PROJECT REPORT

On
“A study on the working of Employees’ State Insurance
Corporation”

FOR
THE PARTIAL FULFILLMENT OF THE AWARD OF THE DEGREE
OF
“MASTER OF BUSINESS ADMINSTRATION”
FROM GGS IP UNIVERSITY
DELHI

BATCH: 2017-2019

SUBMITTED BY: SUBMITTED TO:

Priyanka Kanwar Rathore Prof. Dharini

ARMY INSTITUTE OF MANAGEMENT & TECHNOLOGY,

GREATER NOIDA (UP) – 201306
 Acknowledgement

I want to show my sincere gratitude to all those who made this study possible. First
of all, I am thankful to the helpful staff and the faculty of Army Institute of
Management and Technology. Second, I would like to extend my sincere thanks to
my Industry Guide, Mr. Inder Arora, for his untiring cooperation. One of the most
important tasks in every good study is its critical evaluation and feedback which was
performed by my faculty guide Dr. Shruti Gupta. I am very thankful to my Faculty
as well as Industry guide for investing his precious time to discuss and criticize this
study in depth, and explained the meaning of different concepts and how to think
when it comes to problem discussions and theoretical discussions. My sincere thanks
go to my Institute and family, who supported and encouraged me.

Priyanka Kanwar Rathore

 Executive Summary
A Study on the Working of the Employees’ State Insurance Corporation- this
research has been conducted to know the various aspects of the working of the
Employees’ State Insurance (ESI) Corporation related to the Scheme in India. This
study shows the working of the ESIC and its effectiveness of benefits provided to
the insured employees. The study covers a sample of 30 people who are the
employees of the clients of Randstad India Pvt. Ltd. The primary data were collected
from the respondent (insured person) based on the interview schedule. The
secondary data was gathered from the various magazines and publications of the ESI
Corporation. The data collected were critically analyzed keeping in mind the
objectives of the study. On the basis of the result of the study, it is noted that the ESI
Corporation is not keen on giving enough information to the insured persons and
employers about the ESI Scheme, the quality of medical care provided to the insured
persons through the ESI dispensaries and hospitals is rather poor. The ESI
Corporation is not very enthusiastic about its effective utilisation.
Table of Contents

Certificate of Training – Industry Mentor .............................................................. (i)

Supervisor Certificate – Faculty Mentor................................................................ (ii)
Certificate of Originality ....................................................................................... (iii)
Acknowledgement ................................................................................................ (iv)
Executive
Summary………………………………………………………………………. (v)

Chapter Page No.

Chapter 1- Introduction
1.1- Industry Introduction
1.2- Company Introduction
1.3- Topic Introduction
Chapter 2- Objective of the Research undertaken
Chapter 3- Literature Review
Chapter 4- Hypothesis, if any
Chapter 5- Research Methodology
Chapter 6- Data Analysis
Chapter 7- Result Discussion
Chapter 8- Conclusions & Recommendations
Bibliography
Appendices- to include questionnaire
 Introduction

Mission is “taking the lead in shaping the world of work”.

About Company

Randstad is a multinational consulting company of Dutch human resources based in

Diemen, Netherlands. Randstad is the second provider of human resources services.
It was founded in the Netherlands in 1960 by Frits Goldschmeding and operates in
about 40 countries. Randstad employs approximately 29,320 of its staff, while
580,000 people are deployed to other day-to-day companies through Randstad. In
the world, there are 4,496 branches.

Randstad India is a division of Randstad Holding NV, based in the Netherlands.

Randstad India started in 1992 as "Ma Foi Management Consultants Ltd", a HR
service provider based in Chennai, which in 2004 merged with the Dutch human
resource provider - Vedior NV. In 2005/2006, with two consecutive acquisitions of
Indian recruitment companies - 'EmmayHR' and 'Teams4U', Randstad sealed its
entry into India. Randstad Holding NV acquired Ma Foi's activities through the
acquisition of Vedior in 2007; and named her Indian activities as "Ma Foi Randstad"
in 2010. In late April, 2012, she renamed her "Randstad India".
Randstad is a full-service HR service provider to customers around the world and
has directly participated in careers of over 320,000 people. Business customers
include over 250 Fortune 500 companies.

RANDSTAD INDIA
The organization has a large network of offices across the country to be available to
customers, candidates and flexible workers. The company, formerly called Ma Foi,
has been the leader in the human resources services industry in India over the last
25 years and has joined Randstad through the acquisition of Vedior in 2008. The
Randstad Group is one of the world's leading human resource provider, operating in
39 countries around the world. Randstad India continues to focus on the
development of personal and innovative HR services, leveraging its unique
geographic presence and end-to-end capabilities in all aspects of HR service.
 Randstad in numbers

20.7
billion In revenue

32,280
avg. corporate employees

626,300
people employed everyday

4,752
offices in 39 countries

There are 4 verticals that define service concepts:

1) Temporary and contract staff

Randstad staff provides temporary staff in a wide range of skills for a variety of
industries, including social and industrial sectors, everywhere in India. They manage
the entire HR process from selection, selection, shipment, payment, compliance,
training to detailed management reports. The dedicated team of Randstad
consultants, operating in more than 65 offices, is backed by robust technology, solid
risk management processes, and the pioneering experience of this concept in India.
They provide internal services when our team operates from the customer office,
works closely with them to increase the efficiency of human resources and
productivity. Randstad offers specialized personnel to their customers when they
need people with specialized skills for specific projects or to perform a very niche
job. Have the experience of recruiting the best from the market and aboard with
Randstad because of its image of a professional employer. Consultants provide
adequate HR support to these specialists and help customers keep them during the
contract period.

2) Professionals / Research and Selection

A distinct division focuses on the assumption of supervisors, managers,
professionals, temporary specialists and consultants. These people are employed in
(temporary) positions in the central and upper level, such as engineers, ICT
specialists, or marketing and communication specialists.
In several countries, there are operating companies that select managers for
permanent positions in central and high management. This often involves
recruitment and training programs. They call this "search and selection" service
concept.
Executive Search aside, we offer Intermedia Manager - find suitable professionals
for a specific period of a project or to fill an unexpected gap in the top direction. We
develop
The executive search methodology to find the right person. We take the person on
our payroll and transfer to your organization until the temporary assignment ends.

3) RPO
Recruiting process Subcontracting is the transfer of the operational responsibility of
one or more functions or recruitment tasks, including recruiting management, from
the customer to a service provider.
Key Components of RPO - Recruiting Marketing - brand customer, procurement,
screening, evaluation, selection, operation and administration of recruitment,
deployment and technology management, agency management and internal
recruitment.

4) Technology
This is its new vertical to meet the needs of its customers in the IT industry due to
the growing demand for IT professionals in the latest environment. Where their main
goal is to provide the best human resource for IT industries through which they can
gain market share even in this vertical.

Structure of Staffing Business

Competitors
SWOT Analysis

STRENGTHS
• strong brand in this industry.
• Compliance with all laws (work, work, corporate, regional)
• Pan India Presence (> 25 Seats)

WEAKNESSES
• The process is slow in making decisions.
• Low visibility in India today compared to its overall brand strength
• A high operational cost implies.
• No marketing for candidates

OPPORTUNITY '
• Unused market (96% of India's human resources sector)
• Large sector and unorganized organization
• Advancing the technological landscape

THREATS
• Local Players: Ease of Access, Corruption and Low Intermediation
• Global Competitors: Manpower, Addecco
 Social Security

In India social security measures were planned and implemented after independence. They
were too small and limited to the organized sector workers only, which constituted about 8
per cent of the total workforce, despite a majority of the workforce (about 93% in 2004-05)
comes in the unorganized sector (self-employed or casual workers).

Mainly, the need to ensure social security for all, especially those in the unorganized sector,
is an overarching concern recognized in the Eleventh Five-Year Plan (2007-12). The
Constitution of India provides strength and spirit to the social security for organized and
unorganized workers through its Directive Principles of the State Policy. Social security
legislations came into existence as a part of industrial policy after large-scale
industrialization. Some social security benefits in the form of Acts for the organized workers
working in the big industrial units (factories, mills, etc.) were also enacted during the British
period. But major social legislations were passed only after independence.

The important social legislations and social security measures relating to industrial
workers may be explained as under:
1. The Workmen’s Compensation Act, 1923

2. Provident Funds and Miscellaneous Provisions Act, 1952

3. The Employees State Insurance (ESI) Act, 1948

4. The Maturity Benefit Act, 1961 (amended in 1976)

5. The Payment of Gratuity Act, 1972

6. Universal Contributory Health Insurance Act, 2004

7. The Aam Admi Bima Yojana, 2008

8. The National Health Insurance Scheme, 2007

9. The Indira Gandhi National Old Age Pension Scheme

Thus, while a large proportion of the organized sector workers have been be benefiting from
legally mandated and budget-provided social security benefits since independence, but most
of the workers in the unorganized sector have been left out (only less than 10% of the total
unorganized were benefited).

According to the World Labour Report, 2000, the public sector expenditure on social
security in India was as meagre as 1.8 per cent of the GDP, whereas it was 4.7 per cent in
Sri Lanka and 3.6 per cent in China. The eligibility criterion is also too tight as the exclude
many a vulnerable person.

The below poverty line (BPL) criterion is a minimalist and inappropriate approach to extend
social security to the unorganized workers. About 55 per cent of the population though not
comes in the category of the poor in India but is vulnerable. Not only this, most of the
unorganized workers suffer from the lack of awareness about social security and social
welfare measures.

It has been said that globalization has adversely affected social welfare programmes of the
state. The state often promotes rather than accepts globalization. This is why it is bound to
impact on the policy regime and welfare character of the state.

Social welfare and social security are both linked up but they are pursuing different ends.
Social security refers to a state of mind as well as an objective fact. It is mainly directed
towards providing income security as a preliminary to a state of social and psychological
well-being.

Social welfare, on the other hand, is broadly understood as ‘the end product of possession
of goods, positions in life and supply of services to help him to live in wholesome
contentment and communication with others in the group’.
Narrowly speaking, social welfare refers to a set of institutional or personal services
provided either by the state or voluntary organizations to prevent the incidence or to reform
or rehabilitate the victims of disabilities, or disorganization or delinquencies or destitution
and so on.

Social security measures vary from country to country, but the following common features
are necessary for a scheme to be designated as social security:

i) The aim of the scheme must be either to give curative or preventive medical care, or to
guarantee income in case of involuntary loss of all or a large part of income from work or
to grant additional income to persons with dependents.

ii) The system must be headed by legislation, which should have individual rights to or
imposes definite obligations upon a public, partly public or autonomous organisation.

iii) A public, partly public or autonomous organisation, must administer the system.

iv) For enjoying the right type of security, people must have the confidence that the benefits
will be available when required and the protection will be adequate, both in quality and
quantity.

v) The benefits or services are provided in three major ways: social insurance, social
assistance and public service.

Employees’ State Insurance (ESI) Scheme

The concept of India as a Welfare State is envisaged in the constitution of India.

‘The State shall within the limits of its economic capacity and development’, says
the constitution, make effective provision for securing the right to work, the
education and to public assistance in case of unemployment, old age, sickness, and
disablement, and other cases of unserved want. Before this goal is reached, it is
necessary, to ameliorate the conditions of millions of workers in the country. Social
security as a means of such improvement became a recognized fact by reason of
passing of the Employees’ State Insurance (ESI) Act in 1948, followed by the
Employees’ Provident Fund (EPF) Act, 1952. Even before these Acts were passed
some measure of social insurance existed in the country. But the benefits received
under these measures were in the nature of social assistance and not social insurance.
Moreover, they covered only a minor part of the distress of the industrial worker and
payment was the sole responsibility of the employer and the worker was not liable
in any way to pay any contribution.

The promulgation of the ESI Act, by the Parliament was the major legislation on
social security for workers in independent India. It was a time when the industry was
still in a nascent stage and the country was heavily dependent on an assortment of
imported goods from the developed or fast developing countries. The deployment
of manpower in manufacturing processes was limited to a few selected industries
such as jute, textile and chemicals. The legislation on creation and development of
a foolproof multi-dimensional social security system, when the country’s economy
was in a very fledgling state, was obviously a remarkable gesture towards the socio-
economic amelioration of a workforce though limited in number and geographic
distribution. India, notwithstanding other pressing compulsions of self-reliance and
self-sufficiency, thus, took the lead in providing organized social protection to the
working class through statutory provisions. The ESI Act encompasses certain health
related eventualities that the workers are generally exposed to, such as sickness,
maternity, temporary or permanent disablement, occupational disease or death due
to employment injury, resulting in loss of wages or earning capacity - total or partial.
Social security provisions made in the Act to counterbalance or negate the resulting
physical or financial distress in such contingencies are, thus, aimed at upholding
human dignity in times of crisis through protection from deprivation, destitution and
social degradation while enabling the society the retention and continuity of a
socially useful and productive manpower. Thus, the ESI Scheme of India is an
integrated social security scheme engineered to provide social protection to
employees in the organized sector and their dependents in contingencies, such as,
sickness, maternity or death and disablement due to an employment injury or
occupational disease.

Coverage of the ESI Scheme

The ESI Act is applied on the following categories of factories and establishments in the
centres where the ESI Scheme is implemented.
i) Non-seasonal factories using power and having employers ten or more persons.
ii) Non-seasonal and non-power using factories and establishments having twenty
or more employees.
The employees drawing wages up to a certain limit (at present Rs.21000 per month) of the
aforesaid factories and establishments come under the ESI Scheme.
The Social Security (Minimum Standards) Convention No.102 of the International Labour
Conference12 (1952) defined nine branches of social security benefits for the welfare of
labour class. In India, as a follow up measure for protection of employees in times of
physical and economic distress, the ESI Corporation has already adopted and extended five
major benefits to the insured employees out of the nine benefits identified by the
International Labour Organisation. Under the ESI Scheme, the comprehensive and need
based package of major social security benefits in cash and kind include medical benefit,
sickness benefit, maternity benefit, disablement benefit and dependents’ benefit. In addition,
the Scheme also provides some other need-based benefits such as funeral expenses,
rehabilitation allowance, and vocational rehabilitation.

Beneficiaries of the ESI Scheme

The beneficiaries of the ESI Scheme include both the insured persons and their dependents.
The insured persons are eligible for all the social security benefits under the Scheme, their
dependents are eligible only for the medical benefit.

Employees’ State Insurance (ESI) Corporation

The ESI Corporation is a body corporate having perpetual succession and a common seal,
set up by the Government of India on 24th February 1952, under the provisions of the ESI
Act, 1948 to administer and execute the Scheme of Employees’ State Insurance.
Constitution of the ESI Corporation
The ESI Scheme is administered and executed by the Employees State Insurance
Corporation, which consists of the following members, namely
i) a chairman to be appointed by the Central Government,
ii) a vice- chairman to be appointed by the Central Government,
iii) Not more than five persons to be appointed by the Central Government,
iv) one person each, representing each of the States in which the ESI Act is
in force, to be appointed by the State Government concerned,
v) one person to be appointed by the Central Government to represent the
Union Territories,
vi) ten persons representing employers to be appointed by the Central
Government in consultation with such organizations of employers as
may be recognized for the purpose by the Central Government,
vii) ten persons representing employees to be appointed by the Central
Government in consultation with such organisations of employees as
may be recognized for the purpose by the Central Government,
viii) two persons representing the medical profession to be appointed by the
Central Government in consultation with such organisations of medical
practitioners as may be recognized for the purpose by the Central
Government,
ix) three members of Parliament of whom two shall be the House of the
People and one shall be a member of the Council of States elected
respectively by the members of the House of the People and the members
of the Council of States and
x) the Director General of the Corporation, ex-officio.
Union Minister of Labour functions as chairman of the ESI Corporation whereas
Director General as chief executive discharges the duty of running the day-to-day
administration.

Powers of the ESI Corporation

The ESI Act provides various powers to the Corporation for its proper functioning. The
corporation may employ staff of officers and servants as may be necessary for the efficient
transaction of its business [ Sec.17].
The Corporation may, subject to such conditions as may be prescribed by the Central
Government, acquire and hold property both movable and immovable, sell or otherwise
transfer any movable or immovable property which may have become vested in or have
been acquired by it and do all things necessary for the purposes for which the Corporation
is established. [ Sec.29 (1)]
Subject to such conditions as may be prescribed by the Central Government, the Corporation
may from time to time invest any moneys, which are not immediately required for expenses
properly defrayable under the ESI Act and may, subject as aforesaid, from time to time re-
invest or realize such investments. [Sec.29 (2)]. The Corporation may, with the previous
sanction of the Central Government and on such terms as may be prescribed by it, raise
loans and take measures for discharging such loans. [ Sec. 29 (3)]. The Corporation may
constitute for the benefit of its staff or any class of them, such provident or other benefit
fund as it may think fit. [ Sec. 29 (4)]

Sources and Application of Funds of the ESI Corporation

The main source of fund of the Corporation is the contributions raised from employees
covered under the ESI Scheme and their employers, as a fixed percentage of wages. The
Corporation may accept grants, donations and gifts from the Central Government or any
State Government, local authority, or any individual or body whether incorporated or not,
for all or any of the purposes of the ESI Act.
All money received by the Corporation shall be paid into a fund called Employees State
Insurance Fund and shall be expended by the Corporation according to the provisions of the
ESI Act.

Accounts, Audit, Annual Reports and Budget Estimates

The Corporation shall maintain correct accounts of its income and expenditure in such form
and in such manner as may be prescribed by the Central Government. [ Sec.33]. The
accounts of the Corporation shall be audited annually by the Comptroller and Auditor-
General of India and any expenditure incurred by him in connection with such audit shall
be payable by the Corporation to the Comptroller and Auditor-General of India. [ Sec.34].
The Corporation shall submit to the Central Government an annual report of its work and
activities. [ Sec.35]. The Corporation shall in each year frame a budget showing the probable
receipts and the expenditure which it proposes to incur during the following year and shall
submit a copy of the budget for the approval of the Central Government before such date as
may be fixed by it in that behalf. The budget shall contain provisions adequate in the opinion
of the Central Government for the discharge of the liabilities incurred by the Corporation
and for the maintenance of a working balance. [Sec. 32]

Machinery of the ESI Corporation

The ESI Act envisages the setting up of various kinds of machinery for the effective
functioning of the ESI Scheme in the country. Accordingly, Inspectorates, Revenue
Recovery Machinery, Employees’ Insurance Court and Grievances Redress Cell have been
set up and working in the Corporation. The Act also envisages the setting up of various
kinds of machinery such as Medical Benefit Council (at the apex level), Regional Boards
(at the regional level) and Local Committees (at the grass root level) to advise the
Corporation on matters related to the administration of the ESI Scheme.

Organisational Structure of the ESI Corporation

At the national level, the ESI Corporation administers the ESI Scheme. The Corporation
comprises representatives of employees, employers, the Central Government, State
Governments, medical profession and the Parliament. A Standing Committee, constituted
from amongst the members of the Corporation acts as the executive body. The Medical
Benefit Council, a statutory body, advises the Corporation on matters related to the
provision of medical care to the beneficiaries of the Scheme. The Director-General is the
chief executive of the Corporation and is also an ex-officio member of the Corporation and
the Standing Committee. At the State level, Regional Boards have been constituted in each
State where the ESI Scheme is implemented and at the grass-root level, Local Committees
have been formed as advisory bodies for smooth functioning of the Scheme. The Regional
Boards and the Local Committees have representation, both from employers and employees.
Figure 1.1 shows the organisational structure of the ESI Corporation.
ESI Corporation - Organizational Structures
The below given diagram shows the coverage of ESI scheme in last 55 years. The
significant number of beneficiaries has been increased in a good number from the last
year.

ESI Scheme - coverage in 55 years

March 1952(started)
As on 31st March 2006
Particulars
No of States/UT's Covered Delhi & Kanpur 27
No of Implemented Centers 2 728
No of Employers Covered 500 3,05,000
No of Insured Persons 1,20,000 91,48,000
No of Beneficiaries 1,20,000 3,54,96,589

Medical Infrastructure
The ESIC medical services is divided into two parts- direct and indirect system. Direct
system includes ESI hospitals, dispensaries and annexes whereas the indirect system
includes panel clinics and referral centers and tie ups.
ESI BENEFITS
Basically, there are two ESI benefits, first is the medical benefits given to the
insured person and family members and second is the cash benefit given to
compensate for the loss of wages in contingencies.

FINANCES

 ESI Scheme is a " self-financing " health insurance scheme by the ESIC.

 Contributions are raised from the insured employees and their employers as a fixed
percentage of wages

 The contributions paid by the employees and the employers are deposited in a
common pool known as the ESI Fund, which is utilised for meeting the
administrative expenses, cash benefits and medical benefits to the insured persons
and their dependents.

 The rates of contribution are: -

1. Employees' Contribution: 1.75 percent of wages
2. Employers' Contribution: 4.75 percent of wages
3. State Govts: 12.5% (1/8th) share of medical expenditure
Realisation of the importance of social security in the country led to the promulgation of the
Employees’ State insurance Act, 1948. It was a major legislation on social security for
workers in independent India. The legislation on creation and development of a fool proof
multi-dimensional social security system, when the country’s economy was in a very
fledgling state, was obviously a remarkable gesture towards the socio-economic
amelioration of a workforce though limited in number and geographic distribution. As the
administrator of the ESI Scheme, the ESI Corporation provides social protection to
employees in the organised sector and their dependents in contingencies such as sickness,
maternity or death and disablement due to an employment injury or occupational disease.
 Objectives of the study

The objective of this study is to examine the working of the Employees’ State Insurance
Working Corporation. The study proposes to examine the following aspects of its working
related to the administration and execution of the Employees’ State Insurance Scheme:
1) The effectiveness of the benefits provided to the insured persons under the
Employees’ State Insurance Scheme.
2) Awareness among the insured person regarding ESI scheme.
 Literature Review

The World over there is a growing interest in the area of social security. In India, many
committees and study groups have conducted studies on the existing social security
schemes, particularly on the Employees’ State Insurance Scheme. These committees and
study groups have clearly indicated that social security is the sine qua non of the economic
system. A review of such attempts will be apt at this juncture.
A study group (1957) appointed by the Government of India under the chairmanship of
V.K.R. Menon to examine the experience gained by the working of existing social security
schemes felt that under the existing conditions, extension of social security measures would
not be possible. On the Employees’ State Insurance Scheme, they recommended that the
rate of maternity benefits should be raised to a minimum of one rupee per day. They also
recommended the extended sickness benefit in protracted diseases.
Another one-man committee (1959) was appointed by the Government of India to review
the working of the Employees’ State Insurance Scheme under the chairmanship of A.
Lakshmanswami Mudaliar. Most of his recommendations were related to medical
arrangements of the Scheme and construction of hospitals, standards of specialists’ services
and construction of cottage type hospitals. He also recommended the extended sickness
benefits for 309 days in the case of certain long-term diseases.
The Government of India appointed another committee, called the Employees’ State
Insurance Scheme Review Committee3 (1963), under the chairmanship of R.Pattabhi
Raman to review the working of the Employees’ State Insurance Scheme and to recommend
modifications or changes in the structure and organisation of the Employees’ State Insurance
Corporation with a view to more satisfactory functioning of the Scheme. This committee
recommended that the Scheme should be immediately extended to cover factories with ten
workers if using power and with twenty workers if not using power and to shops and
commercial establishments and trade and commerce. The committee also recommended that
the permanent disablement benefit should be paid in lump sum, duration of sickness benefit
should be raised to 26 weeks, rate of employment injury benefit should be raised by 30
percent over the sickness rates, construction of hospitals should be placed in charge of the
Employees’ State Insurance Corporation, there should be 10 representatives each of the
employers and employees in the Employees’ State Insurance Corporation and 5 each in the
Standing Committee. It also recommended that the Employees’ State Insurance Corporation
should open medical colleges at some places and the chief accounts officer should be
designated as financial advisor. The National Commission on Labour4 (1966) appointed by
the Government of India under the chairmanship of Gajendragadkar to study and report on
the existing arrangements for social security lauded the suggestions and recommendations
made by the Employees’ State Insurance Scheme Review Committee and it recommended
that these should be implemented expeditiously. It particularly endorsed the suggestion that
the Corporation may establish and finance medical institutes. It also recommended the
amendment in the constitution of Regional Boards, increase in the representatives of
employers and employees in the Employees’ State Insurance Corporation and the Standing
Committee and grant of enhanced powers to the Regional Boards for its effective control
over the working of the Scheme in their respective regions.
Malviya Committee5 (1966), appointed by the Government of India, to review the
Employees’ State Insurance Scheme strongly recommended that the Employees’ State
Insurance Scheme should provide full medical care to insured workers. The Committee also
recommended that Local and Regional Committees should start functioning urgently
wherever they were not already functioning in order to make the functioning of the
Employees’ State Insurance Scheme more effective. The Committee suggested that the
employers who give better medical amenities and whose workers are satisfied with those
amenities should be given rebate on their contribution to the Employees’ State Insurance
Corporation. It also suggested that the Central and State Governments should take urgent
and effective steps for the purpose of identification of occupational diseases in each industry
and periodical examination of workers. The other recommendations include that the other
systems of medicines, namely, Ayurvedic, Siddha, Unani and Homoeopathy should be
popularized by setting up dispensaries run on these systems in areas of concentration of
industrial workers and in case of smaller units, medical facilities should be provided on joint
basis by group of employers in scattered areas.
A National Seminar6 (1970) on social security conducted by the International Labour
Organisation, which was held in New Delhi, recommended the integration of various social
security institutions - social insurance, social assistance, family benefits, health care and
other social services and related social welfare schemes. Besides, the seminar recommended
that provision for the following facilities be made:
i) Provision of basic needs, essential services, medical care and legal aid;
ii) Work guarantee as an integral part of social security;
iii) Adequate and effective measures for rural social security;
iv) Rate of interest paid to the provident fund beneficiaries should be well comparable with
the rates of the banks;
v) Long-term social security benefits be linked with the cost of living index;
vi) Creation of alternative investment opportunities for the provident fund money which
may yield higher returns and
vii) Income redistribution through social security programmes.
The Estimates Committee7 (1972) of the Indian Parliament constituted to examine the
Employees’ State Insurance Scheme, recommended that a small committee, consisting of
members of the Employees’ State Insurance Corporation and other experts, should be set up
to go into certain important recommendations in respect of the following matters.
i) To work out a plan for providing medical benefit of uniform standard in all areas where
the benefit provisions are in force.
ii) To work out a viable programme for phased extension of the Employees’ State Insurance
Scheme supported by perspective planning in respect of ways and means.
iii) Exemption limit may be raised to Rs.3 per day.
iv) The Government of India should also contribute towards the cost of the Employees’
State Insurance Scheme.
v) The share of the State Governments should be raised to an appropriate level, which
should in no case be less than what each State is spending normally on the medical care of
the general public.
vi) Central and State Governments should give financial assistance to the Employees’ State
Insurance Corporation by way of grants/loans for the construction programme
vii) The desirability of specifying the State Government’s share in the statute itself without
leaving it to the individual agreements.
viii) The possibility of introducing a Scheme of ‘No claim bonus’ for workers who do not
avail of any benefit under Employees’ State Insurance Scheme during a year and its financial
implications.
ix) Feasibility of creating a separate all India cadre of the Employees’ State Insurance
medical officers on the lines of central health service with an earmarked quota for each State
be examined in consultation with the State Governments.
The Committee on Perspective Planning8 (1972) set up by the Government of India as per
the report of the Estimates Committee recommended that
i) Medical care of an adequate standard should be provided uniformly throughout the
country to the insured persons and their families.
ii) The Employees’ State Insurance Scheme should carry out a 5year phased programme of
extension to additional categories of establishments including smaller factories, shops and
commercial establishments, mines and plantations.
iii) The contents of the Employees’ State Insurance Scheme should be improved at the same
time as its coverage is extended.
iv) The phased programme should be flexible, without any rigid priorities being observed
between different sectors of employment.
v) The Corporation should work out the financial and administrative arrangements for
giving effect to partial coverage as a method not hitherto tried.
vi) Surveys of unorganised and semi-organised sectors of employment should be carried out
to frame plans for their coverage.
vii) Working out of detailed and concrete annual extension plans and supervision of their
implementation should be entrusted to a full time senior officer at the headquarters of the
Corporation.
viii) Over-all progress of the extension programme should be periodically reviewed at the
highest level both in the Corporation and in the State Government.
ix) The wage limit for exemption from employees’ contribution should be raised from
Rs.1.50 to Rs.3/- per day. The loss suffered by the Corporation through increase of the wage
limit for exemption should be borne by the Central Government as part of its recurring
subsidy to the Scheme.
x) The Central Government’s financial assistance to the Scheme is essential, particularly for
providing full medical care to all families, raising the yardstick of hospital beds from 4 to 7
per 1000 and increasing the duration of sickness benefit from 8 to 13 weeks. The Central
Government’s recurring assistance to the Scheme should be fixed ‘per capita’ of the insured
population, at an amount equal to 13.7per cent of the total running cost of the Scheme.
xi) State Government’s share of the cost of medical benefit should be increased.
xii) The Corporation should obtain funds for construction of hospitals by floating debentures
with the assistance of the Central Government. Interest on debentures should be met from
rent charged to the running cost of the Scheme for hospitals built with the proceeds of the
debentures. Repayment liability on account of maturing debentures should be met by raising
an equal amount through fresh debentures. The Corporation should eventually liquidate
debentures by crediting to a sinking fund any surplus of income over expenditure.
xiii) The Scheme should not provide a ‘No claim bonus’ since it is impracticable, besides
being incompatible with the established and internationally recognized principles of social
security.
xiv) The idea of all India cadre of the Employees’ State Insurance medical officers for the
Employees’ State Insurance Scheme should be given up. The State Government should
create a separate cadre of medical officers for the Employees’ State Insurance Scheme.

On the scrutiny of these studies, it can be deduced that the various committees appointed by
the Government of India have reviewed the existing social security schemes and given
recommendations for updating the schemes, particularly the ESI Scheme. Besides the
Government, individuals and organisations have also undertaken several studies on the ESI
Scheme in a restricted sense and have expressed their views on the working of the ESI
Corporation along with the suggestions for making improvements in its working. It is
important to note that these studies were not scientifically designed and the opinion surveys
were not properly structured. Also, most of the findings were just in the form of generalised
observations made without examining the statistical significance. Since no comprehensive
and schematic effort has so far been made to study the working of the ESI Corporation in
the country in its entirety, there is a need for more studies on the working of the ESI
Corporation so that the deficiencies could be diagnosed in the larger context. This can, then,
set in motion effective interventions in restructuring the complete design for a giant leap.
 Research Methodology

To examine the effectiveness of benefits provided to the insured persons under the Employees’ State
Insurance Scheme.

1) Awareness of the ESI benefits

2) Source of the awareness of the ESI benefits

3) Quality of the medical benefits.

Selection of sample

For selecting the respondents, the employees of Randstad Clients were selected which are covered
under ESI scheme.

Collection of data

Primary data was used for the study. The primary data were collected from the respondents based on
structured questionnaire. The secondary data was collected from the publication of the ESI
corporation, reports, books and periodicals.
 Data Analysis

Personal Profile

For the research 30 responses were selected from which 20 were male and 30 were female.

Most of the respondents were below 25 years only few were in between 25 to 45.
66.7% had done their post-graduation, 26.7% had done their graduation and only few were below
that.

90% of the respondents were married and 10% were single in this data analysis.
The 60% of the insured person were having dependents less than 2, 36.7% were having dependents
between 2 to 4 and 3.3% were having dependents between 4 to 6.

Most of the respondents were from urban areas and 33.3% were from semi-urban areas.
43.3% respondents were having permanent employment, 36.7% employess were having casual
employment and 23.3% were having temporary employment.

63.3% respondents were having less than 1 year of period of service, 30% were having 1 to
10 years in period of service and 6.7% were having 10-20 years in period of service.
Most of the respondents were getting their monthly salary and only few were on daily wages.

Monthly salary of most of the respondents is in between 15000-21000 and the remaining
35.5% are earning less than 15000.
46.7% of the respondents are fully aware of the benefits provided by the ESI Corporation, 33.3%
are partially aware and 20% are not at all aware about the benefits of the ESI scheme.

Most of the respondent’s source of awareness is from other employees and other source of
awareness are brochures, ESIC official’s, friends, newspaper etc.
Respondents don’t get regular informative material on ESI scheme published by the ESI
Corporation.

The least they get the material is in English language and other is in Hindi language.
Only 37.9% respondents are satisfied with the measures taken by the corporation for providing
information on the ESI scheme.

50% of the respondents are partially aware of the formalities for claiming various benefits
provided by the corporation under the ESI scheme.
Most of the respondents still don’t prefer ESI Dispensary, they prefer Government hospital and
private hospital instead.

Respondents prefer ESI dispensary because of free medical care not because of other options
like good treatment, medical certification etc.
Respondents don’t prefer ESI dispensary because of lack of medicine and other facilities and they
don’t have full confidence on ESI scheme.

Most of the respondents have not got any treatment from ESI dispensary.
Respondents are satisfied with the service of the doctors but still ESI corporation needs to improve
the services provided to the insured employees.
 Result Discussion
The above research is done on the basis of personal profile which include sex, age, education, marital
status, number of dependents, place of residence, nature of employment, period of service, nature of
employment, period of service, nature of pay, monthly income from employment. The second part
consist the questions which includes the knowledge regarding ESIC which includes- awareness about
the benefits provided by the ESIC, source of awareness, information given by ESIC available to you
or not, language of ESIC material publication, are the insured person satisfied with the measures taken
by corporation for providing information on ESI scheme, awareness about facilities given by ESIC,
do they really prefer ESI dispensaries, reason for preferring ESI dispensary, are they satisfied with the
facilities provided in ESI medical care etc. are the questions answered in this study.
The result showed that around 46% people are aware about the benefits provided by the ESIC. Their
source of awareness is from their employers. The insured people don’t get regular informative material
on ESI scheme published by corporation. Most people are partially aware about the formalities for
claiming various benefits provided by ESIC. Insured people prefer Government hospitals more when
compared with ESI dispensaries because of lack of medicines and other facilities. People rate ESIC as
an average organization in terms of services and facilities provided by it.
 Conclusion
1. Most of the insured persons in factories and establishments are not fully aware of the ESI benefits.
Compared to the insured persons, the employers are better informed about the ESI benefits. The Corporation
is not keen on giving adequate information on the ESI Scheme to the insured persons and employers. The
insured persons are not satisfied with the measures taken by the Corporation for providing information on
the ESI Scheme.
2. All the insured persons do not prefer ESI dispensaries for the treatment. Lack of doctors, lack of medicines
and other facilities for treatment and lack of confidence are the factors preventing them from taking
treatment from ESI dispensaries. The insured persons who are taking treatment from ESI dispensaries are
not satisfied with the various services/facilities provided in ESI dispensaries for treatment.
3. All the insured persons referred to ESI hospitals are not taking further treatments from ESI hospitals. Lack
of doctors, lack of medicines and other facilities for treatment and travel - difficulties prevent some insured
persons from taking further treatments from ESI hospitals. The insured persons who are taking further
treatment from ESI hospitals are not satisfied with the various services/facilities provided in ESI hospitals
for treatment. The Corporation has also to do much to improve the quality of service and win the confidence
of the insured persons in the medical care provided through ESI hospitals. The poor response of the insured
persons towards the Medical Benefit Scheme of the Corporation gives a clear picture of the quality of
medical care provided through ESI dispensaries and hospitals.

Recommendations
Based on the findings, the following proposals are advanced so as to make the functioning of the Employees’
State Insurance Corporation more effective:
1. Awareness of the ESI scheme-
 It is observed that most are not aware about the ESI scheme. So corporation should made
proper efforts to increase the level of awareness among the insured persons and employers
about the ESI scheme. Corporation should publish its magazines and publications in different
languages.
2. Improve medical facilities-
The study shows that medical facilities given by ESIC are not up to the mark. Most of the
insured people are still preferring government hospitals. They should do reimbursement if
possible.
3. Simplify the formalities-
ESIC should simplify the formalities for claiming the cash benefits so that insured person can
easily avail the benefits.
4. Financial help from Central Government
It is found that main contribution to the ESI fund is from employer and the insured person
except State government who meet 1/8 of the share of medical expenses. The corporation can
seek help from the Central Government also.

Bibliography
Reports
Employees’ State Insurance Corporation, Report of the Committee on Perspective Planning, ESIC, Delhi, 1972
Employees’ State Insurance Corporation, Annual Report (1994-95 to 200304), ESIC, New Delhi
Employees’ State Insurance Corporation, Employers Guide, ESIC, New Delhi, 2001.
Employees’ State Insurance Corporation, ESI Scheme of India Citizens Charter, ESIC, New Delhi, 1997.
Employees’ State Insurance Corporation, ESI Scheme of India Data and Progression, ESIC, New Delhi, 1997.
Employees’ State Insurance Corporation, ESI Scheme of India Employees Guide, ESIC, New Delhi, 2002
Employees’ State Insurance Corporation, Financial Estimates and Performance Budget (1994-95 to 2003-04),
ESIC, New Delhi
Employees’ State Insurance Corporation, Know Your Scheme Employees Guide, ESIC, New Delhi, 2002
Government of India, Report of the Employees’ State Insurance Scheme Review Committee, Manager of
Publication, Delhi, 1966

Articles
Balaraman, G. ‘‘ESI Scheme a waste, fear junior executives’’, The Indian Express, Vol.128, October 13, 1996.
Bhatla, P.C.‘‘Perspective Planning-ESIS’’, Report of the Committee on Perspective Planning, ESIC, Delhi,
1972
Chowdary, M.V.S. ‘‘ESI Scheme-Views on the Terms of Reference of the Committee on Perspective
Planning’’, Report of the Committee on Perspective Planning, ESIC, Delhi, 1972.
Kamath, P.B. ‘‘ESI Scheme-Views on the Terms of Reference of the Committee on Perspective Planning’’,
Report of the Committee on Perspective Planning, ESIC, Delhi, 1972
Menon, P.K.G. ‘‘ESI Scheme a waste, fear junior executives’’, The Indian Express, Vol.128, October 13,
1996.
Patel, A.J. ‘‘ESI Scheme-Views on the Terms of Reference of the Committee on Perspective Planning’’Report
of the Committee on Perspective Planning, ESIC, Delhi, 1972.