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Many holes left in the net

Social security for the unorganised sector sounds good. But who’ll pick up the tab?

india Updated: Dec 21, 2008 22:55 IST

The Standing Committee on Labour, in its views on social security legislation for unorganised workers, states “various versions of the Unorganised Workers’ Welfare Bill, at the rate of almost one per year, have been emanating from central government from time to time”. The latest version of the Bill — a post-election promise of the ruling coalition — that squeaked through empty Treasury benches last week is far more spacious in scope than in detail. Based on the findings of the Arjun Sengupta report on enterprises in the unorganised sector, it intends to address the pension, health care and insurance needs of 422 million workers. That is nearly one and a half times the US population. An extremely tall order, but it needs to be done.

The Bill provides overarching legislation to discrete social security schemes and proposes a National Social Security Advisory Board and state boards to recommend more of them. The government can pick up from there to “notify suitable welfare schemes relating to life and disability cover, health and maternity benefits, old age protection, or any other benefits”. The tab will be picked up by the Centre and states, with some contribution coming in from the beneficiary. For a perspective on the scale of operations, consider this: a year's health cover of Rs 30,000 for one person costs around Rs 200. Do the math for 422 million people. And this is only one of the schemes already announced.

The staggering bill for universal social security accounts for much of the feet-dragging. For trade unions, the cost of protecting 94 per cent of the country’s workforce involves spending 3 per cent of the GDP ($30 billion or Rs 150,000 crore). The US in 2006 spent $1.4 trillion — a tenth of its GDP and half the federal budget — on social security. It funds this through payroll taxes that pull in more than what flows out because for every beneficiary the US has more than three workers. India has only 30 million income tax payers. Every taxpaying worker here would have to support 14 of his countrymen. The outgoing government has delivered on its promise, in letter if not in spirit. It will be left to future ones to work through the mountain loads of nitty-gritty before we even come close to devising a social safety net covering every Indian.

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