Social security to lean on smart cards for unorganized workers

Social security to lean on smart cards for unorganized workers

New Delhi: The government, for the first time, is proposing to introduce legislation on social security that will extend to the unorganised workers, who account for 86% of the total workforce of 360 million in the country.

And, to ensure against misuse, it is proposing to issue smart cards to beneficiaries.

A senior government official, who did not wish to be identified, said that the Planning Commission has recommended that smart cards be introduced on a pilot basis to identify workers who qualify for benefits under the proposed legislation. “Planning Commission has also suggested that the scheme be extended gradually to identified groups and that there should be no universal coverage," the official added.

The Government wants to restrict the scheme, Aam Aadmi Samajik Suraksha Yojana (literally translated, Common Man Social Security Scheme), to life and disability coverage, health and maternity benefits and old age protection.

“The insurance package is still in the pipeline and details have not yet been worked out. On the life insurance side of the package, we think it should be on the same lines as the Aam Aadmi Bima Yojana, announced in the Budget," said a senior official at finance ministry, under conditions of anonymity. He added, the government has not yet finalized how the health package would be structured.

The Aam Aadmi Bima Yojana is a death and disability insurance cover for rural landless households introduced through Life Insurance Corp. of India. It is expected to be finalized in consultation with state governments this year. However, the official said it has not been decided whether this will be merged with the Suraksha Yojana.

These will be made a part of the Unorganised Sector Workers’ Social Security Bill, 2007, which is likely to be introduced in the monsoon session of Parliament. Details of the Bill are being worked out by a group of ministers (GoM), which last met on 10 May.

The GoM has also suggested inclusion of self employed workers in the definition of the unorganized sector.

“This scheme will benefit sectors such as gems and jewellery, textiles, handloom and leather, which have large number of self-employed who are without any social security," said Jairam Ramesh, the minister of state for commerce. He also, confirmed that the present draft of this law will soon be put up for cabinet approval.

To effect the social security scheme at grass roots, gram panchayats will be required to monitor issuance and usage of smart cards as also implement the social security schemes. In addition, one central board assisted by state-level boards, will help in implementing and monitoring the schemes. However, implementing the social security schemes would put the exchequer under pressure.

According to Arjun Sengupta, who headed a committee that formulated social security policies for unorganized sector workers around 2% of the gross domestic product (GDP) will need to be spent on social security schemes. At the projected level of GDP for 2006-07, it will work out to Rs82,000 crore, or 12% of the entire expenditure projected in the central budget for 2007-08.

The finance ministry official said that a final fix on likely expenditure can be had only after the Union and state governments worked out their individual contributions.

According to a study done by India Development Fund, an independent research outfit, a social security scheme for the rural area alone will cost the government upwards of Rs42,000 crore.

“However, if India’s growth has to to be inclusive and if labour reforms have to be effected, the government has to implement a social security programme," said Amirullah Khan an economist at the Fund.

Even while the government finalizes the Bill, trade unions want a blanket social security law to cover all workers both in the unorganized and organized sectors.

“The International Labour Organization (ILO) has laid down the minimum standards of social security which the government should not tone down in the new law," said an All India Trade Union Congress official. ILO standards include medical care and sickness, old-age, invalidity, survivors’, family, maternity and unemployment benefits.

The proposed law leaves state governments with the option of introducing other kinds of social security benefits, such as provident fund, education, old-age, marriage, funeral assistance, housing and injury assistance schemes.