Social Protection in India: Two Initiatives

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Social Protection in India Two Initiatives

• K.P. Kannan, Member
• National Commission for Enterprises in the
  Unorganised Sector, New Delhi, and
• Fellow, Centre for Development Studies,
• Trivandrum, Kerala, India

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India

• Many promotional measures but highly inadequate.
  The challenge is one for extension of coverage
  and effective implementation. (Child and mother
  nutrition - ICDS, Mid-Day Meal, PDS, Health care,
  Primary education - SSA).

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Leading State

• In this respect the State of Kerala in southern
  India is the leading State - both in terms of
  promotional and protective social security.
  Reflected in high HDI, GDI and other welfare and
  recently income indicators.
• Nearly 60 of informal workers have protective
  social security cover through the institution of
  Welfare Funds (28 in all).

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All and informal workers (in ml.)1999-00
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Two recent and major national initiatives

• Rural Employment Guarantee Act, 2005.
• Unorganised Sector Workers Social Security Bill,
  2005 (Draft under debate).
• Both are rights-based.
• One is Promotional.
• The other is Protective.

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Main features of REGA

• Upto 100 days of employment per household on
  demand.
• To do unskilled manual work.
• Wage rate to be fixed by the Central Govt.
• Employment to be provided within 15 days of
  demand. Otherwise, unemployment allowance to be
  paid as determined by the State Government.

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REGA

• Implementation by State Governments.
• State Employment Guarantee Council
• Standing Committee at the District level.
• Programme Officer at the Block Level
• Village Panchayats to send proposals

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REGA

• A National Employment Guarantee Fund
• State Employment Guarantee Fund.
• All wage costs and 75 of non-wage costs to be
  borne by the Central Govt.
• Total cost Minimum of 1 of GDP (2004-05).
  Maximum of 2.5 of GDP.
• This is equal to 8 to 22 of Central Govt budget.

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REGA

• To begin with 200 districts to be covered (nearly
  one-third).
• Immediate costs 2.6 to 7 of Central
  budget(around US100 bn).

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Main Issues

• Political commitment of State Governments.
• Linking projects to physical capital formation.
• Linking projects to social sector (HD) projects
  to benefit women.
• Initiative and capacity of Local Govts
  (Panchayats)

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Main features of Soc Security Bill

• To cover all informal workers in the whole
  country.
• Eligible workers estimated at around 300 million.
• Both rural and urban.
• Workers in the informal sector as well as
  informal workers in the formal sector to be
  covered.

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National Minimum SS

• Health cover for family (for sickness for all
  plus injury to worker and death of breadwinner).
• Maternity for self or spouse.
• Life insurance (death and disability).
• Old age pension

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Financing

• Contribution from worker, employer (wherever
  identifiable, govt if not) and government _at_
  Rs.365 each /year/worker, i.e. Rs.1,095 per year
  per worker.
• Contribution of workers belonging to poor
  households Central Govt to pay.
• Contribution of employers who cannot be
  identified Central and State Govts to pay at
  31 ratio.

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Financing (contd..)

• Government contribution at 31 by Central and
  State Govts.
• Contribution of Central Govt (Rs.225.58 bn) and
  State Govts (Rs.50.1 bn) 0.8 of GDP (2004-05).
• Cost to Govt not to exceed 1 of GDP including
  administrative expenses.

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Other features of SSBill

• Proposed NMSS to form the core.
• All existing schemes to continue.
• State Govts may add to the benefits .
• Many State Govts do have their own schemes.

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Organisational structure

• National Social Security Fund and Board
• State Level SS Board
• A network of offices of State Boards down to
  local level called Workers Facilitation Centres
  (WFC).
• WFCs are designated agencies such as existing
  Welfare Funds, Labour Coops, Workers
  Organisations and/or NGOs.

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Organisational structure (contd..)

• If these do not exist, Local Self Govts (Village
  Panchayats/Nagar Palikas) to act as WFCs.

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Membership

• Enrolment by registration. WFCs to assist workers
  to enrol and get IDs.

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Delivery of Benefits

• Insurance-based. State Govts to negotiate with
  insurance companies.
• Agreements between State Boards and insurance
  companies.
• Delivery Several options
• E.g. Through Post Office network (Some State
  Govts already use this to distribute old age
  pensions to the aged poor).

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Phasing

• To cover all eligible workers within a period of
  five years.

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Main Challenges

• Uneven level of organisation of workers (From
  high level in Kerala to low level in UP).
• Calls for concerted public action to mobilise
  workers.
• Uneven level of commitment by State Governments.

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Prospects

• Political commitment at the national level
  Common Minimum Programme
• Commitment of political parties and trade unions.
• Availability of best practices in a number of
  States.
• International commitment. Eg. ILOs Global
  Campaign on Extension of Social Security.