As part of its social outreach, the Union Cabinet on Thursday decided to extend medical facilities to beedi workers and bring them under the Rastriya Swasthya Bima Yojana.
About 55 lakh beedi workers will gain from the decision, which will cost the government around Rs 311.25 crore.
State governments will identify these workers who work from home and are present in large numbers in states like West Bengal, Madhya Pradesh, Tamil Nadu, Maharashtra, Karnataka, Andhra Pradesh, Bihar and Jharkhand.
Information and broadcasting minister Ambika Soni saw the decision as "a significant and important agenda of the UPA government."
The scheme, labour minister Mallikarjun Kharge said, will "cover 10 lakh beedi workers in the current financial and 100% workers by 2013-14."
Workers will have to contribute Rs 30 towards a smart card.
Under the scheme, a worker and his family (unit of five) will get an insurance cover of Rs 30,000.
Claims beyond this would be reimbursed directly by the welfare commissioner to the concerned hospital.
The Cabinet also decided to lower the age for availing pension benefits and raised the quantum of this benefit for septuagenarians living below the poverty line.
"The additional funds required will be Rs 1,736 crore for providing old age pension at Rs 200 per month per beneficiary in the age group of 60-64 years and Rs 953 crore for providing enhanced pension at Rs 500 per month per beneficiary of age 80 years and above," said Kharge.
Presently, 169 lakh persons above 65 years and living below the poverty line receive central assistance.
The lowering of the age limit to 60 will cover another 72.32 lakh BPL persons between 60-64 years while 26.49 lakh persons who are above 80 years will benefit from the increase in the pension amount from Rs 200 to Rs 500.
As a result of change in the eligibility criteria for old age pension, the criteria for widow pension and disability pension will also get revised from 40-64 years to 40-59 years and from 18-64 years to 18-59 years respectively, a statement said.