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

ESIC has been catering to the workers to a humane egalitarian mission for the advancement of the nation. Since its inception in 1952. Employees’ State Insurance Corporation set up by the Government of India as per the provisions of the ESI Act. This paper examines the quality of Social Insurance Benefits provided by Employees’ State Insurance Corporation in India. The study is exploratory in nature using primary and secondary data. 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. 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. . The main source of finance for funding the Scheme is contribution received by the Corporation from employees and employers. It has vast resources to provide world class medical facilities and extend the implementation of the Scheme to more areas.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. Coverage of the Scheme is restricted to organised sector.

It may be any government-sponsored programme in which the benefits and eligibility requirements of the program are defined by law. seasonal and temporary nature of occupations. Workmen’s Compensation Act. (18.27 Million workers are in the organized sector. casualization of labour. 1972. 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. namely: Employees State Insurance Act. Social security to the workers in the organised sector is provided through different Central Acts. 1961. disablement and death which are beyond the human control. lack of labour law coverage.27 million in private sector) and the rest are in the unorganized sector. State legislations including welfare Funds and Public initiatives. 1923. The unorganized sector on the other hand. Social assistance through welfare Funds of Central. high labour mobility.00 million in public sector and 9. Therefore it is the workers in private sector and unorganised sector are those who are in need of special social insurance schemes.employee relationship. Social insurance arrangements in the unorganized sectors is by way of Central legislations including welfare funds. labourforce in India is about 459 millions. Maternity Benefit Act. The programme serves a defined population. Employees Provident Fund & Miscellaneous Provisions 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. 1948. there is no direct employer. 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. Social insurance Schemes. 1952.The Role of Employees’ State Insurance Corporation in Providing Social Insurance in India 1. lack of . dispersed functioning of operations. and participation is either compulsory or the programme is heavily enough subsidised that most eligible individuals choose to participate. 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. Employees in public sector are provided social protection under the rules of the respective Governments. Out of which 27. As per 2011 data. Introduction Social insurance is basically a system of monetary and health protection provided to individuals in contingencies such as disease. and Payment of Gratuity Act.

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

2. The study covers a period of three years from 2008-2009 to 2010-2011. statistical tools like averages. hotels. 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. For the purpose of analysis. using purposive sampling technique. The beneficiaries of the scheme include both the insured persons and their dependents. 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. 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. road motor transport undertaking and news paper establishments employing 10 or more persons. Analysis of Data Coverage of Scheme The ESI Act covers workers in the organized sector only. cinemas including preview theatres. restaurants. Methodology The study is exploratory in nature using primary and secondary data.quality of benefits. The ESI Act. there are equal number of insured men and women. . The secondary data were collected from various printed and published materials of the ESI Corporation like annual reports. Out of 100 samples.11% of the total work force in the country. At present about 53% of organized sector are covered under the Employees' State Insurance Act. which represents only about 3. circulars and press releases and also from website of the Corporation. periodic journals. 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. Establishments like shops. 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. percentages and growth rates were used.

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

80% of average daily wages for an extended period of up to two years Full wage for undergoing sterilization operations for family welfare .97 554. of Beneficiaries 501. in Lakhs) 700 600 500 400 300 200 100 0 2008-09 2009-10 2010-11 125. Bar Diagram-1 Number of Employees.28 155.37 138. 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. Insured Persons and Beneficiaries under the ESI Scheme (No.96 143 154. of Employees No.69 129. 6 weeks in case of miscarriage or medical termination of Extended Sickness Benefit Enhanced Sickness Benefit Maternity Benefit .3 No. of Insured Persons No.84 602.57 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. Benefit is payable for a maximum period of 12 weeks in case of confinement."Rashtriya Swasthya Bima Yojana" for providing social security to BPL (Below Poverty Line) workers in the unorganized sector.

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. for each day. 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. 10.pregnancy which can be extended up to one additional month in case of sickness arising out of confinement. 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. 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. 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. partial or total loss of earning capacity and is paid periodically to the insured person for life.000 made to defray the expenditure on the funeral of the deceased insured person. Standard benefit rate is calculated as per ESI (Central) Rules.2. The rate of dependants’ benefit is 90% of average daily wage.per case up to two confinements only. Rehabilitation allowance is payable to the insured persons. 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 . Lump sum payment up to a maximum of Rs.500/. The amount payable is Rs.

rates & taxes and fees. Employees in receipt of an average daily wage up to Rs. employers will contribute their own share in respect of these employees. The rates of contribution were last revised by the corporation in 1st Jan. 1997.1.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. There rates are Employee’s Contribution . out of total income. but are entitled to all social security benefits under the Scheme.12%. the State Governments also share a 12. The other sources of revenue are interest on investments of reserve fund. fines & forfeitures. due to closure of factory or establishment.75 percent of the wages.in Finance of the ESI Corporation Contribution received from employees and employers was the main source of finance of the Corporation. According to the financial reports of the ESI Corporation during the 3 year period from 2008-2009 to 2010-2011. 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.123 per day or the actual amount charged by the centre. rent. an insured person who become unemployed after being insured for 3 or more years. interest on reserve fund . average percentage of contribution was 80. Employer’s Contribution . whichever is higher Under this scheme. However. 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.are exempted from payment of contribution.4.6. Total . As per the provisions of the ESI Act. The rates are revised from time to time.50 percent of the wages.75 percent of the wages.50% of expenditure on medical care.esic.100/.nic.

in-patient and specialist services are provided through a network of panel clinics. the Corporation has 146 ESI hospitals. 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. 62.35%. rates & taxes.53% and other sources including rent.83% of total benefit). 1496 ESI dispensaries.081. The percentage of administrative expenditure of the Corporation came to 8. The primary. Average Surplus revenue over expenditure came to 52.83 Lakhs (78. compensation from State Government and miscellaneous came to 2. full and comprehensive medical care.99% was provided as provision for repairs. 06. maintenance and depreciation of buildings. 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. the Corporation has spend an average of 27. 0. fines & forfeitures. 1. maintenance and depreciation of buildings and remaining is transferred to various reserve funds. 8. 1540 private medical practitioners had also been empanelled . For the purpose of providing medical care to insured persons and their dependants.e.39%. A portion of revenue is provided as provision for repairs. payment of cash and other benefits. Revenue of the Corporation is mainly utilised for the purpose of providing medical care to the insured persons and their dependants. Rs.05% for the other benefits.19% of the total revenue for providing medical benefits to the insured persons and their dependants. 2.investments was 17. Even after providing benefits to all needy insured persons the Corporation was able to make surplus. Since the Corporation is a social organisation existing for providing social security to the people. 7455 Insurance Medical Officers and has reserved beds in State Government Hospitals.96%. As per the financial reports of the corporation during the 3 year period from 20082009 to 2010-2011.460. ESI Dispensaries and Hospitals. fees. Medical Benefit amounts to Rs. with the help this surplus income it can improve its medical facilities and extend its services to more and more areas. Medical benefit is provided to the insured persons and their dependants by way of free. out-patient. and administrative expenses.62% for providing cash benefits.27 Lakhs during the three year period from 2008-09 to 2010-11. An average of 0.

in Lakhs) 2008-09 2009-10 2010-11 32334. 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. Laboratory services. it can easily provide best medical care.55 2944.73 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.20 33093. 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. In-patient Treatment and Health Improvement Services were satisfactory to insured persons. 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.77 268031.for providing primary medical care.75 Expenditure on Super Speciality (Rs. In order to assess the quality of medical benefit provided by the ESI Corporation under the ESI Scheme.98 Total Expenditure (Rs.05 3114. other services and facilities provided in the ESI hospitals like Service of Doctors.55 1007.92 41958. in Lakhs) 9873. Even though as per section 58 of the ESI Act. Except in case of Availability of Medicines.42 3918.10 198965. Table.56 13590.) 125964.11 1460.) (Rs. . Even if the Corporation doesn’t receive assistance from the Government.2 Expenditure Incurred for Provision of Medical Care and per capita Contribution Income Year Expenditure on Model/ESIC Hospitals (Rs.97 1797.34 54682. the responsibility for providing medical treatment to the ESI beneficiaries is vested with the State Governments.

17%. 42. 2.36% as unemployment allowance under Rajiv Gandhi Shramik Kalyan Yojana and 0.83% as dependants’ benefit. average percentage of Cash Benefit payments is 21. 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.391. Disablement benefit. 13.05% is provided as sickness benefit.55% as disablement benefit. 8. Rs. Out of the total average amount spend on providing benefits i.e. 34. Rajiv Gandhi Shramik Kalyan Yojana and Funeral expenses. 06. 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. Maternity benefit. 0.27 Lakhs during the three year period from 2008-09 to 2010-11. .081.43% as maternity benefit.78% as funeral expenses to the dependants of insured persons who died. During this period out of the total average cash benefit Rs.Bar Diagram. Dependants’ benefit.2 Percentage of sample insured persons who opined the services and facilities provided in the ESI Hospitals were satisfactory. The amount of cash benefits depends on the income earned by the insured persons from their employment.5 Lakhs . 43.

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.91 26.06 2944.00% 20. The corporation will not find any difficulty in increasing the amount of benefits if there is any necessity. Since the fund is readily available.40 3.42 1.33% 88.31 0.84 107.43 324.79 104.89% 71.00% 0.55 1.00% 40.78 3. it will reduce the delay in disbursement of the cash benefits.98 2.19 28.77 3.13 1.64 41.00% 83.38 97.) 102.83 31.67 338.) 105. so the Corporation is able to provide reasonable compensation to insured persons.00% 80.00% 60.20 49.42 322.70 2009-10 (Rs.73 Source: ESI Corporation Annual Reports Income of the Corporation from contribution alone far exceeds the amount paid as cash benefits.00% Sickness Benefit Maternity Benefit Disablement Benefit Other Benefits Insured Persons 81.) 99.79 51.14 28.11 2010-11 (Rs.48 3918.57 27.72 3114.74 2.89 26. Bar Diagram-3 Satisfaction level of Sample Insured Persons in the amount of Cash Benefits received by them Insured Persons 100.43% Source: Primary Data .

it can extend the implementation of the Scheme to the unorganised sector which consists of majority of workforce in India. people are more prone to diseases and an ordinary person find it very difficult to pay his hospital bills. The Corporation needs to give more importance in improving its medical infrastructure because in today’s world of rising prices and climatic changes. This will help to reduce poverty and health problems faced by workers in this sector. 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. . 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. Since the Corporation has sufficient resources.3. To a certain point ESI Corporation was successful in playing its role of providing social insurance benefits to workers in the organised sector. The Corporation was successful in implementing the ESI Scheme covering more than fifty percent of workforce in organised sector. 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.

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

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