Social Insurance

What is it?
• Government provides it on a compulsory
basis
• It comes into picture when private parties
fail to cover all risks.
• Government can use its power and
resources to apply the insurance method
in its original or modified form
 Characteristics
• Based on law, and not on contract. Cost and
benefits set by the govt.
• Coverage is compulsory. Benefits can’t be
chosen
• Objective is to provide some min level of
economic security and stress on free enterprise
and individual initiative
• Focus on providing max benefits to the LIG
• Assures an interruption of income does not
happen in the case of death or unemp
 Legal Framework
• Section 32B
• Section 32C
• Social sector consists of unorganised
sector, informal sector, economically
vulnerable, backward etc.
 Social Insurance in India
• UNICEF and World Bank provide evidence
that direct public support will lead to
success of social security programs
• Countries with primary social security
became rich. Eg: China, Cuba, Jamaica,
Kuwait etc.
 Need for SI in India
• Large percentage employed in the
unorganized sector
• State support negligible
• Social changes in the country
• A comprehensive social security system
includes social insurance, health
insurance, disability compensation,
unemployment compensation, old-age
pension schemes, etc.
 India – a special case
• Support led social security is best
• Not a constitutional right
• Fragile economic condition does not
permit
 SI Schemes of GIC
• Krishi Bima Yojana, Personal Accident
social security scheme, hut insurance
scheme etc.
• Most of them failures due to incompatibility
with the objectives.
 SI Schemes of LIC
• Landless Agricultural Laborers Scheme,
Group Insurance Schemes, Krishi Shramik
Samajik Suraksha Yojana etc.
• Most of them failed due to lack of
awareness among people
• Another scheme launched was Janashree
Bima Yojana to replace older schemes
• Objective was to provide LI to rural and
urban poor
• Min size of group 25
• Annual premium: 200 per member
• Member/nodal agency/state govt. pays
half the premium, other half by Social
Security Fund
• 40 occupational groups covered ranging
from beedi workers to construction
workers
 Recommendations
• Cost minimization through pooling of funds
• Need for separate body for SI
• Group insurance schemes are the best
and work-based and community based SI
systems should be encouraged
• Introduction of a nodal agency which
reduces the admin overheads, higher
chances of success, suits local
requirements
 Nodal agencies can be…
• Cooperatives
• Associations
• Self Help Groups
 Selecting nodal agencies
• High level of mutual trust
• Monetary transactions
• Frequency of interaction of nodal agency
with the group
• Organizational structure of the nodal
agency
• Interest of the nodal agency
 Objectives of Unemployment
Insurance
• For employed persons who lose their jobs and
are willing to work
• Provide cash income during involuntary
unemployment
• Helps unemployed workers find jobs
• Encourage employers to stabilize employment
• Help stabilize economy
• Popular in U.S etc., will take time to come to
India.