferent Ministries running the scheme led
to chaos and workers from unorganized
sector are still paying the price.
As mentioned before, the introduc-
tion of successful social security schemes
proved to be instrumental in elevating
the US economy. The same is possible
for India as well if Prime Minister Modi
can widen the scope of social security
benefits to unorganized sector and bring
them at par with organized sector.
Social Security around
the Globe
World Social Protection Report,
2014, has mentioned that social security
has played a key role in responding
effectively to the global crisis. Social
protection policies foster both economic
and social development in the short
and the long term. People enjoying
income security and effective access to
other social services are automatically
empowered to take advantage of
economic opportunities. Thus, social
security is a key element to promote
human development, political stability
and inclusive growth.
Although the need for social protec-
tion is widely recognized, the concept of
social security remains unfulfilled for the
large majority of the world’s population.
Only 27 per cent of the global popula-
tion has access to comprehensive social
security systems, whereas 73 per cent are
covered partially or not at all.
According to a national daily, In-
dia spends mere 1.4 percent of its
GDP on social protection, among the
lowest in Asia, far lower than China, Sri
Lanka, Thailand, and even Nepal. As
per Asian Development Bank report
2013, in East Asia, Republic of South
Korea spends 5 percent of its GDP on
social protection, which is highest in
the region.
Taking example of Europe, the big-
gest spender on welfare in the developed
world is France, at 33 per cent of GDP,
according to The Telegraph. It is fol-
lowed by Denmark, Belgium and Fin-
land (30 per cent), Sweden, Italy and
Austria (28 per cent) and Spain (27 per
cent). These countries, with effective
social security measures, have witnessed
positive results during time of recession
and slow growth.
India needs to bring social protec-
tion measures that are available to all
communities to counter persistent lev-
els of poverty and economic insecurity.
Social protection measures are essential
elements of a policy response that can
address those challenges.
An Attempt to Bring Change
In May 2015, Prime Minister
Narendra Modi introduced three
national social security schemes. From
age 18 to 40, anyone can apply for these
new schemes but they were especially
introduced for economically weaker
sections.
Pradhan Mantri Jeevan Jyoti Bima
Yojana will offer Rs 2 lakh cover at Rs
330 premium every year. Bank account
holders in the age 18 to 50 years are
eligible to take this facility. The life risk
cover will get terminated after 55 years.
Pradhan Mantri Suraksha Bima Yojana,
will offer a renewable one year accidental
death cum disability cover of Rs 2 lakh at
Rs 12 premium every year. The insured
will get Rs 1 lakh in case of partial per-
manent disability. Atal Pension Yojana is
for the people in the unorganized sector
who are outside a formal pension net.
These new schemes were introduced
by Prime Minister as around 80 percent
of the country’s population is still
outside the insurance coverage and
only 11 percent of the working popula-
tion is under pension net. Bank account
holders can apply for the schemes via
any one of the saving accounts. For
this, the government has directed banks
to sell new policies by maximum 31st
August, 2015.
The government will co-contribute

3. 22 I August 2015 www.governancetoday.co.in
50 per cent of total contribution or Rs
1,000 per annum whichever is lower, for
the first five years. Subscribers without
any social security and who don’ pay
income tax will get this added benefit.
In order to avail the government con-
tribution, people will have to enroll
themselves before December 31, 2015.
Subscriber will get guaranteed minimum
pension from the age of 60. The pension
per month could be any amount depend-
ing on the contribution.
Although, bringing these news
schemes by Prime Minister is a posi-
tive attempt to get every citizen of this
nation under the social security net but
how successful and effective they really
are on ground level is yet to be seen.
Absence of social security and fi-
nancial necessity still keep almost 50 per
cent of workers stuck in the agricultural
sector. A robust social safety net is re-
quired that is available for every single
citizen that can encourage them to mi-
grate towards urban areas and pursue
higher education and knowledge-based
jobs in order to boost human capital and
productivity.
However, the current share of GDP
contributed towards social security
stands nowhere and fails to assist those
who need it the most. Thus, government
has to refine its current policies if it has
to achieve inclusive growth through bet-
ter social security mechanisms.
ritika@governancetoday.co.in
Total public social expenditure and health expenditure
as a per cent of GDP