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

Employees’ State Insurance Corporation set up by the Government of India as per the provisions of the ESI Act. 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. The main source of finance for funding the Scheme is contribution received by the Corporation from employees and employers. Since its inception in 1952. 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. ESIC has been catering to the workers to a humane egalitarian mission for the advancement of the nation.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. This paper examines the quality of Social Insurance Benefits provided by Employees’ State Insurance Corporation in India. Coverage of the Scheme is restricted to 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.

Maternity Benefit Act. 1948. The unorganized sector on the other hand. Social insurance arrangements in the unorganized sectors is by way of Central legislations including welfare funds. and participation is either compulsory or the programme is heavily enough subsidised that most eligible individuals choose to participate. 1952. Employees in public sector are provided social protection under the rules of the respective Governments. 1961. As per 2011 data.00 million in public sector and 9.27 Million workers are in the organized sector. State legislations including welfare Funds and Public initiatives. Social security to the workers in the organised sector is provided through different Central Acts. and Payment of Gratuity Act. there is no direct employer.27 million in private sector) and the rest are in the unorganized sector. casualization of labour. Social assistance through welfare Funds of Central. Workmen’s Compensation Act. 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.employee relationship. 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.The Role of Employees’ State Insurance Corporation in Providing Social Insurance in India 1. Introduction Social insurance is basically a system of monetary and health protection provided to individuals in contingencies such as disease. lack of labour law coverage. seasonal and temporary nature of occupations. 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. Therefore it is the workers in private sector and unorganised sector are those who are in need of special social insurance schemes. disablement and death which are beyond the human control. Social insurance Schemes. lack of . Out of which 27. 1923. (18. The programme serves a defined population. namely: Employees State Insurance 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. labourforce in India is about 459 millions. It may be any government-sponsored programme in which the benefits and eligibility requirements of the program are defined by law. Employees Provident Fund & Miscellaneous Provisions Act. high labour mobility. dispersed functioning of operations. 1972.

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

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

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

3 No. Benefit is payable for a maximum period of 12 weeks in case of confinement. 6 weeks in case of miscarriage or medical termination of Extended Sickness Benefit Enhanced Sickness Benefit Maternity Benefit . in Lakhs) 700 600 500 400 300 200 100 0 2008-09 2009-10 2010-11 125.97 554. 80% of average daily wages for an extended period of up to two years Full wage for undergoing sterilization operations for family welfare . Insured Persons and Beneficiaries under the ESI Scheme (No.84 602. of Employees No. 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.69 129."Rashtriya Swasthya Bima Yojana" for providing social security to BPL (Below Poverty Line) workers in the unorganized sector.96 143 154.57 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. of Insured Persons No.28 155. Bar Diagram-1 Number of Employees.37 138. of Beneficiaries 501.

The amount payable is Rs. 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 . 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. Rehabilitation allowance is payable to the insured persons. 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. Lump sum payment up to a maximum of Rs.pregnancy which can be extended up to one additional month in case of sickness arising out of confinement. The rate of dependants’ benefit is 90% of average daily wage. 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. 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.2. 10. 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.500/. 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.per case up to two confinements only. Standard benefit rate is calculated as per ESI (Central) Rules. for each day. 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.

123 per day or the actual amount charged by the centre.75 percent of the wages. fines & forfeitures. the State Governments also share a 12. 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.6. 1997.1. The rates are revised from time to time. rates & taxes and fees.are exempted from payment of contribution. average percentage of contribution was 80.4. However.50% of expenditure on medical care.nic. The rates of contribution were last revised by the corporation in 1st Jan. There rates are Employee’s Contribution . Employees in receipt of an average daily wage up to Rs. due to closure of factory or establishment. Total .50 percent of the wages. 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.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. Employer’s Contribution . According to the financial reports of the ESI Corporation during the 3 year period from 2008-2009 to 2010-2011. As per the provisions of the ESI Act.75 percent of the wages. rent. interest on reserve fund .in Finance of the ESI Corporation Contribution received from employees and employers was the main source of finance of the Corporation.12%.100/. The other sources of revenue are interest on investments of reserve fund. an insured person who become unemployed after being insured for 3 or more years. out of total income. whichever is higher Under this scheme.esic. but are entitled to all social security benefits under the Scheme. employers will contribute their own share in respect of these employees.

39%. and administrative expenses.e. The primary. 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. in-patient and specialist services are provided through a network of panel clinics. Out of the total average amount spend on providing benefits i. Since the Corporation is a social organisation existing for providing social security to the people.99% was provided as provision for repairs.96%.83 Lakhs (78.19% of the total revenue for providing medical benefits to the insured persons and their dependants.081. The percentage of administrative expenditure of the Corporation came to 8. the Corporation has 146 ESI hospitals. rates & taxes. with the help this surplus income it can improve its medical facilities and extend its services to more and more areas. Revenue of the Corporation is mainly utilised for the purpose of providing medical care to the insured persons and their dependants. Average Surplus revenue over expenditure came to 52. 2. fines & forfeitures. For the purpose of providing medical care to insured persons and their dependants. 7455 Insurance Medical Officers and has reserved beds in State Government Hospitals. Even after providing benefits to all needy insured persons the Corporation was able to make surplus. 1496 ESI dispensaries. compensation from State Government and miscellaneous came to 2. 8.35%. Medical Benefit amounts to Rs. Rs.53% and other sources including rent. fees. Medical benefit is provided to the insured persons and their dependants by way of free. 06. ESI Dispensaries and Hospitals.460.05% for the other benefits. out-patient. As per the financial reports of the corporation during the 3 year period from 20082009 to 2010-2011. 62.investments was 17.80% of the total revenue was transferred to capital construction reserve fund and 1.27 Lakhs during the three year period from 2008-09 to 2010-11. A portion of revenue is provided as provision for repairs. 1. full and comprehensive medical care. 1540 private medical practitioners had also been empanelled . the Corporation has spend an average of 27. maintenance and depreciation of buildings. 0.62% for providing cash benefits. payment of cash and other benefits.83% of total benefit). An average of 0. maintenance and depreciation of buildings and remaining is transferred to various reserve funds.

it can easily provide best medical care.75 Expenditure on Super Speciality (Rs.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.10 198965.42 3918. In order to assess the quality of medical benefit provided by the ESI Corporation under the ESI Scheme.for providing primary medical care.) 125964. the responsibility for providing medical treatment to the ESI beneficiaries is vested with the State Governments. 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. Even though as per section 58 of the ESI Act. in Lakhs) Total Per Capita Expenditure (Rs. in Lakhs) 9873. In-patient Treatment and Health Improvement Services were satisfactory to insured persons. .05 3114. other services and facilities provided in the ESI hospitals like Service of Doctors.92 41958. Laboratory services. Table.77 268031.2 Expenditure Incurred for Provision of Medical Care and per capita Contribution Income Year Expenditure on Model/ESIC Hospitals (Rs. Except in case of Availability of Medicines. in Lakhs) 2008-09 2009-10 2010-11 32334.) (Rs. 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.55 2944. 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.98 Total Expenditure (Rs.34 54682.55 1007.11 1460. Even if the Corporation doesn’t receive assistance from the Government.56 13590.20 33093.97 1797.

. 06. 0.2 Percentage of sample insured persons who opined the services and facilities provided in the ESI Hospitals were satisfactory. 34. 2. The amount of cash benefits depends on the income earned by the insured persons from their employment. Disablement benefit. Dependants’ benefit.83% as dependants’ benefit. Maternity benefit. 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.27 Lakhs during the three year period from 2008-09 to 2010-11. 8.36% as unemployment allowance under Rajiv Gandhi Shramik Kalyan Yojana and 0. Out of the total average amount spend on providing benefits i.55% as disablement 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. 13. 42.391.5 Lakhs .e.Bar Diagram.081.17%. Rs. During this period out of the total average cash benefit Rs.78% as funeral expenses to the dependants of insured persons who died.43% as maternity benefit. 43.05% is provided as sickness benefit. Rajiv Gandhi Shramik Kalyan Yojana and Funeral expenses.

00% 0. so the Corporation is able to provide reasonable compensation to insured persons.64 41.) 105.33% 88. it will reduce the delay in disbursement of the cash benefits.06 2944.14 28.00% 40.40 3.98 2.00% 20.11 2010-11 (Rs.20 49.89 26.13 1.77 3.42 322.43 324.42 1.89% 71. Bar Diagram-3 Satisfaction level of Sample Insured Persons in the amount of Cash Benefits received by them Insured Persons 100.38 97.55 1.83 31.) 99.48 3918.73 Source: ESI Corporation Annual Reports Income of the Corporation from contribution alone far exceeds the amount paid as cash benefits.67 338. The corporation will not find any difficulty in increasing the amount of benefits if there is any necessity.00% Sickness Benefit Maternity Benefit Disablement Benefit Other Benefits Insured Persons 81.74 2.) 102.00% 83.70 2009-10 (Rs.43% Source: Primary Data .91 26.84 107.79 104.31 0.78 3.19 28.79 51.57 27.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.00% 80. Since the fund is readily available.72 3114.00% 60.

The Corporation was successful in implementing the ESI Scheme covering more than fifty percent of workforce in organised sector.3. 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. people are more prone to diseases and an ordinary person find it very difficult to pay his hospital bills. 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. 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. it can extend the implementation of the Scheme to the unorganised sector which consists of majority of workforce in India. In the 60th year of service to the nation. 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 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.

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

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