The Employees State Insurance Act, (ESI), was enacted by the government of India in 1948. The major objective of the Act was to provide certain benefits to employees in case of sickness, maternity and injury (during employment) and for providing other benefits in relation to the main objective. Instead of widening the scope of the ESI scheme – the only nationwide scheme that delivers a measure of protection against illnesses – the government it appears is tightening the noose around it. That this is being done in the name of “reforms” is a supreme irony.
India has a work force of about 54 crore people. Since most of them are in the unorganised sectors they are devoid of any social security benefits. Those in the government departments and public sector enterprises, who are covered under social security, are only about 3%. The vast majority are in the informal sector. The ESI reaches where no health insurance scheme does. But such a scheme requires a corpus or reserves in order to meet its commitments.
FEATURES: The ESI scheme provides for significant benefits to the dependents of those who die in harness or while commuting to their workplace. Dependents who lose their breadwinner are eligible to receive 90% of the average salary drawn at the time of death of the worker. In fact, there have been instances where dependent family members have received benefits even when the worker was not registered with the Employees’ State Insurance Corporation (ESIC), after the worker succumbed in a fall at their workplace. This lifetime benefit available to dependents is a feature that no commercial insurance scheme can match. Moreover, workers receive a measure of salary protection when they fall sick and are unable to report to work. Extended sickness benefit equivalent to 80% of the salary drawn by the employee would be paid during the entire duration of the paid leave, even while no contribution is being paid on his behalf. Further, the employee and his family members are entitled to medical treatment similar to an employee, without a ceiling on cost of medical treatment during the receipt of Extended Sickness Benefit.
PROPOSED REFORMS: The proposed reduction in the contribution from the present 6.5% of the salary of the employee to 5% was further reduced to 4% when the official gazette notification was issued. However, these reductions, which were carried out in the name of “reforms” were not based on any actuarial calculations, considerations or rationale. While the Ministry officials, who are divorced from any responsibilities, take the decision to reduce the rate of contribution, they have not decided as to how to provide the service to the 1.3 crore additional families in the new areas where ESI scheme was extended. In effect, the government has been collecting contributions from members who are unlikely to get any benefits in the near future. Thus, self-proclaimed subject experts and advisors to the Labour Ministry exercise authority over the ESIC without any accountability. Another “reform” proposal being contemplated in the corridors of power is an amendment to the definition of wages in the ESI Act, to bring it on par with the Employee Provident Fund scheme. Currently, the ESI Act definition of ‘wages’ includes all remuneration paid or payable to the employee, unlike the EPF Act, which includes only basic wages, dearness allowance and retaining allowance, if any. This deceptively minor change in legal terminology threatens to significantly undermine the interests of the workers, especially those at the bottom of the pyramid. It goes without saying that the challenges before the working class in Modi’s second term are much more onerous.
Fundamental principles recommend that provisions be made for liabilities arising in the future. This requires a build-up of reserves from current revenues. The task of building and maintaining ESIC’s reserves has been neglected by successive governments. As per the fundamental accounting and actuarial principles, the building of reserves is essential. The fast–tracking of “reforms” since 2014 has substantially diluted the autonomy of the ESIC. In 2014, a series of changes were made by the Board, curtailing most of the benefits under the scheme. Importantly, employee’s access to the super specialty treatment was reduced significantly. It is obvious that the only beneficiaries of the dismantling of the ESI scheme would be the private insurance companies.
The ESI scheme is different from any insurance scheme as it covers medical, retirement, sickness, disablement, dependent, maternity and confinement benefits, funeral expenses, unemployment allowance and vocational rehabilitation allowance. It covers OPD care to inpatient care to post-hospitalisation expenses. No insurance scheme gives so much coverage. The ESIC could be a guiding scheme for the government where it is directly involved in healthcare at various levels. There is no doubt that this scheme can be improved significantly so that it fulfills its mandate better. For instance, the ESIC is unable to monitor and regulate the quality of service at dispensaries run by the state government. It could also implement changes in human resource planning to ensure that officials remain accountable. It has to be clearly understood by the decision makers that productivity of a person depends on his health. Any step to dilute the health scheme will affect productivity and thus development of the nation.
(The writer is a social scientist and practicing criminal lawyer).
