58 Social Assistance and Social Insurance
This chapter takes the two main modes of social-security provision — social insurance (contributory, work-based) and social assistance (non-contributory, often means-tested) — and walks through India’s principal schemes under each.
58.1 Social Insurance vs Social Assistance
| Dimension | Social Insurance | Social Assistance |
|---|---|---|
| Funding | Contributions from worker, employer, state | General taxation |
| Eligibility | Membership through contribution | Need-based, often means-tested |
| Beneficiaries | Workers and dependants | Citizens or residents in need |
| Benefit | Linked to contributions | Flat or means-tested |
| Administration | Specialised institutions (ESIC, EPFO) | Government agencies |
| Examples in India | EPF, ESI, EPS, Gratuity | NSAP, PDS, MGNREGA, NFSA |
The two modes are complementary. Social insurance covers workers in formal employment; social assistance reaches the rest. Modern systems blend the two.
58.2 Social Insurance Schemes in India
58.2.1 Employees’ State Insurance Act, 1948
The flagship social-insurance scheme. ESI provides medical, sickness, maternity, employment-injury, dependants’, funeral and unemployment benefits to insured workers.
| Feature | Provision |
|---|---|
| Coverage | Establishments with 10+ workers earning up to ₹21,000/month (₹25,000 for persons with disability) |
| Contribution | Employer 3.25% + Employee 0.75% = 4% of wages (revised 2019 from 6.5%) |
| Administered by | Employees’ State Insurance Corporation (ESIC) |
| Benefits | Medical, sickness (70% wages for 91 days), extended sickness (long-term illness), enhanced sickness (sterilisation), maternity (26 weeks at 100% wages), employment injury (90% wages while disabled), permanent / temporary disablement, dependants’ benefit, funeral expense (₹15,000), confinement expense, vocational rehabilitation, unemployment under RGSKY/ABVKY |
ESIC operates a network of dispensaries, hospitals and panel doctors providing primary, secondary and (in tertiary cases) referred care.
58.2.2 Employees’ Provident Fund (EPF) — Three Schemes
Covered in detail in chapter 52. Three schemes — EPF (1952), EPS (1995), EDLI (1976).
58.2.3 Employees’ Compensation Act, 1923
Earlier called the Workmen’s Compensation Act. Provides compensation for employment injury (accidents and occupational diseases).
| Feature | Provision |
|---|---|
| Coverage | Workers not covered by ESI; railway servants; plantation workers; etc. |
| Conditions for compensation | Personal injury caused by accident arising out of and in the course of employment |
| Defences excluded | Doctrine of common employment, contributory negligence, assumption of risk — all abolished |
| Compensation amount | Function of monthly wages, age (factor in Schedule IV), and degree of disablement |
| Forum | Commissioner for Employees’ Compensation |
Three classical employer defences (common employment, contributory negligence, voluntary assumption of risk) were abolished by the Act — placing strict liability on the employer.
58.2.4 Maternity Benefit Act, 1961
Provides paid leave and benefits to women workers for childbirth.
| Feature | Provision |
|---|---|
| Coverage | All establishments with 10+ workers (excluded for ESI-covered women) |
| Eligibility | Worked at least 80 days in 12 months preceding the expected delivery |
| Maternity leave | 26 weeks (raised from 12 in 2017); 12 weeks for third and subsequent children |
| Adopting / commissioning mothers | 12 weeks |
| Crèche | Mandatory in establishments with 50+ workers (raised from 30) |
| Nursing breaks | 2 nursing breaks during work hours up to child’s age of 15 months |
| Work from home | Permitted post-maternity leave by mutual agreement |
| Wages | 100% of average daily wage |
The 2017 amendment more than doubled maternity leave — a major progressive change in Indian social insurance.
58.2.5 Payment of Gratuity Act, 1972
Covered in chapter 51.
58.3 Social Assistance Programmes in India
India operates a wide social-assistance architecture funded by general taxation.
58.3.2 Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA), 2005
A landmark social-assistance programme. Guarantees 100 days of unskilled wage employment per rural household per year. Currently the world’s largest employment-guarantee programme.
| Feature | Provision |
|---|---|
| Coverage | Rural households with adult members willing to do unskilled manual work |
| Guarantee | 100 days per household per year |
| Wage | State-notified MGNREGA wage; updated annually with CPI-AL |
| Demand-driven | Work to be provided within 15 days; otherwise unemployment allowance |
| Worksite facilities | Drinking water, shade, first-aid, crèche if 5+ children |
| Asset creation | Productive assets — water conservation, irrigation, rural connectivity |
MGNREGA combines social assistance (income support) with productive asset creation. Critical role during COVID-19 reverse migration.
58.3.3 National Food Security Act (NFSA), 2013
Right-based food assistance to ~67% of the population (75% rural, 50% urban).
| Beneficiary | Entitlement |
|---|---|
| Priority Households | 5 kg food grain per person per month at ₹3 (rice), ₹2 (wheat), ₹1 (coarse grain) |
| Antyodaya Anna Yojana families | 35 kg per family per month |
| Pregnant and lactating mothers | Cash maternity benefit; meals through ICDS |
| Children 6 months to 14 years | Hot cooked meals through Anganwadis and Mid-Day Meal Scheme |
58.3.4 Pradhan Mantri Jan Arogya Yojana (PM-JAY) / Ayushman Bharat
Health-assurance scheme — world’s largest publicly-funded health insurance. Coverage: ₹5 lakh per family per year for secondary and tertiary hospitalisation; ~50 crore beneficiaries from poor and vulnerable families.
58.3.5 Pradhan Mantri Shram Yogi Maan-Dhan (PM-SYM), 2019
Voluntary, contributory pension scheme for unorganised workers earning below ₹15,000/month. Worker contributes ₹55 to ₹200 per month (matched by government); pension of ₹3,000 per month from age 60.
58.3.6 Atal Pension Yojana (APY), 2015
Voluntary contributory pension for citizens 18-40. Pension of ₹1,000 to ₹5,000 per month from age 60.
58.3.7 eShram
National database of unorganised workers — over 30 crore registrations by 2024. Foundation for portable benefits, targeted welfare and policy planning.
58.4 Hybrid Schemes — Insurance + Assistance
Modern Indian schemes increasingly blend the two modes.
| Scheme | Hybrid features |
|---|---|
| PM-SYM | Worker contribution + government match |
| APY | Worker contribution; guaranteed pension |
| ESIC’s Atal Bimit Vyakti Kalyan Yojana (ABVKY) | Insurance-funded unemployment benefit |
| Building & Other Construction Workers Welfare | Cess (insurance-like) + welfare delivery (assistance-like) |
| BOCW Welfare Schemes | Pension, education, medical from cess fund |
58.5 Sustainable Development Goals and Social Security
The UN Sustainable Development Goals frame social-security goals globally:
- SDG 1.3: Implement nationally appropriate social-protection systems and measures for all, including floors.
- SDG 8.5: Achieve full and productive employment and decent work for all.
- SDG 10.4: Adopt policies, especially fiscal, wage and social protection, to progressively achieve greater equality.
58.6 Critique and Challenges
| Challenge | Effect |
|---|---|
| Coverage gap | ~80% of workers still inadequately covered |
| Fragmentation | Multiple schemes with overlapping eligibility |
| Targeting errors | Inclusion (non-poor benefiting) and exclusion (poor missing) errors |
| Benefit adequacy | Pension levels often below subsistence |
| Portability | Inter-state portability still being built |
| Awareness | Many beneficiaries unaware of entitlements |
| Last-mile delivery | Banking access, biometric authentication failures |
The Code on Social Security, 2020 attempts to address several of these — particularly fragmentation and the unorganised-sector gap.
58.7 Practice Questions
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- Social insurance = contributory, work-based; social assistance = non-contributory, tax-funded.
- ESI Act, 1948: 10+ workers, ₹21,000 wage ceiling; contribution 3.25% + 0.75% = 4% (post-2019).
- EPF (chapter 52): 12% + 12%, includes EPS and EDLI.
- Employees’ Compensation Act, 1923: strict liability; common-law defences abolished.
- Maternity Benefit Act, 1961: 26 weeks (since 2017); crèche at 50+ workers; nursing breaks.
- NSAP: IGNOAPS (old age), IGNWPS (widows), IGNDPS (disability), NFBS, Annapurna.
- MGNREGA, 2005: 100 days of rural wage employment.
- NFSA, 2013: 5 kg per person per month for ~67% of population.
- PM-JAY: ₹5 lakh health cover for ~50 crore beneficiaries.
- PM-SYM, APY: contributory pension for unorganised workers.
- eShram: national database of unorganised workers (30+ crore).
- Code on Social Security, 2020 — universal coverage, gig and platform inclusion.