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

1948. 1972. seasonal and temporary nature of occupations. disablement and death which are beyond the human control. and Payment of Gratuity Act. Social insurance arrangements in the unorganized sectors is by way of Central legislations including welfare funds. Social insurance Schemes. Maternity Benefit Act.The Role of Employees’ State Insurance Corporation in Providing Social Insurance in India 1. 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. casualization of labour. namely: Employees State Insurance Act. Social assistance through welfare Funds of Central.employee relationship. 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. 1961. and participation is either compulsory or the programme is heavily enough subsidised that most eligible individuals choose to participate. Therefore it is the workers in private sector and unorganised sector are those who are in need of special social insurance schemes. Employees in public sector are provided social protection under the rules of the respective Governments.27 million in private sector) and the rest are in the unorganized sector. there is no direct employer. The programme serves a defined population. Social security to the workers in the organised sector is provided through different Central Acts. lack of labour law coverage. As per 2011 data. 1952.00 million in public sector and 9. 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. 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. State legislations including welfare Funds and Public initiatives. 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.27 Million workers are in the organized sector. 1923. The unorganized sector on the other hand. (18. Employees Provident Fund & Miscellaneous Provisions Act. dispersed functioning of operations. Workmen’s Compensation Act. high labour mobility. lack of . Out of which 27.

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

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

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

69 129. 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. Benefit is payable for a maximum period of 12 weeks in case of confinement. 80% of average daily wages for an extended period of up to two years Full wage for undergoing sterilization operations for family welfare . in Lakhs) 700 600 500 400 300 200 100 0 2008-09 2009-10 2010-11 125.37 138. of Insured Persons No.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.3 No."Rashtriya Swasthya Bima Yojana" for providing social security to BPL (Below Poverty Line) workers in the unorganized sector. Insured Persons and Beneficiaries under the ESI Scheme (No.28 155.97 554. of Beneficiaries 501.96 143 154. 6 weeks in case of miscarriage or medical termination of Extended Sickness Benefit Enhanced Sickness Benefit Maternity Benefit . Bar Diagram-1 Number of Employees.84 602. of Employees No.

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

123 per day or the actual amount charged by the centre.4.6. Total .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. but are entitled to all social security benefits under the Scheme. out of total income. Employer’s Contribution . There rates are Employee’s Contribution .nic.esic.1. the State Governments also share a 12. The other sources of revenue are interest on investments of 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. 1997.75 percent of the wages. average percentage of contribution was 80.100/. The rates are revised from time to time. whichever is higher Under this scheme. However. interest on reserve fund . fines & forfeitures.are exempted from payment of contribution.75 percent of the wages. According to the financial reports of the ESI Corporation during the 3 year period from 2008-2009 to 2010-2011. employers will contribute their own share in respect of these employees.12%. Employees in receipt of an average daily wage up to Rs. an insured person who become unemployed after being insured for 3 or more years. The rates of contribution were last revised by the corporation in 1st Jan.50% of expenditure on medical care. rates & taxes and fees.50 percent of the wages. due to closure of factory or establishment. As per the provisions of the ESI Act. 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. rent.in Finance of the ESI Corporation Contribution received from employees and employers was the main source of finance of the Corporation.

ESI Dispensaries and Hospitals. rates & taxes. maintenance and depreciation of buildings.081. with the help this surplus income it can improve its medical facilities and extend its services to more and more areas. Even after providing benefits to all needy insured persons the Corporation was able to make surplus. Average Surplus revenue over expenditure came to 52. fines & forfeitures.05% for the other benefits. Medical benefit is provided to the insured persons and their dependants by way of free. 1496 ESI dispensaries.39%.35%. Revenue of the Corporation is mainly utilised for the purpose of providing medical care to the insured persons and their dependants.53% and other sources including rent. 1540 private medical practitioners had also been empanelled . As per the financial reports of the corporation during the 3 year period from 20082009 to 2010-2011. Rs.investments was 17.96%. For the purpose of providing medical care to insured persons and their dependants. 8. Out of the total average amount spend on providing benefits i.99% was provided as provision for repairs. full and comprehensive medical care.19% of the total revenue for providing medical benefits to the insured persons and their dependants.80% of the total revenue was transferred to capital construction reserve fund and 1. fees. payment of cash and other benefits. 2. the Corporation has 146 ESI hospitals. maintenance and depreciation of buildings and remaining is transferred to various reserve funds. 0.83% of total benefit).62% for providing cash benefits. compensation from State Government and miscellaneous came to 2. Since the Corporation is a social organisation existing for providing social security to the people. A portion of revenue is provided as provision for repairs. The primary. The percentage of administrative expenditure of the Corporation came to 8. An average of 0. 7455 Insurance Medical Officers and has reserved beds in State Government Hospitals. 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.83 Lakhs (78. out-patient. the Corporation has spend an average of 27. 62. 06. in-patient and specialist services are provided through a network of panel clinics. Medical Benefit amounts to Rs.460.e. 1.27 Lakhs during the three year period from 2008-09 to 2010-11. and administrative expenses.

77 268031. it can easily provide best medical care.56 13590. .97 1797. other services and facilities provided in the ESI hospitals like Service of Doctors.) 125964. Laboratory services. 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 1007.2 Expenditure Incurred for Provision of Medical Care and per capita Contribution Income Year Expenditure on Model/ESIC Hospitals (Rs.75 Expenditure on Super Speciality (Rs.34 54682. Even though as per section 58 of the ESI Act.05 3114. In order to assess the quality of medical benefit provided by the ESI Corporation under the ESI Scheme.10 198965.73 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. 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. in Lakhs) 2008-09 2009-10 2010-11 32334.) (Rs.11 1460.42 3918.for providing primary medical care.92 41958.20 33093. Even if the Corporation doesn’t receive assistance from the Government. the responsibility for providing medical treatment to the ESI beneficiaries is vested with the State Governments.98 Total Expenditure (Rs.55 2944. 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. in Lakhs) Total Per Capita Expenditure (Rs. Except in case of Availability of Medicines. in Lakhs) 9873. Table.

83% as dependants’ benefit. 06. average percentage of Cash Benefit payments is 21. 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. Rs. Out of the total average amount spend on providing benefits i. Maternity benefit. Rajiv Gandhi Shramik Kalyan Yojana and Funeral expenses. 42.78% 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.36% as unemployment allowance under Rajiv Gandhi Shramik Kalyan Yojana and 0. 8. 34.2 Percentage of sample insured persons who opined the services and facilities provided in the ESI Hospitals were satisfactory.43% as maternity benefit. Disablement benefit.081. 0.e.05% is provided as sickness benefit. 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. During this period out of the total average cash benefit Rs. 13.Bar Diagram.27 Lakhs during the three year period from 2008-09 to 2010-11.17%. 2.5 Lakhs .391. . Dependants’ benefit.55% as disablement benefit. 43.

00% 60. it will reduce the delay in disbursement of the cash benefits.79 104.70 2009-10 (Rs.55 1.89% 71. The corporation will not find any difficulty in increasing the amount of benefits if there is any necessity.) 105.98 2.78 3. Bar Diagram-3 Satisfaction level of Sample Insured Persons in the amount of Cash Benefits received by them Insured Persons 100.00% 20.06 2944.20 49.57 27. Since the fund is readily available.33% 88.67 338.00% 40.00% 80.11 2010-11 (Rs.73 Source: ESI Corporation Annual Reports Income of the Corporation from contribution alone far exceeds the amount paid as cash benefits.) 102.77 3.19 28.00% 0.42 322.43 324.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.38 97.84 107. so the Corporation is able to provide reasonable compensation to insured persons.64 41.00% Sickness Benefit Maternity Benefit Disablement Benefit Other Benefits Insured Persons 81.83 31.14 28.74 2.40 3.48 3918.89 26.13 1.31 0.00% 83.79 51.72 3114.43% Source: Primary Data .42 1.) 99.91 26.

The Corporation needs to give more importance in improving its medical infrastructure because in today’s world of rising prices and climatic changes. In the 60th year of service to the nation. people are more prone to diseases and an ordinary person find it very difficult to pay his hospital bills. 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 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. This will help to reduce poverty and health problems faced by workers in this sector.3. Since the Corporation has sufficient resources. it can extend the implementation of the Scheme to the unorganised sector which consists of majority of workforce in India. 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 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 Corporation was successful in implementing the ESI Scheme covering more than fifty percent of workforce in organised sector.

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

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