1 Rethinking Social Protection for India's Working Poor in the

Rethinking Social Protection for India’s Working Poor in the Unorganised Sector

Babu P. Remesh

I. Introduction

Of late, the issue of provision of social security to the growing segment of unorganised

sector workers

gained enhanced significance in the development discourse in India.

Various efforts of the Government of India, in recent years, such as designing of new

social security schemes

, recasting of earlier schemes, introduction of innovative methods

towards effective identification and enrolment of beneficiaries, contemplation of

comprehensive legislations to ensure social protection for unorganised sector workers and

so on testify a paradigm shift in the social security front. Also, in the recent past, there

has been an increased emphasise on creating enabling frameworks and promotional

measures towards ensuring effective social protection to the poor (especially for those in

the unorganised segments of the workforce) and enhancing their reservation income in

the labour market. This visible change in the concerns of the policy makers reflects some

of the ongoing transformations in the labour scene. Firstly, this is an outcome of the

increasing realisation that the unorganised sector is growing at an alarming rate, where

majority of the workers are left with no social security to fall back upon during

contingencies and old age. Secondly, it is an acknowledgement by the development

planners that the existing legal and protective frames have become inadequate to address

the issues of unorganised sector workers. Thirdly, it also suggests that, in view of the

growing fiscal deficit scenario, the governments (both at the centre and in the states

) also

find it extremely difficult to sustain even the existing social security measures, which are

currently being provided to only about 7 per cent of the workforce in organised

occupations.

The growing concern in social security issues of unorganised labour, in recent times,

needs to be understood as a historical juncture in the trajectory of development planning

Associate Fellow, V.V.Giri National Labour Institute, NOIDA, INDIA. E-mail: neetbabu@gmail.com.

The analysis and views expressed in the paper are purely those of the author and do not necessarily

represent those of the Institution with which he is affiliated.

The terms `unorganised sector’ and `informal sector’ are used in this paper interchangeably, which is a

general practice followed in India. Accordingly, informal employment is referred to as unorganised sector

employment. Whenever, reference is made to informal/unorganised sector and informal/unorganised sector

conjointly, the term `informal economy’ is used. These concepts are in accordance with the definitions

followed by the currently functioning National Commission for Enterprises in the Unorganised Sector

(NCEUS) in India.

For a recent updating on the new social security initiatives of Government of India in the unorganised

sector, See Government of India (2008).

As per the Constitution of India, a federal structure of governance is followed in the country, where a

Union Government (commonly referred as Central Government), governs a federal union of 28 states and 7

union territories, collectively called the Republic of India. Under the Constitution of India, labour is a

subject in the concurrent list where both the Central & State Governments are competent to enact

legislation and implement policies, subject to certain matters being reserved for the Centre.

in India, where the labour markets have been undergoing tremendous transformations,

which include: growth of informal sector activities; deterioration in the quality of

employment (in terms of job security, terms and conditions at work); weakening of

worker organisations and collective bargaining institutions; marked decline in social

security and so on. To a greater extent, these transformations could be related to the

ongoing globalisation process and the resultant efforts on the part of employers to

minimize the cost of production to the lowest levels. It is also evident that most of these

outcomes are highly correlated and mutually reinforcing. A closer analysis suggests that

the growing informalisation of labour market has been central to most of these

transformations, which inter alia highlights the utility of understanding the growth of

unorganised sector in the country and discussing its implications.

II. Growing Prominence of Unorganised Sector in India

Predominance of informal employment has been one of the central features of the labour

market scenario in India. While the sector contributes around half the GDP of the

country

, its dominance in the employment front is such that since early 1980s and even

before that more than 90 per cent of total workforce has been engaged in the informal

economy. As per the estimates of the National Commission for Enterprises in the

Unorganised Sector (NCEUS), the unorganized sector/informal sector workers comprise

about 86 per cent of workforce in the Indian economy in 2004-2005 and informal

employment, both in the organised and unorganized sector as 92 per cent

. This national

level pattern of informal workers occupying around 90 per cent of the workforce is more

or less similar in the case of most of the prominent states in the country. Among the

unorganised sector workers, a considerable proportion (about 65 per cent) is engaged in

agricultural sector, which in turn indicates the prominence of rural segment in the

informal economy.

The growth of formal employment in the country has always been less than that of total

employment, indicating a faster growth of employment in the informal sector. Temporal

data suggests that within the formal sector also the proportion of informal/unorganised

workers are on the increase. For instance, by providing a comparison of the NSSO

Employment Data for 55

and 61

Rounds (for 1999-2000 and 2004-2005 respectively)

the NCEUS (2007) explains that the country is currently in a state of `informalisation of

the formal sector’, where the entire increase in the employment in the organised sector

over this period has been informal in nature (NCEUS, 2007).

As per the latest estimation of a Sub-committee of the National Commission for Enterprises in the

Unorganised Sector (NCEUS), using the modified apportioning method, the contribution of unorganised

sector to GDP is about 50 per cent. For further details refer NCEUS (2008).

Based on the National Sample Survey Organisation (NSSO) 61

Round-2004-2005 Data, the NCEUS

estimates that out of the total 457.5 million workers in India, 422.6 million (92.4 per cent) are engaged in

the informal employments. This includes 393.5 million workers engaged in the informal employment in the

unorganised sector and 29.1 million workers engaged in informal employment in the organised sector. For

further details of the estimation, refer NCEUS (2006; 2007; 2008).

The enhanced prominence of the informal sector is duly recognised in the recent policy

documents of the Government of India, which discusses the ways and means of

employment generation, to benefit the growing mass of unemployed. For instance, a

special group constituted by the apex-planning agency of the country (i.e., Planning

Commission of India) on “Targeting 10 Million Employment Opportunities per year over

the 10

Plan Period (2002-2007)” explains that – “exclusively for generating the

desirable high level of employment in the country, one has to target the unorganised

sector, including small and medium enterprises” (Government of India, 2002).

It has been widely acknowledged that the informal sector in India suffers from a low

productivity syndrome, compared to the formal sector. The prominent features of the

sector are lower real wages and poor working/living conditions. Further, the sector is

characterised by excessive seasonality of employment (especially in the farm sector),

preponderance of casual and contractual employment, atypical production organisations

and work relations, absence of social security measures and welfare legislations, negation

of social standards and worker rights, denial of minimum wages and so on. Poor human

capital base (in terms of education, skill and training) as well as lower mobilisation status

of the workforce

further add to the vulnerability and weaken the bargaining strength of

workers in the informal sector. Thus, the sector has become a competitive and low cost

device to absorb labour, which cannot be absorbed elsewhere, whereas any attempt to

regulate and bring it into more effective legal and institutional framework is perceived to

be impairing the labour absorbing capacity of the sector.

With the advent of globalisation and resultant reorganization of production chains led to a

situation where production systems are becoming increasingly atypical and non-standard,

involving flexible workforce, engaged in temporary and part time employment

, which is

seen largely as a measure adopted by the employers to reduce labour cost in the face of

stiff competition. A growing body of literature suggests that these flexible workers in the

new informal economy are highly vulnerable in terms of job security and social

protection, as they (unlike their counterparts in conventional occupations) are not

deriving any of the social protection measures stipulated in the existing labour

legislations. The insecurities and vulnerabilities of these modern informal sector labour

(for instance, those in the new service sector occupations) are on the rise, as there is a

visible absence of worker mobilisation and organised collective bargaining in these

segments, owing to a multitude of reasons (Remesh, 2004).

A majority of the informal sector workers in India lack voice and the presence of union and their

membership is reported to be very thin. Only 17.5 per cent of total informal workforce reported presence of

unions/associations in their trade. The trade union density also reported to be only 9.7 per cent (Satpathy,

2004).

A recent estimate suggests that the proportion of temporary workers in the informal economy is around 40

per cent (Satpathy, 2004).

The alarming expansion of informal sector, in recent times, has adversely affected

employment and income security for the large majority of the workforce, along with a

marked reduction in the scale of social welfare/security programmes. Thus, an important

challenge raised by the exploding informal economy is the need for ensuring adequate

social safety nets and welfare measures to provide social security to the growing segment

of unorganised sector workers. Accordingly, during the past decades, government in

India (both at the centre and state levels) have been striving towards designing and

implementing more effective measures to strengthen and expand the social protection in

the unorganised sector workers

. In this backdrop, a discussion of the recent social

security initiatives in the country would be meaningful. To contextualize such a

discussion, the following section of the essay would attempt a brief but critical analysis

of social security measures launched by the government till recently.

III. Social Security for Unorganised Sector: A Review

In India, the organised sector, which accounts for about 7 per cent of the total workforce,

benefit from a fair minimum standard of social security. The provisions of social security

for organised workers are mainly protective in nature and are ensured through a legal

framework and institutional infrastructure created under enabling legislations such as the

Employees State Insurance Act, 1948 and the Employees Provident Fund and

Miscellaneous Provisions Act, 1952. In contrast to this, the social security arrangements

for vulnerable poor in general and informal workers in particular have been very

minimal. For instance, rough estimates shows that only less than 3 per cent of informal

sector workers are covered by some social security measures. Nonetheless, the

government and other societal institutions have launched various social security

programmes to meet the basic subsistence needs and contingencies of the poor and

informal sector workers since long, starting with the community development

programmes (CDP) in 1950s.

So far, there no specific and comprehensive schemes or legislation at the national level,

which exclusively address the issues of unorganised sector. The major efforts towards the

formulation of a national legislation stagnated for a long time, since the formulation of

two draft legislations were prepared in 1980 and in 1997, which were subsequently

reviewed and recommended by the National Commission on Rural Labour (1987-91) and

some of the specially constituted Parliamentary Committees and consultative forums

Nevertheless, the workers in the unorganised sector benefit from several of the labour

laws and social protection measures, which are more or less generic in nature. For

instance, The Minimum Wages Act, 1948 directs both the Central and State Governments

Despite this increased attention towards expansion of social security measures, it is visible that (owing to

the mounting fiscal deficits) the government led initiatives are increasingly tilting towards alternative

approaches, ensuring contributions from other social partners such as employers (and at times the

beneficiaries themselves).

It is to be noted here that in the post 2000 period, there have been some consistent efforts towards

enacting a comprehensive legislation, which will be discussed further in the subsequent section on new

initiatives.

to periodically notify the minimum wage rates for various categories of informal labour.

The other important legislations, which have some bearing on the welfare of unorganised

sector workers include: Bonded Labour System (Abolition) Act, 1976, Payment of

Wages Act, 1936, Employees State Insurance Act, 1948, Maternity Benefit Act, 1961,

Personal Injuries (compensation Insurance) Act, 1963, Payment of Gratuity Act, 1972,

Workmen’s Compensation Act, 1923, Plantation Labour Act, 1948, Employees Provident

Fund and Misc. Provisions Act, 1976, Inter-state Migrant Workmen (RECS) Act, 1979

and Child Labour (Prohibition and Regulation) Act, 1986. However, all these Acts are

either benefiting to select organised segments of the unorganised workforce or mostly

with certain limited enabling provisions. Further, it is generally understood that the above

acts have not been able to adequately address the social security concerns of the workers

in the informal sector or to provide them any specific welfare measures. Despite the

implementation of all these acts, the workers in the sector are mostly inadequately

protected in terms of security of employment; better working conditions (prescribed

times of work and reasonable wags); and effective systems/machineries for identification

of eligible beneficiaries, dispute resolution and so on.

During the past five decades, starting with the Community Development Programmes

(CDP) in 1950s, the Government and other social institutions have launched various

social security programmes to meet the basic subsistence needs and contingency needs of

the poor and informal sector workers. Broadly, it is possible to group these measures into

three categories, such as: (i) Social Assistance Programmes; (ii) Social Insurance

Schemes; and (iii) Welfare Funds. A brief review of these programmes is attempted

subsequently to gain some insights that help in strengthening the social protection in

agriculture.

Social Assistance Programmes

The social assistance programmes constitutes a varieties of measures such as food-based

transfer programmes, income transfer programmes and cash-transfer programmes. The

food based social safety nets are designed to ensure livelihoods and adequate

consumption, relieve deprivation and improve nutritional status of the poor and

vulnerable sections of the population. Broadly, three types of interventions could be

identified in the category such as self-targeted employment programmes for able bodied

(Sampoorna Gram Swarozgar Yojana; Food for Work Programmes; and Employment

Assurance Schemes); welfare programmes for specific vulnerable groups (elderly and

disabled, pregnant and lactating mothers etc.) and programmes for basic education and

nutrition.

The Public Distribution System (PDS) is the key component in the overall food security

arrangements in the country. Over the years, the PDS has played an important role in

moderating open market prices and ensuring food security at the household level by

providing food grains and other essential prices at lower prices. Nevertheless, in the past

few decades, the mounting burden of food subsidies coupled with the limited

effectiveness in targeting the poor households, led the government to streamline the

system. As a result of these efforts, from 1997 onwards the Targeted Public Distribution

System (TPDS) is being implemented in the country. The main objective of the TPDS is

to improve the PDS consumption of the `identified poor’ by offering a specific quantum

of cereals at highly subsidised prices. The current systems involved in the distribution of

the programme is vehemently criticised by commentators on account of issues such as

inefficiency in targeting, increased per unit cost of transfer of benefits, leakages, unequal

and skewed distribution of benefits to higher income classes (among the poor), regional

disparities in performances and so on

. Notwithstanding all these comments there are

evidences to suggest that the TPDS has improved coverage of poor households residing

in rural areas of poor states, thereby ensuring food subsidy reaching them effectively

(Kundu and Srivastava, 2004). Despite the functioning of TPDS, along with other food

transfer schemes introduced subsequently (namely The Annapurna Scheme

; Antyodaya

Anna Yojana

), it is widely reviewed that the overall improvement in nutritional status

of the population due to these schemes are rather low, which highlights the need for

further strengthening the existing food transfer measures.

The other two major food security programmes are the Mid Day Meal Scheme (MDMS)

and the Integrated Child Care Development Scheme (ICDS). When PDS provides

indirect nutritional support (by improving the physical and economic access to staple

food), the MDMS and ICDS imply direct, targeted nutritional intervention involving

provision of cooked food to the vulnerable among poor, especially children (by self

selection)

One of the commendable alternative initiatives towards provision of food security is the

Community Grain Bank Scheme, which was launched in late 1990s in 13 select states.

The scheme was initially aimed at covering 50 per cent of the tribal population in the

country. Recently, the scheme was revised and extended to cover the entire endemic,

drought –and- migration prone areas in the country with the concentration of tribal

population and also other tribal areas. As per the provisions, the Government provides a

one time grant towards purchase of locally preferred variety of food grains at the rate of 1

quintal per member family for initial stock of the bank, setting up of traditional type of

storage facilities and purchase of weights and scales. Within the first five years, nearly

2000-grain banks are set up a cost of over Rs. 100 million. The scheme is truly

participative in nature. At the village level, a 7 member working committee manages the

For a detailed account on these issues see Remesh and Satpathy, et.al, 2006.

Annapurna Scheme was launched by the central government in which 10 kgs of rice or wheat will have

to be given to the destitute elderly who is not at all supported by any means either formally or informally.

The scheme is in operation through the Department of Civil Supplies of the state governments and

beneficiary estimation was provided by the central government. Due to administrative and procedural

problems, in some of the states, the scheme could not be started and in some states, the scheme was

dropped (Remesh and Satpathy, et.al, 2006).

Antyodaya Anna Scheme of the central government targets to cover 10 million poorest of the poor

households from amongst 65 million below poverty line (BPL) families by making available 25 kg of

wheat and rice at highly subsidised rates. The prospective beneficiaries of the programme were identified

by local-self government institutions in open meetings. A few recent studies suggest that there are

substantial drawbacks for the programme in terms of beneficiary identification and targeting errors,

inadequate and improper coverage, faulty implementation and leakages (Remesh and Satpathy, et.al, 2006).

For a detailed account see Kannan and Pillai (2007), which also provides rich information on several

governmental schemes/measures apropos health and education security.

scheme, with the village headman as its chairman and all tribal population of the village

living below poverty line as its members. The member families are entitled to take loans

in 4 installments of upto 25 kg. each during the period of scarcity, which is repayable at

the time of next successful harvest to recoup the stock. The interest on loan is 5 per cent

upto 3 months and 10 per cent from 3 to 6 month. In the event of non-payment beyond 6

month, the membership of the individual is liable to lapse but may be revived after

repayment. Available reports suggest that food bank schemes have been quite successful

at local levels in improving food security in remote and difficult areas for vulnerable

groups (Remesh and Satpathy et.al, 2006).This scheme, however, did not cover all the

workers in the informal economy, as it was specifically designed towards safeguarding

against fall in nutritional standards of scheduled tribes living in remote and backward

areas. Notwithstanding its limited coverage, the lessons from such innovative approaches

and participatory models are useful, while improving the efficacy of established and

conventional programmes such as PDS.

Income transfer programmes in India basically include the labour-based public works and

infrastructure programmes (or workfare programmes) to promote rural and urban

livelihoods. The first such scheme was started in early 1960s in the form of Rural Works

Programme largely due to recognition of the fact that growth alone could not take care of

poverty. Subsequent to this, a number of wage employment programmes such as Food for

Work Programme (FFW-1977), Jawahar Rozgar Yojana (JRY), Sampoorna Gram

Swarozgar Yojana ((SGRY), Jawahar Gram Samridhi Yojana (JGSY), Employment

Assurance Scheme (EAS), Pradhan Mantri Gram Sadak Yojana (JGSY), Food for Work

Programme for Calamity Hit States (FFW-2002) and so on were initiated from time to

time. The latest addition to this set of schemes is the recently introduced Employment

Guarantee Act, 2005

. Among the state level schemes in the same direction,

Employment Guarantee Scheme (Maharashtra) requires a special mention

The available evidences suggest that, on the whole, workfare programmes were found

effective in reducing poverty levels of rural folk through provision of certain minimum

levels of employment to the rural poor in unskilled manual work during slack seasons or

The National Rural Employment Guarantee Act, 2005 assures that the State Government concerning the

rural area shall provide to every poor household whose adult members volunteer to do unskilled manual

work not less than one hundred days of such work in a financial year in accordance with the scheme made

under this Act. The minimum wage to be paid to the workers are stipulated and if fail to provide the

minimum guaranteed level of employment, the appropriate government is liable to pay an unemployment

allowance.

Employment Guarantee Scheme (EGS) in Maharashtra, which began in early 1970s, envisages the

provision of employment on request, at a stipulated wage, within 15 days, and no more than five kilometers

away from the participant’s home villages. An unemployment allowance is paid when this is not possible.

A major proportion of the beneficiaries of the scheme are agricultural labour, though the scheme is not

specially designed to cater farm workers. About three quarters of the EGS budget is spent on wages and the

current scheme provides guaranteed employment year around. The available evaluations suggest that the

EGS has attracted people who are often excluded from other programmes- for example, women and

members of scheduled castes. Also, it is widely established that the scheme was successful in terms of

reducing poverty and unemployment, besides acting as an effective insurance mechanism.

situations of natural calamities, such as drought or famine

. These schemes were more or

less found performing well in terms of targeting and income support. Notwithstanding

these positive aspects, several studies suggest that the coverage and penetration of

benefits of these employment generation programmes have been minimal in relation to

requirements. The drawbacks of these programmes suggested by various evaluation

studies, include lower coverage of eligible job seekers, lesser number of average

employment days generated, less labour intensive nature of the programmes, large

leakages from the expenditure, delay in payment of wages, and inappropriate selection of

programme areas.

Among the cash transfer programmes in the social security front, which are equally

applicable to the workers in the agricultural workers National Social Assistance

Programme (NSAP) are prominent. NSAP, which is a social security programme for the

welfare of poor households, initiated in 1995, has three components such as National Old

Age Pension Scheme (NOAPS)

, National Family Benefit Scheme (NFBS)

and

National Maternity Benefit Scheme (NMBS)

. A component wise review of the efficacy

of these programmes suggests that the physical coverage and financial performance of

NOAPS was better compared to the other schemes. However, the amount of pension for

NOAPS has been abysmally low. Data indicate that the average payment has been even

less than the stipulated amount, which indicates that some of the eligible beneficiaries

may not have been provided with pensions. Very recently, the government modified the

NAOPS and NMBS to improve their efficacy and coverage. Recasting the NAOPS from

November 2007 onwards a new scheme called “Indira Gandhi National Old Age Pension

Scheme” (IGNOAPS)

came into existence. Similarly, from April 25 onwards the

National Maternity Benefit Scheme (NBMS) got replaced by a modified scheme called

“Janani Suraksha Yojana” (JSY)

. The existing literature and assessments in the subject

suggest that the standard criticisms against government sponsored schemes in terms of

poor design, inadequate allocation, improper implementation and weak beneficiary

participation also hold true in the case of the above cash transfer programmes.

The discussion here is based on the evaluations and reviews available on the performance of schemes

prior to the Employment Guarantee Act (EGA), 2005 and does not include any comment on the EGA,

2005, which is in its nascent stage of implementation.

The National Old Age Pension Scheme (NOAPS) is available to all poor persons aged 65 years or older.

Under the NOAPS, the Central Government provides for Rs. 200/- per pensioner per month and the states

are urged to contribute an equal amount.

As per this scheme, a lump sum cash assistance (of Rs. 10000) is provided to households below the

poverty line on the death of the primary bed winner. For further details see Government of India (2008).

This programme assures a fixed sum (of Rs. 500) for pregnancy upto the first two live births.

As per this scheme, the benefit of old age pension was extended to all citizens above 65 years and living

below the poverty line. The state governments have been asked to top up the central government per capita

grant of Rs. 200 month and to certify that all eligible persons have been covered (and to credit the pension

–where feasible- into a post office or public sector bank account of the beneficiary). For more details of

IGNOAPS see Government of India (2008).

While NMBS is linked to provision of better diet for pregnant women from below poverty line families,

JSY integrates the cash assistance with antenatal care during the pregnancy period, institutional care during

delivery and immediate post-partum period in a health centre by establishing a system of coordinated care

by field level health worker. The state level implementation of the scheme is organised with the help of an

accredited social health activist, ASHA – as an effective link between the Government and the poor

pregnant women. For further details of JSY, refer : Government of India (2006)

Social Insurance Schemes

Another major category of social protection in India for unorganised sector labour (and

thus for agricultural labour) is the social insurance schemes, which are meant to improve

ability of the poor individuals and households to resist sudden shocks or losses caused by

social and other contingencies. The two major generic schemes under this are the

Janshree Bima Yojana (JBY), 2000 and the Universal Health Insurance Schemes (UHIS),

2004. While the former envisages life insurance protections to persons between 18-60

years old, living below or marginally above poverty line in rural areas, the latter assures

hospital care to poor persons and families. Other centrally sponsored schemes that benefit

agricultural labourers are `Personal Accident Insurance Scheme for Poor Families’ and

`Group Insurance Scheme for Landless Agricultural Labourers’. Though detailed

evaluations of the above schemes are yet to be done, it is commonly observed that, these

measures suffer generally from several drawbacks such as inadequate coverage, lack of

effective beneficiary participation, improper implementation and so on. Further, the

resource allocations towards these schemes are far from adequate that their sustainability

of would be in question, if all the eligible beneficiaries effectively utilise it.

Welfare Funds

Welfare funds represent a slightly different mode and innovative way of providing social

security to the workers in specific occupational categories. The various welfare funds,

which are currently catering to different informal sector occupations in India, provide

different types of welfare amenities to the workers such as healthcare, housing,

educational assistance for children, drinking water and so on. However, at the central

government level, there are no specific welfare funds functioning so far, which provide

certain levels of social security to all the workers in the informal sector

. The impressive

performance of welfare funds in funds in southern states, particularly in the state of

Kerala, in the past few decades has been widely discussed in the literature

and several

similar state level schemes (for instance, in Karnataka and Kerala) are currently being

contemplated. A unique aspect of welfare funds is its effective involvement of multiple

stakeholders in designing and implementing social safety nets

. Despite the fact that

many of the older welfare funds functioning at state levels are facing severe bottlenecks

and administrative problems currently, in view of their impressive track record, it is

desirable to examine the replicability of the model in the national level, while designing

more viable social security interventions for informal labour.

From the foregoing discussion, it is could be concluded that despite their impressive

share in the workforce of the country, the unorganised labour generally lacks

At present the central government runs five occupation-based welfare funds set up under various acts of

Parliament. They are for: Beedi Workers, Limestone & Dolomite Mine Workers, Iron Ore, Chrome Ore &

Manganese Ore Mine Workers, Mica Mine Workers & Cine Workers.

Refer Kannan (2002) for a detailed discussion on the performance of welfare funds.

The welfare funds in Kerala are being run with active support from trade unions and through

contributions from workers, employers and the government (Kannan, 2002).

comprehensive and effective legislations as well as welfare schemes that assure a certain

minimum level of social security. In this backdrop, the subsequent section discusses

some of the recent initiatives (both promotional and protective) of the government to

enhance the social security standards of unorganised labour in the country.

IV. Recent Initiatives

Due to a growing recognition of the burgeoning informal sector and its resultant adverse

implications on labour standards as well as social security systems, during the recent past,

the policy planners in India have been paying considerable attention towards designing

more effective social safety nets and revamping the existing measures. Of late, issues like

targeting, proper identification, expansion of coverage as well as designing of efficient

delivery mechanisms received more attention than ever in the history. Along side this,

mounting fiscal deficit scenarios forced the governments (both at the centre and in the

states) to seek alternative approaches to devise more cost-effective and targeted

interventions as well as to seek enhanced participation of and contributions from other

stakeholders, such as the employers as well as the social/community actors (including the

targeted beneficiaries themselves).

Food Security Initiatives

Since mid 1990s, a major area of intervention was in terms of targeting and strengthening

the food based social security systems. The following table (Table 1) provides a summary

of major initiatives in this sphere. In 1995, a major scheme on providing mid-day meals

was launched through which some amount of cooked food was ensured per day to the

children of indigent families. This measure not only acted as a means of nutritional

support to the families of unorganised sector labour, but also provided an incentive for

school enrolment of their children.

Table 1: Major Food Security Schemes in India since Mid 1990s

Programmes Year of

launching

Objective Target Groups Coverage

1. Mid Day

Meals Scheme

(MDMS)

1995 Nutritional support and

incentive for enrollment and

attendance of primary

school children in

government, government

aided and schools run by

local bodies

Cooked meal @ 100 gm per

child per day or 3kg of dry

food grains conditional on 80

per cent attendance

95.7

million

2. Community

Grain Bank

Scheme

1996 Prevention of starvation

deaths in 13 identified states

Mainly Tribal population in

remote and backward areas

Select

regions

in 13

identified

states

3. Targeted

PDS

1997 Subsidized foodgrains of 35

kg per household at 45 per

cent of the economic cost

All Below Poverty Line

(BPL) households

(for Above Poverty Line

(APL) households 35 kg of

foodgrains at 66 per cent of

the economic cost)

198

million

househol

4. Annapurna

Scheme

2000 Relief for the elderly poor

(10 kg of foodgrain per

person per month free of

cost

Indigent senior citizens above

65 years of age who are

eligible for old age pensions

0.48

Million

5. Antyodaya

Anna Scheme

2000 Freedom from Hunger (35

kg of foodgrain at about 50

per cent of BPL rates)

Targeted towards poorest of

the poor in the existing BPL

population

million

families

Source: Remesh and Satpathy, et.al (2006)

The next remarkable step was the introduction of the Community Grain Bank Scheme,

which though launched on an experimental basis in select tribal regions, was generally

hailed as an effective and innovative approach to ensure community involvement in the

implementation of social security measures. In 1997, the PDS framework prevalent in the

country was massively overhauled and a revamped and targeted system (TPDS) was

launched, with a progressive and discriminatory pricing mechanism, through which a

higher share of overall food subsidy was earmarked to those families below poverty line.

These efforts, of streamlining the benefits to benefit the disadvantaged and needy

segments of the society, were further supplemented with the introduction of two more

programmes in 2000, namely Annapurna Scheme and Antyodaya Anna Scheme. While

the former aimed at providing some food relief to the elderly in the impoverished

families, the latter was objected to abate hunger among poorest of the poor. Though many

of these schemes have been either lagging far behind their envisaged targets (in terms of

coverage and delivery) or still functioning at the pilot stages, it is encouraging to see that

social security reforms in the country are increasingly tilting towards meeting the

requirements of more vulnerable segments.

Social Insurance and Pension Measures

In the social insurance sector also, the recent past witnessed a remarkable upsurge with

the introduction a number of new schemes, the details of which are summarized in Table

2. A major and universal of social insurance scheme (Janshree Bima Yojana) was

launched in 2000, along with the Life Insurance Corporation of India (LIC). The

implementation of the scheme, which is currently functional and expanding, is designed

with the help of some local level nodal agencies, which could be panchayats (local self

governments), non-governmental organisations and self-help groups (SHGs) or any other

institutionalised arrangements. Another scheme launched in collaboration with LIC in

2001, Krishi Samajik Suraksha Yojana, was aimed at providing some social insurance

benefits to the farm workers. However, due to inadequate resources, the scheme was

closed later in 2004. Yet another LIC aided scheme was the Varishta Pension Bima

launched in 2003, which is being fully financed by the investments of the beneficiaries.

Subsequently, in 2004, a community based Universal Health Insurance System was also

launched by the public sector general insurance companies of the country, which aimed at

providing some reimbursement of medical expenses; life-cum-accident insurance; and

compensation on job loss to the families below poverty line. Some of the other social

security initiatives introduced by the Government of India, in recent past

, include:

For details of these new social security initiatives, see Government of India (2008).

Handloom Weavers’ Comprehensive Welfare Schemes

, Handicraft Artisans

Comprehensive Welfare Scheme

, Pension to Mastercraftpersons

, National Scheme for

Welfare of Fishermen and Training and Extension

, Aam Admi Bima Yojana

and

Rashtriya Swasthya Bima Yojana

. In 2004, Government also launched a

Comprehensive Social Security Scheme for the Unorganised Sector Workers, as a follow

up to the recommendations of the Second National Commission on Labour (2002).

However, as against the initial expectations the performance of the scheme, was not

impressive and within two years of its launching, it became has become virtually non-

operational (NCEUS, 2006).

Despite the fact many of the above mentioned insurance/pension schemes could not bring

in any considerable solutions to the social security issues of unorganised sector labour, it

is evident from the planning of these measures that, unlike the earlier periods, in the

recent past, the Government has been attaching more attention and care towards

involving other social partners (such as insurance companies; employers, community

organisations, local bodies, SHGs and so on) as well as the beneficiaries themselves

towards mobilising resources and effectively implementing the programmes.

Legislative Interventions and Initiatives on Social Security

Of late, there have been some commendable legislative initiatives in India that have

bearings on the social security of unorganised sector workers. In 1996, two umbrella

legislations towards regulating the conditions of work and provision of a measure of

social security to the group of construction workers, which constitutes one of the largest

segments of workers in the unorganised sector – were passed by the Parliament of India.

During 2005-06 and 2006-07, the government was implementing two separate schemes (viz., `Health

Insurance Scheme’ for providing health care facilities to the handloom weavers; and `Mahatma Gandhi

Bunkar Bima Yojana’ for providing life insurance cover to the handloom weavers in case of

natural/accidental death, total/partial disability due to accident). During the 11

plan, started in 2007, both

these schemes have been merged into one integrated scheme called `Handloom Weavers’ Comprehensive

Welfare Scheme’. For more details, see Government of India (2008).

This scheme, initiated in the 11

plan (2007-12) is an amalgamation of two existing schemes, which are

operational since the 10

plan (2002-07) namely Rajiv Gandhi Shilpi Swasthya Bima Yojana (for providing

health and insurance cover to an artisan’s family) and Bima Yojana for Handicrafts Artisans (for providing

life insurance cover to the handloom weavers in case of case of natural/accidental death, total/partial

disability due to accident). For more details, see Government of India (2008).

As per this scheme renowned and needy mastercraftpersons of 60 years or more are provided with a

monthly pension. For more details, see Government of India (2008).

This scheme launched in 1991-92 is also an amalgamation of two earlier schemes, namely Janata

Personal Accident Policy (1982-83) and National Welfare Fund for Fishermen (1986-87). For more details,

see Government of India (2008).

This scheme also is being implemented through the Life Insurance Corporation of India. The scheme

provides certain social security benefits to members of rural landless households (aged between 18-59

years) in the events of natural/accidental death, total/partial disability due to accidents and so on. For more

details, see Government of India (2008).

As per this scheme unorganised workers in the below poverty line category and their family members are

eligible for certain health insurance and medical relief. For more details, see Government of India (2008).

Table 2. Major Social Insurance and Pension Schemes in India Since 2000

Programmes Year of

launchi

Objective Target Groups Source(s) of

contribution

1. Janshree

Bima Yojana

2000 Insurance cover in the

events of natural and

accidental death as well as

partial/permanent disability

Urban and rural poor

who live below the

poverty line or on the

margin

Central

Government

and the

beneficiaries/s

ome nodal

agency/state

government

2. Krishi

Samajik

Suraksha Yojana

2001 Some life-cum-accident

insurance, a lump sum

money back after 10 years

and a moderate pension

Agricultural workers in

the age group of 18-50

years

Central

Government

and the

beneficiaries

3. Varishta

Pension Bima

2003 An assured annual return of

9 per cent on the

investments of

beneficiaries, in the form of

monthly pension.

Unorganised workers

aged 55 years and above

Fully financed

with the

investments of

beneficiaries

4. Unorganised

Sector Workers

Social Security

Scheme

2004 A moderate level of old age

pension, personal accidental

insurance and medical

insurance.

Unorganised and self

employed workers in

the age group of 18-50

years and drawing a

lower level of

salary/wage/income per

month

Beneficiaries

and the Central

Government

5. Universal

Health Insurance

Scheme

2004 Some reimbursement of

medical expenses; life-cum-

accident insurance; and

compensation on job loss.

Persons and families

below poverty line

Insurance

premium from

beneficiaries

6. Aam Admi

Bima Yojana

2007 Provide some death and

disability benefits to the

rural landless poor.

Unorganised landless

households

Central and

state

government

7. Rashtriya

Swasthya Bima

Yojana

2007 Provision of some health

insurance to worker

families.

Unorganised workers

falling below the

poverty line.

Government of

India and the

State

government; A

nominal

annual fee

from

beneficiaries

Source: Compiled from NCEUS (2006) and Government of India (2008)

On the basis of these legislations [The Building and other Construction Workers

(Regulation of Employment and Conditions of Service) Act, 1996 & The Building and

Other Construction Workers Welfare Cess Act, 1996], various states are expected to

enact state level legislations. Subsequently, the Government notified the Building and

Other Construction Workers (ECS) Central Rules, 1998, which stipulated several social

security benefits to the construction workers including accident relief, old age pension,

housing loans, payment of insurance premium, payment towards educational expenses of

children, medical and maternity benefits and so on. Following these Acts, various state

governments are currently in the process of enacting their own legislations. So far, six

states have enacted such legislations and functioning of the new schemes under these

legislations have been attaining momentum in states like Kerala and Tamil Nadu.

The Second National Commission on Labour (NCL), constituted by the Government in

1999 dealt with the social security concerns of unorganised sector in a detailed manner.

One of the six special study groups constituted by the commission was on social security

and in its final report submitted in 2002, the Commission provided detailed

recommendations towards strengthening the social security system in the country. As

mentioned elsewhere, in response to the Commission’s recommendations, the Ministry of

Labour prepared a pilot Unorganised Sector Workers Social Security Scheme (2004),

which however met with limited response

. Further to this, the Ministry also prepared an

Unorganised Sector Workers Bill, 2004, which contained measures relating to both social

security and conditions of work in the informal sector.

The present Central Government also continues to uphold the priority attached to social

security issues, and in its Common Minimum Programme (CMP), inter alia, recognized

as one of its basic principles of governance the need to “enhance the welfare and well

being of farmers, farm labour and workers, particularly those in the unorganised sector

and assure a secure future for their families in every respect”

. In 2004, the Government

set up a National Commission for Enterprises in the Unorganised Sector (NCEUS) to

review, inter alia, the “social security system available for labour in the informal sector

and make recommendations for expanding their converge”. The NCEUS submitted its

recommendations on social security enhancement in May 2006 to the Prime Minister of

India and drafted a bill [The Unorganised Workers’ Social Security (Draft) Bill, 2006],

which was formulated after detailed review and examination of all the hitherto similar

exercises in the country. It is widely acknowledged that Draft Bill proposed by the

NCEUS is a substantive step towards provision of social security to informal sector

workers (EPW, 2006). As per the plan of NCEUS, three forms of social security would

be provided to about 300 million workers in the unorganised sector. These are health

insurance, life insurance and old age security – involving joint financing by the workers,

employers and the central and state governments. The NCEUS scheme is hailed as the

first ever-comprehensive social security scheme for the unorganised sector in India

(Kannan et.al, 2006)

As a part of designing this system the Ministry also experimented the introduction of identity cards and

identity numbers (Social Security Cards and Social Security Numbers) to the unorganised sector workers,

which was again in line with the recommendations of the NCL

The CMP further states that – “ The UPA government is firmly committed to ensure the welfare and well

being of all workers, particularly those in the unorganised sector, who constitute 93 per cent of our

workforce. Social security, health insurance and other schemes for such workers like weavers, handloom

workers, fishernen and fisherwomen, toddy tappers, leather workers, plantation labour, beedi workers, etc.

will be expanded”.

For a detailed account of the salient features of NCEUS Scheme and related discussions/criticisms, refer

the special issue of Economic and Political Weekly on Social Security for Unorganised Workers (Vol. XLI,

No.2, August 12-18, 2006), which contains a set of articles such as Kannan et. al (2006), Jose (2006),

O’Keefe & Palacios (2006), Rao et. al (2006), Sankaran (2006), Duggal (2006) and Neetha (2006)

A distinct feature of the NCEUS’s proposal is that it is a right based one, as it envisages

the scheme in the form of a legally enforceable entitlement. Unlike many other earlier

schemes, it makes all unorganised sector workers eligible for the social security,

irrespective of their occupation and duration of employment. Yet another important

aspect is that, if implemented, the NCEUS plan would provide a national floor level

social security for all the informal workers throughout the country. Notwithstanding these

merits, there are still discussions going on indicating some of the shortcomings of the

proposals of NCEUS and suggestions for further refinement of the proposed plan of

action. These include: the need for focusing first on promotional security measures rather

than rushing with protective measures (as suggested by NCEUS); impracticability of the

defined contribution model suggested (by which all workers will have to make a

contribution); the meagerness of benefits envisaged; aspects of exclusion some segments

(for instance, unpaid women workers) and so on These suggestions/shortcomings,

however, no way undermine the importance of the proposals put forth by the NCEUS.

Subsequently, the NCEUS has also prepared two more bills namely ‘Unorganised

Agriculture Sector workers (Conditions of Work and Livelihood Promotion) Bill, 2007’

and ‘Unorganised Non- Agriculture Sector workers (Conditions of Work and Livelihood

Promotion) Bill, 2007’.

The latest initiative in terms of ensuring social security through legislative measures is

the introduction of ` Unorganised Sector Workers’ Social Security Bill, 2007’ in Rajya

Sabha (in September 2007). This bill was further referred to the Standing Committee on

Labour (for a detailed review). The committee submitted its detailed suggestions in its

report to Parliament (in December 2007). All these indicate the importance attached

by the Government of India and the Ministry of Labour and Employment on the crucial

issue of social security provision to the unorganised sector.

Two other recent legislative initiatives of Government of India also require special

mention in the ongoing discussion, as they undoubtedly act as promotional and enabling

measures towards the realisation of social security to the informal sector. The first one,

the National Employment Guarantee Act (NREGA), 2005 is a step towards legal

enforcement of the right to work, as aspect of the fundamental right to live with dignity.

The NREGA, 2005 (the provisions of which are currently being implemented in select

regions and would be covering the entire country by 2010) ensures at least 100 days of

guaranteed wage employment in a year to at least one adult member of very household.

The work is to be provided within 15 days of demanding it and to be located within five

kilometers distance. The salient features of the resultant National Employment Guarantee

Scheme (NREGS) include the self-selection characteristics and the unemployment

compensation to be paid by the government, in case the required minimum employment

could not be provided. The available first round appraisals of the functioning of the

NREGS provide mixed results. While the scheme is reported to be effective in certain

regions/pockets, its performance is lagging behind in many other regions. Despite the

widespread criticism regarding the narrow scope of the scheme (restricted to BPL

households) and inadequate role of local bodies in selection of the beneficiaries, it is

expected that the efficient implementation of the provisions of this scheme would

enhance the social security levels and reservation income of the rural labour households,

besides bringing in a rise in the rural wage levels across the country.

The second legislation, The Right to Information (RTI) Act, 2005 is expected to improve

the effectiveness of the social security programmes, as it gives the people right to

question the government and get information about any government activity (with few

exceptions), which can mitigate corruption and improve efficiency of welfare

programmes

(Dev, 2006). Already, the RTI Act has proved to be effective in the

implementation of draught relief employment programmes in the state of Rajasthan and it

is expected that it could do a lot towards the proper implementation of employment

guarantee scheme (for instance, NREGA) and other social security programmes for the

unorganised sector

V. Conclusion

On the whole, from the discussion in the paper, based on a critical review of the existing

social security initiatives in India, it is evident that the past decade witnessed an

unprecedented revival in the social security scenario of India, due to an increased

recognition by the government, apropos the adverse labour market implications of the

growing informal sector, in an era of globalisation of economies and production systems.

Some of these interventions and initiatives though require further refinements and proper

enforcement, invite more informed discussions at the national and international level. A

welcome aspect of these new initiatives is the visible efforts of the government towards

designing and implementing right-based social security systems, along with enabling

governance structures, which inter alia seek more participation from all other

stakeholders, including the targeted beneficiaries themselves.

Under the RTI Act, 2005 people can: demand from the government information pertaining to any of its

departments; demand photocopies of government contracts, payments, estimates, measurements of

engineering works etc.; demand to inspect any public development work that may be still under

construction or completed; demand to inspect government documents – construction drawings, records,

registers etc.; demand status of the requests or complaints and so on.

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