The Role of Employees’ State Insurance Corporation in Providing Social Insurance in India (Insurance

)

By Damu Chandran.C

Email: damu111@hotmail.com

Ph No: 9895890079

Since its inception in 1952. ESIC has been catering to the workers to a humane egalitarian mission for the advancement of the nation. Employees’ State Insurance Corporation set up by the Government of India as per the provisions of the ESI Act. provides various social security benefits to the workers and their families in the form of medical care and cash payments to compensate loss of wages due to different contingencies for a single contribution through ESI Scheme. .Abstract The Role of Employees’ State Insurance Corporation in Providing Social Insurance in India This paper evaluates the role of Employees’ State Insurance Corporation in providing social insurance to workers in India. The main source of finance for funding the Scheme is contribution received by the Corporation from employees and employers. This study revealed that to a certain point ESI Corporation was successful in playing its role of providing social security benefits to workers in the organised sector. Coverage of the Scheme is restricted to organised sector. This paper examines the quality of Social Insurance Benefits provided by Employees’ State Insurance Corporation in India. It has vast resources to provide world class medical facilities and extend the implementation of the Scheme to more areas. The study is exploratory in nature using primary and secondary data.

employee relationship. lack of . (18. casualization of labour. Introduction Social insurance is basically a system of monetary and health protection provided to individuals in contingencies such as disease. The organised sector is characterized by a direct employer-employee relationship within an organization and has labour laws and other regulations to control the activities of the sector. As per 2011 data. Out of which 27. The social insurance programmes in India derives their strength and spirit from the directive principles of the state policy as contained in the Constitution of India. Maternity Benefit Act. 1952. 1961. 1948.27 Million workers are in the organized sector. lack of labour law coverage. Social assistance through welfare Funds of Central. dispersed functioning of operations. Social security to the workers in the organised sector is provided through different Central Acts. State legislations including welfare Funds and Public initiatives.The Role of Employees’ State Insurance Corporation in Providing Social Insurance in India 1. labourforce in India is about 459 millions. 1923. The programme will be funded by taxes or premiums paid by or on behalf of participants and sometimes additional sources of funds may be used. disablement and death which are beyond the human control. namely: Employees State Insurance Act. and participation is either compulsory or the programme is heavily enough subsidised that most eligible individuals choose to participate. 1972. It may be any government-sponsored programme in which the benefits and eligibility requirements of the program are defined by law. and Payment of Gratuity Act. Workmen’s Compensation Act. These principles provided that social insurance to workers are either solely at the cost of the employers or on the basis of joint contribution of the employers and the employees. Therefore it is the workers in private sector and unorganised sector are those who are in need of special social insurance schemes.27 million in private sector) and the rest are in the unorganized sector. seasonal and temporary nature of occupations. Employees in public sector are provided social protection under the rules of the respective Governments.00 million in public sector and 9. Employees Provident Fund & Miscellaneous Provisions Act. The unorganized sector on the other hand. high labour mobility. The programme serves a defined population. Social insurance Schemes. there is no direct employer. Social insurance arrangements in the unorganized sectors is by way of Central legislations including welfare funds.

a statutory body at the open level. The Study covers only insured persons from the state of Kerala for evaluating the . Nehru also became the first Honorary Insured person.organizational support. Employees’ Insurance Courts and Public Grievances cell. Revenue Recovery machinery. the workers in unorganised sector mainly require income support in times of drought. The ESI Scheme is administered by the Employees’ State Insurance Corporation. Jawaharlal Nehru. acts as an Executive body. the problem of social insurance in organised sector is mainly handled by Employees State Insurance Corporation formed under Employees State Insurance Act. 1952 at two centers namely. ESI Scheme provide both medical and monetary support to workers during eventualities such as sickness. all of which make it vulnerable to socioeconomic hardships. The ESI Scheme is based on the principle of pooling of risks and resources in which every contributor at any given point of time emerges as a beneficiary or a benefactor and society at large is the net gainer. with its Headquarters located at New Delhi. When all other Schemes provide only monetary support to workers. Administrative machinery of the Corporation includes Social Security Officers. In addition to medical care. Union Minister of Labour functions as Chairman of the ESI Corporation and Director General as Chief Executive is responsible for day-to-day administration. etc. temporary or permanent disablement and occupational disease or death due to employment injury for a single contribution. low bargaining power. The Medical Benefit Council. 1948. a statutory body having a perpetual succession and a common seal. The social insurance needs of workers in both sectors differ in many ways. The Corporation comprises representatives of employees. and set up by the Government of India on 24th February. Regional Boards at the State level and Local Committees at the grass root level has been constituted as advisory bodies for smooth functioning of the ESI scheme. the Central Government. Kanpur and Delhi by Pt. In India. State Governments. 1952. the first Prime Minister of India and Pt. Scope of the Study The study examines the role of the ESI Corporation in providing social insurance to workers in India by assessing the benefits provided by the Corporation under the ESI Scheme. Whereas organised sector workers medical and monetary support when are physical incapable of working since there is no problem of seasonal unemployment. employers. lean seasons and during periods of unemployment. Medical Profession and the Parliament. A Standing Committee constituted from among the members of the corporation. This Scheme was launched on 24th February. maternity.

. An assessment of sources and application of finance of the Corporation is also done to get an idea about the expenditure on different social insurance benefits.quality of benefits. cinemas including preview theatres. Bar diagrams and tables were also used. Objectives of the Study The main objectives of the study are to evaluate whether ESI Corporation is successful in solving the problem of social insurance in India and to what extent.11% of the total work force in the country. Establishments like shops. Methodology The study is exploratory in nature using primary and secondary data. there are equal number of insured men and women. Out of 100 samples. road motor transport undertaking and news paper establishments employing 10 or more persons. The ESI Act. restaurants. which represents only about 3. circulars and press releases and also from website of the Corporation. At present about 53% of organized sector are covered under the Employees' State Insurance Act. 2. The secondary data were collected from various printed and published materials of the ESI Corporation like annual reports. The beneficiaries of the scheme include both the insured persons and their dependents. statistical tools like averages. Primary data is collected from 100 sample insured persons who had treatment from ESI hospitals and also availed of any of the Cash Benefits provided under the Scheme and selected equally from two districts of Kerala: Alappuzha and Kollam. Analysis of Data Coverage of Scheme The ESI Act covers workers in the organized sector only. percentages and growth rates were used. 1948 is applicable to the following   Factories employing 10 or more persons irrespective of whether power is used in the process of manufacturing or not. periodic journals. An insured person means a person who is or was an employee of whom contributions are or were payable under the ESI Act and who is by reason thereof entitled to any of the benefits provided under the Act. The study covers a period of three years from 2008-2009 to 2010-2011. using purposive sampling technique. For the purpose of analysis. hotels.

000/.15.e. Andhra Pradesh. In the first phase. Union Territories like Delhi and Chandigarh The existing wage-limit for coverage under the Act is Rs. Jharkhand. The first phase had been almost successfully implemented even though it is not complete. Workers of factories and establishments situated in the non-implemented areas Workers drawing wages exceeding Rs. Pondicherry. In the case of unorganised sector since there is no fixed employer-employee relationship. Uttarakhand. Assam.f. medical benefit under the scheme can be extended to other beneficiaries on payment of user charges subject to framing of schemes by the Central Government. Bihar.15. West Bengal. factories run without power employing 20 or more workers and establishments employing 20 or more workers are to be covered. 01/06/2010 vide ESI (Amendment) Act. In India. In the third phase the unorganised and semi-organised sectors. Chattisgarh. 1948 w. Sikkim. Punjab. Uttar Pradesh. The remaining workers (47%) in the organised sector are not covered under the ESI Scheme due to the following reasons:     Employees of Central and State Governments Workers of factories and establishments employing less than 10 persons. However. Ministry of Labour & Employment has introduced a Scheme called . The Scheme extends to all types of workers whether permanent or temporary.000 per month and this wage-limit is determined by the Standing Committee of the Corporation periodically. 2010. ESI Corporation has started measures for second and third phase. Further the Govt. of India.per month. and Tamilnadu. Arunachal Pradesh and Mizoram. The Committee on Perspective Planning (1972) of the ESI Corporation had aimed at extension of the Scheme in three phases.The Scheme has also been extended to private educational institutions and private medical institutions in Rajasthan. Jammu & Kashmir. no fixed earnings and no fixed wage records recovery of contribution from such workers will be very difficult. factories run with power and employing 10 to 19 workers. Kerala. In second phase the organized mines and plantations. as per amendment in the ESI Act. Since the ESI Scheme provides a uniform package of benefits at a uniform rate of contribution. the ESI Scheme has been implemented in   All states except Manipur. it cannot be extended to workers in the unorganized sector in its present form.

57 Source: ESI Corporation Annual Reports Table 1 Table showing the Benefits provided by the ESI Corporation under the Employees’ State Insurance Scheme ESI BENEFITS QUANTUM OF BENEFIT Medical Benefit Medical Benefit to Retired /Disabled IP & his/her spouse Sickness Benefit Full Medical Care to IP and his family Full Medical Care for self and spouse only 70% of average daily wages and is payable for 91 days during two consecutive benefit periods.37 138. 80% of average daily wages for an extended period of up to two years Full wage for undergoing sterilization operations for family welfare . of Employees No. 6 weeks in case of miscarriage or medical termination of Extended Sickness Benefit Enhanced Sickness Benefit Maternity Benefit .96 143 154. Insured Persons and Beneficiaries under the ESI Scheme (No.97 554.28 155. Benefit is payable for a maximum period of 12 weeks in case of confinement.69 129."Rashtriya Swasthya Bima Yojana" for providing social security to BPL (Below Poverty Line) workers in the unorganized sector.3 No.84 602. of Insured Persons No. Bar Diagram-1 Number of Employees. 7 days for Vasectomy and 14 days for Tubectomy from the date of operation or from the date of admission in the hospital Daily rate of benefit is equal to full wage. of Beneficiaries 501. in Lakhs) 700 600 500 400 300 200 100 0 2008-09 2009-10 2010-11 125.

2.500/. Confinement expenses are payable to an insured woman or an insured person in respect of his wife in case facilities for confinement are not available in ESI Institutions. Amount of benefit depends upon the loss of earning capacity of the IP determined by a Medical Board Periodical pension is paid to the dependants of a deceased insured person where death occurs as a result of an employment injury or occupational disease.per case up to two confinements only.pregnancy which can be extended up to one additional month in case of sickness arising out of confinement. Rehabilitation allowance is payable to the insured persons. for each day. Standard benefit rate is calculated as per ESI (Central) Rules.000 made to defray the expenditure on the funeral of the deceased insured person. Temporary Disablement Benefit Payable in case of temporary disability arising out of an employment injury for the period duty certified by an insurance medical officer. The widow receives a fixed rate equivalent to 3/5th of the disablement benefit rate and each dependent child is paid an amount equivalent to 2/5th of the benefit. partial or total loss of earning capacity and is paid periodically to the insured person for life. Lump sum payment up to a maximum of Rs. The amount payable is Rs. Benefit is payable at 90% of average daily wage Payable where the disablement is due to an employment injury or occupational diseases that results in permanent. 1950 Scheme is for insured persons not more than 45 years of age and disability due to Permanent Disablement Benefit Dependants’ Benefit (paid to dependants of deceased IP) Funeral Expenses(paid for the funeral of a deceased IP) Confinement Expenses( to insured woman or in respect of wife of IP) Rehabilitation Allowance Vocational Rehabilitation Allowance Skill . 10. The rate of dependants’ benefit is 90% of average daily wage. on which they remain admitted in an Artificial limb-centre for fixation or repair or replacement of artificial limb at double the standard benefit rate.

Total . Medical care is also provided for the insured person and his family Rajiv Gandhi Shramik Kalyan Yojana Source: Official website of the ESI Corporation: www. Employer’s Contribution .75 percent of the wages. the State Governments also share a 12. However. fines & forfeitures. According to the financial reports of the ESI Corporation during the 3 year period from 2008-2009 to 2010-2011.123 per day or the actual amount charged by the centre.75 percent of the wages.1. out of total income. but are entitled to all social security benefits under the Scheme. 1997. rates & taxes and fees.Development Scheme employment injury is not less than 40 and allowance is paid for all the days of training in Vocational Rehabilitation Centre at the rate of Rs.12%.100/. rent. due to closure of factory or establishment.50% of expenditure on medical care. interest on reserve fund . retrenchment or permanent disablement (not less than 40%) arising out of non-employment injury is entitled to unemployment allowance equal to 50% of average daily wages for a maximum period of up to one year and vocational training is provided for upgrading skills for which the expenditure on fees and travelling is borne by the ESI Corporation. The rates of contribution were last revised by the corporation in 1st Jan.nic. an insured person who become unemployed after being insured for 3 or more years. whichever is higher Under this scheme.are exempted from payment of contribution. The other sources of revenue are interest on investments of reserve fund. employers will contribute their own share in respect of these employees. There rates are Employee’s Contribution .esic. average percentage of contribution was 80.50 percent of the wages. Employees in receipt of an average daily wage up to Rs. As per the provisions of the ESI Act.in Finance of the ESI Corporation Contribution received from employees and employers was the main source of finance of the Corporation. The rates are revised from time to time.4.6.

compensation from State Government and miscellaneous came to 2. in-patient and specialist services are provided through a network of panel clinics. 1. 1496 ESI dispensaries. 2.99% was provided as provision for repairs.investments was 17.35%. Medical Benefit amounts to Rs. maintenance and depreciation of buildings. fines & forfeitures. Even after providing benefits to all needy insured persons the Corporation was able to make surplus. fees. with the help this surplus income it can improve its medical facilities and extend its services to more and more areas. the Corporation has 146 ESI hospitals. 8.83% of total benefit).05% for the other benefits. the Corporation has spend an average of 27.96%. and administrative expenses. Medical benefit is provided to the insured persons and their dependants by way of free. 06. full and comprehensive medical care. Since the Corporation is a social organisation existing for providing social security to the people.19% of the total revenue for providing medical benefits to the insured persons and their dependants. out-patient. The percentage of administrative expenditure of the Corporation came to 8.460. An average of 0.83 Lakhs (78. A portion of revenue is provided as provision for repairs.39%.27 Lakhs during the three year period from 2008-09 to 2010-11. Out of the total average amount spend on providing benefits i.80% of the total revenue was transferred to capital construction reserve fund and 1. 7455 Insurance Medical Officers and has reserved beds in State Government Hospitals.53% and other sources including rent. 62. Average Surplus revenue over expenditure came to 52. 0. Rs. 1540 private medical practitioners had also been empanelled . maintenance and depreciation of buildings and remaining is transferred to various reserve funds.e. The primary. rates & taxes. Revenue of the Corporation is mainly utilised for the purpose of providing medical care to the insured persons and their dependants. As per the financial reports of the corporation during the 3 year period from 20082009 to 2010-2011. Quality of Social Insurance Benefits Quality of Medical Benefit Medical benefit is the most important social security benefit provided by the ESI Corporation under the ESI Scheme.081. ESI Dispensaries and Hospitals.62% for providing cash benefits. For the purpose of providing medical care to insured persons and their dependants. payment of cash and other benefits.

73 Total per capita Income from Contribution Source: ESI Corporation Annual Reports Table -1 shows that total per capita medical expenditure of the Corporation is increasing every year and the Corporation has more than enough income to provide fund for medical benefits.2 Expenditure Incurred for Provision of Medical Care and per capita Contribution Income Year Expenditure on Model/ESIC Hospitals (Rs.98 Total Expenditure (Rs. Laboratory services.11 1460.20 33093.55 1007. Even if the Corporation doesn’t receive assistance from the Government. Super specialty services are provided through in-house super specialty facilities in some of the ESI Hospitals and large number of advanced empanelled medical institutions on referral basis.56 13590. in Lakhs) 2008-09 2009-10 2010-11 32334.77 268031.10 198965.42 3918. the ESI Corporation had decided in principle to take over the administration of the ESI medical scheme from the State Governments because of its strong financial base.92 41958. Even though as per section 58 of the ESI Act. the responsibility for providing medical treatment to the ESI beneficiaries is vested with the State Governments. Except in case of Availability of Medicines.75 Expenditure on Super Speciality (Rs.55 2944.05 3114.) 125964. in Lakhs) 9873. other services and facilities provided in the ESI hospitals like Service of Doctors. Table.34 54682. an analysis of the satisfaction level of the insured persons in the services and facilities provided in the ESI Hospitals is made in the study. in Lakhs) Total Per Capita Expenditure (Rs. In-patient Treatment and Health Improvement Services were satisfactory to insured persons. .) (Rs.for providing primary medical care.97 1797. it can easily provide best medical care. In order to assess the quality of medical benefit provided by the ESI Corporation under the ESI Scheme.

Bar Diagram.e.17%. Out of the total average amount spend on providing benefits i. Maternity benefit.43% as maternity benefit. During this period out of the total average cash benefit Rs.081. 43. Disablement benefit. 42. Insured Persons 100 90 80 70 60 50 40 30 20 10 0 87% 77% 46% 82% 76% Insured Persons Service of Doctors Availability of Medicines Laboratory Services In-patient Treatment & other hospital facilities Health Improvement services Source: Primary Data Quality of Cash Benefits Cash benefits include Sickness benefit. Rs.2 Percentage of sample insured persons who opined the services and facilities provided in the ESI Hospitals were satisfactory. 34.78% as funeral expenses to the dependants of insured persons who died. The amount of cash benefits depends on the income earned by the insured persons from their employment. . Rajiv Gandhi Shramik Kalyan Yojana and Funeral expenses. 06. 8.05% is provided as sickness benefit.27 Lakhs during the three year period from 2008-09 to 2010-11. The study (Bar diagram-3) reveals that the majority of insured persons who have availed of the cash benefits were satisfied with amount of the benefits. Dependants’ benefit.83% as dependants’ benefit. 13. 2. 0.5 Lakhs .55% as disablement benefit.36% as unemployment allowance under Rajiv Gandhi Shramik Kalyan Yojana and 0.391. average percentage of Cash Benefit payments is 21.

14 28.91 26.77 3.) 99.Table-3 Per capita expenditure as regards Cash Benefits of ESI Corporation and per capita contribution income Benefits Sickness Benefit Maternity Benefit Temporary Disablement Benefit Permanent Disablement Benefit Dependant’s Benefit Funeral Expenses Rajiv Gandhi Shramik Kalyan Yojna Other Benefits Total Cash Benefit Income from Contribution 2008-09 (Rs.31 0.89 26.00% 20.) 105.84 107.57 27.11 2010-11 (Rs.38 97.98 2.78 3.55 1.72 3114.19 28.89% 71.74 2.43 324.13 1.20 49. Since the fund is readily available. it will reduce the delay in disbursement of the cash benefits.00% 40.00% Sickness Benefit Maternity Benefit Disablement Benefit Other Benefits Insured Persons 81.83 31.70 2009-10 (Rs.06 2944.00% 60.00% 83.64 41.79 51. Bar Diagram-3 Satisfaction level of Sample Insured Persons in the amount of Cash Benefits received by them Insured Persons 100.40 3.00% 80.00% 0. The corporation will not find any difficulty in increasing the amount of benefits if there is any necessity.79 104.67 338. so the Corporation is able to provide reasonable compensation to insured persons.48 3918.43% Source: Primary Data .) 102.33% 88.42 322.42 1.73 Source: ESI Corporation Annual Reports Income of the Corporation from contribution alone far exceeds the amount paid as cash benefits.

it can extend the implementation of the Scheme to the unorganised sector which consists of majority of workforce in India. Conclusion and Suggestions This paper examined the role of ESI Corporation in providing social insurance to workers and the quality of social insurance benefits provided by the Corporation under the ESI Scheme. the Corporation can convert the journey into a movement and place it amongst the leading social organisations of the world if it continues to provide best social insurance benefits and takes measures to improve and extend the implementation of the ESI Scheme. . In the 60th year of service to the nation. The Corporation was successful in implementing the ESI Scheme covering more than fifty percent of workforce in organised sector.3. The Corporation needs to give more importance in improving its medical infrastructure because in today’s world of rising prices and climatic changes. The majority of insured persons were satisfied with the quality of medical benefit and those who availed of various cash benefits were satisfied with the amount of the benefits. To a certain point ESI Corporation was successful in playing its role of providing social insurance benefits to workers in the organised sector. Since the Corporation has sufficient resources. This will help to reduce poverty and health problems faced by workers in this sector. people are more prone to diseases and an ordinary person find it very difficult to pay his hospital bills.

in esickerala. L.disabilityindia.Bibliography Books Amit Nanda. ESIC. New Delhi Websites www.R. Employees’ State Insurance Corporation. New Delhi. Current Publications. Employers Guide.nic. Thiruvananthapuram Reports Employees’ State Insurance Corporation. 2010. Yamuna Publications.com www. 2011.gov.com www. 2001. Statistical Abstract (2008-2009 to 2010-2011). Employees’ State Insurance Corporation.keralaesic. 6 Decades of Inspiring Hope. The Employees’ State Insurance Act.esic. Research Methodology.in www. Potti.org www. ESIC. Mumbai.scribd. ESIC. 1950. 1948 & The employees’ State Insurance (central) Rules. New Delhi.wikipedia. ESIC. New Delhi Employees’ State Insurance Corporation.org . Annual Reports (2008-2009 to 2010-2011).

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