Centre plans to lower ESI contribution rate to 4%

Employers to contribute 3%, with 1% coming as employee contribution.

HYDERABAD, TELANGANA, 07/07/2016: A view of old ESI Hospital at Hyderabad on July 07, 2016. Photo: K.V.S. Giri

The Centre has proposed a reduced rate of contribution from companies towards the health insurance scheme for workers in areas where it plans to set up a dispensary or a hospital for the first time.

393 districts

The ministry has proposed that employers contribute four per cent, instead of 6.5 per cent of a worker’s income towards the Employees’ State Insurance (ESI) scheme, as per the draft rules dated July 25, reviewed by The Hindu . At present, the ESI Corporation has a presence in certain parts of 393 districts of the country.

The corporation has plans to cover all the states and expand the scheme to India’s 683 districts by March next year. ESIC is present in all states, except the north-eastern states of Manipur, Sikkim, Arunachal Pradesh and Mizoram.

Workers drawing salary up to Rs.15,000 per month are entitled to medical benefits for treatment during incidences of sickness, maternity, disability and death due to injury during work. The ESI Act applies to factories with 10 or more workers and it is also applicable to shops, hotels, restaurants, cinemas and road transport undertakings.

While 4.75 per cent of a worker’s salary goes towards ESI as employer’s contribution, 1.75 per cent of the income goes as the employee’s share. This is proposed to be decreased to three per cent and one per cent for two years, respectively.

“Our plan is to expand ESI to all parts of the country. Since the medical facilities at places where we want to open a new dispensary or hospital will not be at par with our established units, we have decided to take less contribution from companies for a period of two years,” said a senior ESIC official, on condition of anonymity.

March 2017

The official said it would cover all parts of 393 districts by September-end this year and the entire country by March next year.

Trade unions suggested that ESI Corporation collaborate with private hospitals in the new areas to provide full medical treatment to workers.

“We welcome the expansion of ESI services to all the districts,” said AITUC Secretary DL Sachdev, “But taking less contribution means workers would not be provided full medical facilities that are otherwise available in the 393 districts. They should provide full facilities by tying up with private hospitals to ensure all medical treatments are available.”