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NAC, govt review social security plan for unorganized sector by Remya Nair & Anuja

In an indication that the ruling Congress may be looking to evolve a comprehensive social security package ahead of the next general election, the Sonia Gandhi-led National Advisory Council (NAC) has started a consultative process with four central government ministries aimed at linking existing and new schemes for the huge unorganized sector.

The plan, according to an NAC member, is to issue one entitlement card to every worker in the unorganized sector to avail of benefits available under schemes such as health and life insurance, maternity care, disability and pensions coverage.

NAC has sought feedback from ministries of finance, women and child development, labour and health for convergence towards a comprehensive social security package for the unorganized sector, said two people familiar with the development.

The women and child welfare department runs a conditional maternity benefit scheme called the Indira Gandhi Matritva Sahyog Yojana; labour ministry implements the Rashtriya Swasthya Bima Yojana (RSBY), the government’s flagship health insurance plan for those below the poverty line; and the finance ministry is finalizing the contours of an insurance plan having disability, life and pension benefits all rolled into one.

“We have written to the four ministries and are awaiting replies,” said the NAC member who did not want to be identified citing the assembly elections.

NAC is considering a plan to make the finance ministry the nodal agency for approving fund allocation and the labour ministry responsible for enrolment, besides setting up a National Social Security Authority (NSSA) to oversee plan implementation.

“NSSA should ideally have individuals with experience in technology, fund management and specific social sectors,” the NAC member said.

According to government estimates, the informal sector constitutes almost 94% of India’s workforce and accounts for around 60% of India’s gross domestic product (GDP).

“When it comes to coverage, the name might be universal; but when it comes to details, it may be partial,” said D. Rajasekhar, professor at the Centre for Decentralisation and Development, Institute for Social and Economic Change, in Bangalore. “One needs to understand whether the coordination between ministries will happen only at the Central level or also at the state level for the scheme’s implementation.”

Social security has to be “universal and provided as an entitlement, similar to NREGA (Mahatma Gandhi National Rural Employment Guarantee Act),” said Rajasekhar, who specializes in social security for unorganized workers and child labour.

The Parliament passed the Unorganized Sector Workers’ Social Security Bill in 2008 aimed at covering the segment through schemes run by the Centre and the states. But with a majority of the informal sector still outside the social security net, the NAC working group wants to make the law more effective.

The working group on social security will present its recommendations to NAC at a meeting in March. NAC may finalize its recommendations by April, following which it will be communicated to the government.

NAC is recommending a more broad-based approach for providing health coverage to the huge organized sector.

“At present, RSBY covers only hospitalization but it is important to give primary, secondary and tertiary care. Free medicines are an important requirement,” the NAC member said. “Insurance does not work as it leads to a lot of leakages. Obviously we can’t scrap RSBY but it can be first extended to more sections and, gradually, move to universal coverage.”

RSBY, which provides for an in-patient cover of Rs.30,000 to a family every year, has been witnessing large-scale leakages and beneficiary frauds. For instance, the claims payout in Kerala is as high as 170%, whereas Jharkhand and Chhattisgarh have claims ratio of 4%, as per government estimates.

NAC is also in talks with the finance ministry for finalizing the broad contours of a life-cum-pension scheme, initially only for women. Under this, the worker, the Centre, and the state government will contribute Rs.1,000 each per year. “The response from the central government has not been so clear,” the NAC member said. “They are very worried about anything that pushes up expenditure.”