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Universal social security plan

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  •  The government has drafted Rs 1.2 lakh crore plan to provide universal social security coverage for the poorest fifth of the country as part of a bigger scheme that’s being planned for all individuals.

About the scheme:

  • This programme envisages three categories — the poorest 20%, who will get a government payout; those who subscribe on their own and formal sector workers who will need to set aside a fixed proportion of income toward the scheme.
  • The annual cost of coverage to the poorest has been pegged at Rs 1.2 lakh crore. They are categorised as SECC(Socio Economic and Caste Census) 4 and are conservatively estimated at 20% of the population.
  • People under SECC 3 category — another 20% of population and mostly self-employed— will pay a lump sum to avail the benefits while the wage-employed class will pay as per the existing system.
  • The scheme will have two tiers. The first of these comprises mandatory pension, insurance (both death and disability) and maternity coverage and the second, optional medical, sickness and unemployment coverage.
  • Funds collected under the universal social security scheme will be divided into sub-schemes and be ringfenced, meaning the benefits and the contribution will be commensurate.
  • Analysis:
  • India's total workforce currently stands at 450 million, of which a little over 10% are in the organised sector and getting social security of some sort.
  • Every year, more than 10 million people are added to the workforce but most don’t get even the minimum wage and lack any kind of social security coverage, being mostly in the unorganised sector.
  • Under the existing system, in the organised sector, around 25% of the basic salary, including employee and employer contributions, goes toward the provident fund of the employee and another 6% for insurance, taking the total contribution to more than 30%.

Vishal Thakur By - Vishal Thakur
Posted On - 10/19/2017 12:00:00 AM

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