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. 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.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. . Employees’ State Insurance Corporation set up by the Government of India as per the provisions of the ESI Act. The main source of finance for funding the Scheme is contribution received by the Corporation from employees and employers. Coverage of the Scheme is restricted to organised sector. 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. ESIC has been catering to the workers to a humane egalitarian mission for the advancement of the nation. 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.

namely: Employees State Insurance Act. 1952. casualization of labour. lack of labour law coverage.00 million in public sector and 9. State legislations including welfare Funds and Public initiatives. Introduction Social insurance is basically a system of monetary and health protection provided to individuals in contingencies such as disease. Therefore it is the workers in private sector and unorganised sector are those who are in need of special social insurance schemes. Social insurance Schemes. Workmen’s Compensation Act.employee relationship. Employees in public sector are provided social protection under the rules of the respective Governments. labourforce in India is about 459 millions. The programme serves a defined population. Maternity Benefit Act. Social insurance arrangements in the unorganized sectors is by way of Central legislations including welfare funds. Social assistance through welfare Funds of Central. disablement and death which are beyond the human control. 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. there is no direct employer.27 Million workers are in the organized sector. and participation is either compulsory or the programme is heavily enough subsidised that most eligible individuals choose to participate. Out of which 27. It may be any government-sponsored programme in which the benefits and eligibility requirements of the program are defined by law. lack of . The unorganized sector on the other hand. 1923. 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. seasonal and temporary nature of occupations. and Payment of Gratuity Act. 1948. 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 in private sector) and the rest are in the unorganized sector. Employees Provident Fund & Miscellaneous Provisions Act. 1972. high labour mobility. (18. dispersed functioning of operations. 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 security to the workers in the organised sector is provided through different Central Acts. 1961.The Role of Employees’ State Insurance Corporation in Providing Social Insurance in India 1. As per 2011 data.

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

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

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

6 weeks in case of miscarriage or medical termination of Extended Sickness Benefit Enhanced Sickness Benefit Maternity Benefit .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.28 155.96 143 154.37 138. Insured Persons and Beneficiaries under the ESI Scheme (No.3 No. Bar Diagram-1 Number of Employees. in Lakhs) 700 600 500 400 300 200 100 0 2008-09 2009-10 2010-11 125. Benefit is payable for a maximum period of 12 weeks in case of confinement. of Beneficiaries 501. of Employees No.84 602."Rashtriya Swasthya Bima Yojana" for providing social security to BPL (Below Poverty Line) workers in the unorganized sector. of Insured Persons No.97 554.57 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. 80% of average daily wages for an extended period of up to two years Full wage for undergoing sterilization operations for family welfare .

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

50% of expenditure on medical care.esic. an insured person who become unemployed after being insured for 3 or more years. the State Governments also share a 12. However.75 percent of the wages. whichever is higher Under this scheme. employers will contribute their own share in respect of these employees.50 percent of the wages. but are entitled to all social security benefits under the Scheme. According to the financial reports of the ESI Corporation during the 3 year period from 2008-2009 to 2010-2011. 1997.100/.4.nic. Total . As per the provisions of the ESI Act.6. There rates are Employee’s Contribution . The other sources of revenue are interest on investments of reserve fund. Employees in receipt of an average daily wage up to Rs.are exempted from payment of contribution. due to closure of factory or establishment. interest on reserve fund .12%. The rates are revised from time to time. 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.75 percent of the wages. 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. fines & forfeitures. 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. out of total income.123 per day or the actual amount charged by the centre. The rates of contribution were last revised by the corporation in 1st Jan.in Finance of the ESI Corporation Contribution received from employees and employers was the main source of finance of the Corporation.1. Employer’s Contribution . average percentage of contribution was 80. rent.

e. 8. the Corporation has 146 ESI hospitals. Out of the total average amount spend on providing benefits i.460.62% for providing cash benefits. The primary. A portion of revenue is provided as provision for repairs. 62. full and comprehensive medical care.35%. out-patient. 1496 ESI dispensaries. fines & forfeitures.99% was provided as provision for repairs.83 Lakhs (78.081. with the help this surplus income it can improve its medical facilities and extend its services to more and more areas. Rs.83% of total benefit). The percentage of administrative expenditure of the Corporation came to 8. 06. the Corporation has spend an average of 27. As per the financial reports of the corporation during the 3 year period from 20082009 to 2010-2011. payment of cash and other benefits. Even after providing benefits to all needy insured persons the Corporation was able to make surplus. An average of 0. Medical benefit is provided to the insured persons and their dependants by way of free.53% and other sources including rent. and administrative expenses. Revenue of the Corporation is mainly utilised for the purpose of providing medical care to the insured persons and their dependants.39%.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.investments was 17. 1540 private medical practitioners had also been empanelled . 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. compensation from State Government and miscellaneous came to 2. Medical Benefit amounts to Rs.96%. ESI Dispensaries and Hospitals.19% of the total revenue for providing medical benefits to the insured persons and their dependants. in-patient and specialist services are provided through a network of panel clinics. For the purpose of providing medical care to insured persons and their dependants. Since the Corporation is a social organisation existing for providing social security to the people.27 Lakhs during the three year period from 2008-09 to 2010-11. 0. 1. fees. rates & taxes. Average Surplus revenue over expenditure came to 52. 2.05% for the other benefits. maintenance and depreciation of buildings and remaining is transferred to various reserve funds. maintenance and depreciation of buildings.

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.20 33093. In-patient Treatment and Health Improvement Services were satisfactory to insured persons.for providing primary medical care.11 1460. 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.34 54682.) (Rs.55 2944. Except in case of Availability of Medicines.05 3114. Even if the Corporation doesn’t receive assistance from the Government. 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.75 Expenditure on Super Speciality (Rs.55 1007.77 268031. Laboratory services. the responsibility for providing medical treatment to the ESI beneficiaries is vested with the State Governments.98 Total Expenditure (Rs.56 13590. Table.) 125964.10 198965.2 Expenditure Incurred for Provision of Medical Care and per capita Contribution Income Year Expenditure on Model/ESIC Hospitals (Rs. in Lakhs) Total Per Capita Expenditure (Rs.97 1797. Even though as per section 58 of the ESI Act.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. in Lakhs) 9873. other services and facilities provided in the ESI hospitals like Service of Doctors.92 41958. 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. in Lakhs) 2008-09 2009-10 2010-11 32334.42 3918. .

Rs. 06. 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. 2.5 Lakhs .83% as dependants’ benefit. During this period out of the total average cash benefit Rs. 43.391.43% as maternity benefit. Disablement 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.e. average percentage of Cash Benefit payments is 21. 0.Bar Diagram. Dependants’ benefit. Rajiv Gandhi Shramik Kalyan Yojana and Funeral expenses.17%. Out of the total average amount spend on providing benefits i. The amount of cash benefits depends on the income earned by the insured persons from their employment. Maternity benefit. 8.05% is provided as sickness benefit.2 Percentage of sample insured persons who opined the services and facilities provided in the ESI Hospitals were satisfactory.36% as unemployment allowance under Rajiv Gandhi Shramik Kalyan Yojana and 0.55% as disablement benefit. 42.081. 13. 34. .27 Lakhs during the three year period from 2008-09 to 2010-11.78% as funeral expenses to the dependants of insured persons who died.

42 322.00% 83.74 2.91 26. Since the fund is readily available.84 107.78 3.14 28.13 1.83 31.06 2944.33% 88.67 338.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.89 26.43 324.64 41.55 1.89% 71.00% 0.43% Source: Primary Data .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. so the Corporation is able to provide reasonable compensation to insured persons. Bar Diagram-3 Satisfaction level of Sample Insured Persons in the amount of Cash Benefits received by them Insured Persons 100.31 0.79 104.00% 60.57 27.) 102.77 3.) 99.72 3114.20 49.19 28.) 105.11 2010-11 (Rs.38 97. The corporation will not find any difficulty in increasing the amount of benefits if there is any necessity.00% 20.98 2.79 51.40 3. it will reduce the delay in disbursement of the cash benefits.48 3918.00% 80.00% Sickness Benefit Maternity Benefit Disablement Benefit Other Benefits Insured Persons 81.00% 40.42 1.

This will help to reduce poverty and health problems faced by workers in this sector. The Corporation was successful in implementing the ESI Scheme covering more than fifty percent of workforce in 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. In the 60th year of service to the nation.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. people are more prone to diseases and an ordinary person find it very difficult to pay his hospital bills. 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. . Since the Corporation has sufficient resources. 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.

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

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