"Social security is a protective measure; it does not solve chronic problems"

print   ·   T  T  
Arjun K. Sengupta: "It is for the first time anywhere in the world that a social security scheme of such a magnitude for the poorest of the poor has been drafted." PHOTO: V. Sudershan
Arjun K. Sengupta: "It is for the first time anywhere in the world that a social security scheme of such a magnitude for the poorest of the poor has been drafted." PHOTO: V. Sudershan

Aarti Dhar

Economist and Rajya Sabha memberArjun Senguptais also chairperson of the National Commission for Enterprises in the Unorganised Sector. In an interview in New Delhi, he talked about the Commission's report that was recently submitted to the Government. It seeks to provide social security to 362 million workers. Excerpts:

The National Commission for Enterprises in the Unorganised Sector submitted its report to the Government last month. Has it been accepted?It is not the question of being accepted or rejected, but that of the next step. We have submitted our report to the Prime Minister, and it is for him to decide how he would like the report to be processed. It can be processed by the Labour Ministry or sent to a Group of Ministers (GoM) before going to the Union Cabinet.

What is the status of the two other draft bills prepared earlier one by the Union Labour Ministry under the National Democratic Alliance Government, and the second proposed by some members of the National Advisory Council (NAC)?We have used the two drafts in our report on Social Security for Unorganised Workers. The Labour Ministry sent us these documents for reference. We have studied these, the report by the Hanumantha Rao Committee, and also the National Labour Commission recommendations. A study of the experience of different social security [schemes] in different States is also an important aspect of our final draft report. We have incorporated the positive suggestions of all these documents in our report. Our report actually is an analysis of all this and the final scheme that we have presented is a "meaningful and doable" thing.

While talking to the insurance companies, who are to play an important role in the implementation of the scheme, did you find them open to the idea of providing social security and insurance cover to the poor, or did you need some amount to persuasion to make them agree to the proposals?We did not ask for the acceptance of the idea from the insurance companies. We tried to find out from them whether the scheme we are proposing is feasible and can actually be implemented. And we got a very positive response. In fact, I was not surprised by the response because the scheme of this size is attractive since an insurance scheme is dependent upon the number of people involved as that reduces the risk and cost involved. The response from the Postal Department was also very good. We want this scheme to be a cashless proposition. No monetary transaction will take place until the end when either pension or Provident Fund is to be received. An account will be opened in the name of a registered worker in a post office and they will be given a number, based on which [they] will be issued a smart card. In that account the worker's, Government's, and the employer's contribution will be deposited. However, one cannot withdraw the money but for the purpose it is meant for. If the worker is hospitalised, the money goes to the hospital directed and not in the hands of the worker or an intermediary. There will be Workers Facilitation Centres that will be responsible for persuading the workers to get themselves registered, help them with their problems, and sort out any disputes. Running Facilitation Centres will involve some administrative costs but this will be borne entirely by the Centre. Otherwise, there will be no money that will go directly to the employees so there is no scope for exploitation.

The new draft includes domestic workers also. Do you think households would be willing to pay an additional one rupee a day on a small amount of Rs.150 or Rs.200 a month? And, how would you ensure this is done?There is a legal provision under the Social Security for Unorganised Workers Bill to ensure employer's contribution. In case there is no employer (self-employed workers) or the transaction cost of finding an employer is too high, the employer's contribution will be paid by the Government. We have provided for the whole of employer's contribution to be paid by the Government but if you can collect, and we hope that we would be able to collect, nothing like it. Also, in many cases the employers would be happy to pay as it would absolve them of responsibilities in the case of an emergency. Now, it is entirely up to the Government to be able to implement the scheme. We are just an expert body and we have calculated what was the maximum cost the Government would have to incur in case the employers do not pay.

How will the scheme be implemented at the State level?Implementation at the ground will have to be done by the State Governments. The Central Government will provide the money but the State Governments will form the State Social Security Boards, which will implement the scheme with the help of local Workers Facilitation Centres, comprising trade union representatives, non-governmental organisations, and motivated workers who will help the workers to register themselves.

What is the total cost of the scheme?In the first year when one-fifth of the 362 million workers would be covered, the contribution of the Centre and the States, plus the administrative cost will be Rs.7,637 crore that is approximately 0.20 per cent of the Gross Domestic Product (GDP). Of this, the Centre contributes Rs.6,384 crore and the States Rs.964 crore.

In the fifth and final year when the scheme covers the last worker, the total cost of the Centre, States, and administrative expenses would be Rs.25,000 crore (0.48 per cent of the GDP), of which the States contribution would be Rs.5,400 crore.

How have the trade unions received the report?We have discussed it with the trade unions. They were quite interested and they believe it is the beginning of a major step. Social security is a protective measure and it does not solve the chronic problems of employment, health, and education. The trade unions are interested in this as part of a total social protection.

The scheme entails hospitalisation benefits for workers to the tune of Rs.15,000 per year, maternity benefit of Rs.1,000 per delivery, and personal accident cover in the event of death of [the] earning head of the family.

How did the States respond to your proposals? Did they not complain of shortage of funds?The way we have done it, the States' contribution is very little. They do realise that the scheme is overwhelmingly Centre-sponsored and they are now coming to terms with it. Then, there are States that already have social security schemes and they have the freedom of combining the State schemes with the Central scheme.

How would you describe the scheme yourself?The merit of the scheme is that it is for the first time anywhere in the world that a social security scheme of such a magnitude for the poorest of the poor has been drafted. If we succeed in implementing this, it will be an example for the world.



Recent Article in OPINION