When one talks of social security for the unorganised sector one faces two definitional problems . What is social security and what is unorganized sector?

Definition of Social Security
There is no commonly accepted definition of social security. To begin with it was called social insurance . Later the term social security came into vogue . The term currently in fashion is social protection. According to the ILO the term social protection encompasses a framework "which provides guaranteed basic social support for the citizens rather than on their rights." It includes all sorts of statutory or non statutory schemes, formal or informal , provided that the contributions to these schemes are not wholly determined by market forces. These schemes may feature, for example, group solidarity, or an employer subsidy or perhaps a subsidy from the Government It seems to me that in this sense the term social protection is nothing but social security in the broadest sense. I therefore prefer to use that expression in this paper.

Definition of Unorganized Sector

The Second National Commission on Labour has stated that the unroganised sector is too vast to remain within the confines of a conceptual definition and that it eludes definition . Its main features can be identified and the sectors and processes where unorganized labour is used can be listed though not exhaustively . The Commission has pointed out that apprentices, casual and contract workers, home based artisans, a section of self employed persons involved in jobs such as vending, rag picking, rickshaw pulling, agricultural workers, migrant labour and those who perform manual and helper jobs come under this sector as well as those who depend on natural resources that are open or common property.

The Commission has also pointed out that the official records have defined unorganized sector as residual of the organized sector which consists of establishments employing 10 or more persons and has expressed the view that such a definition is not dependable for the reason that it gives rise to problems of deriving the estimate of the numbers in the sector. (Elsewhere the Commission has expressed the view that the safest approach, in the context of coverage of labour laws , would be to define the organized sector as consisting of establishments which have a minimum number of employees- the Study Group on Labour Laws had recommend an employment limit of 20 )

The Union Government has defined "unorganized sector" in the draft Unorganised Sector Workers Bill, 2003, to mean "the sector in which the Scheduled occupations /activities are undertaken " It has listed 122 employments in the Schedule which according to the definition constitute the unorganised labour In other words workers in the unorganised sector are to be identified with the employments in which they are employed. This definition is also not free from ambiguity in so far as an employment may straddle across both organized sector as defined for coverage under labour laws and the unorganized sector. For instance in the beedi industry there are several establishments employing twenty or more persons and therefore are covered under the Employees Provident Funds Act as well as the Employees State Insurance Act., thus forming part of the within the organized sector.

The Second National Commission on Labour has however stated that all workers who are not covered under the social security laws may be considered as part of the unorganized sector This definition appears to be best suited for purposes of this paper . and the theme of the paper has been developed accordingly .

Approach to the Sector

There may be two approaches to social security for the unorganized sector. It may be employment oriented or community oriented. . In the former case the social security programmes would be work related . In the latter case it would be citizenship based. or residence based. Or it may be a combination of both .

The International Labour organization faced with a low level of coverage of statutory systems , has developed a new strategy for improving and extending social security coverage. This consists of three forms of action:
· extension based on classical social security mechanism; social insurance, universal benefits and systems of social assistance programmes
· the promotion of and support for the development of decentralised systems deriving from local initiatives, in particular micro insurance ;
· the design of linkages and bridges between decentralized systems and other forms of social protection and public initiatives.

The ILO had sent a team of experts to India a few years ago to study the question of Social Protection of the Unorganized Sector. The study was sponsored by the UNDP
The team came to the following policy conclusions:

" In India, not more than ten percent of the working population and their dependants are covered by formal sector social insurance, and this coverage is mainly in the area of pensions and healthcare. Extension and reform of the social insurance system in the organized sector could reach about another 5 percent of the working population; i.e., most so far uncovered regular workers and some casual wage workers in the unorganised sector. At the other end of the income scale are the 30 percent of poor households who can probably only be helped by tax financed social assistance . In between these two groups are the bulk of the working population ( about 60 percent ) above the poverty line but not eligible or not interested in formal social insurance. - who have some contributory power and are interested to contribute to social insurance programmes that are tailored to their needs..

The first challenge of a comprehensive social security policy is to reach the majority of the aforementioned working population, with social insurance schemes specially designed for them, that are effective in protecting against poverty , while at the same time promoting productivity and employment. Workers are willing to contribute to special insurance if they feel that they get value for money, if the benefits correspond to their priority needs and if the system that administers the benefits is trustworthy

The second challenge is the promotion of cost effective social assistance aimed at the 30 percent of households that live in poverty. ….

The third challenge is the reform and extension of social insurance schemes in the organized sector to larger groups of regular and casual workers

To meet the first challenge the team recommended
(i) extension of health insurance schemes both for raising additional finances and for enhancing their quality
(ii) extension of the number of life insurance benefits provided through the LIC aiming at a higher take up of the benefit.
(iii) extension of the modality of welfare funds ; and
(iv) introduction of area based schemes

To meet the second challenge the team emphasised the main implementation issues , particularly the determination of the criteria for eligibility

To meet the third challenge the team recommended
(i) removal of the restrictions on coverage relating to the industries and employments to be covered and the number of persons employed in a coverable establishment;
(ii) improvement in the administration of medical benefit under the ESI scheme;
(iii) improvement in the quality of administration by training the social security administrators and employers of small enterprises and
(iv) introduction of a unique social security number to each person covered under the schemes

Extension of existing social security laws

There are already several recommendations for extension of the ESI Scheme and the Schemes framed under the EPF Act by removal or relaxation of the existing restrictions. The Second National Commission on Labour has made the following recommendations for extension of the application of the existing social security laws:

General
Wage and employment threshold should be uniform. There should be a provision for raising the wage ceiling and its eventual removal . The employment threshold wherever it exists should be lowered and eventually removed

WC Act
· The term 'worker' may be replaced by the term 'employee' so as to make the WC Act applicable to all categories of employees
· The Clauses in the Schedule to the WC Act which restrict the coverage wherever thy exist, may be removed
· The WC Act should be converted into a social insurance scheme from being employers liability scheme

Maternity Benefit Act

The provisions of the Maternity Benefit Act should be made applicable to all classes of women workers and those classes of women workers who are now not covered under the Act may be covered.

ESI :
· Employment injury and maternity benefits may be delinked from medical benefits and the ESI scheme may be extended throughout the country for purposes of those benefits without waiting for creation of necessary facilities for extension of the medical benefit . Alternatively, separate social insurance schemes may be introduced for those benefits .

· When the constraints on extension of the ESI Scheem are removed , there would be no justification for retaining the other restrictions on the application of the Act. If necessary there may be a ceiling on wages fro purposes of contributions and benefits and not for coverage.
EPF
· The EPF Act may be made applicable to all classes of establishments subject to such exceptions as may be necessary for specified reasons
· The employment threshold should be brought down immediately from 20 to 10 , then to five within the next three to five years and finally to one

Establishment of welfare funds
Welfare funds represent one of the models developed in India for providing social security to the workers in the unorganized sector model . The Union Government has already established welfare funds for mine workers, beedi workers and cine workers. The Government of India have also enacted a law for building and construction workers which requires the establishment of one or more welfare funds for building and construction workers. The Tenth Five Year plan envisages the establishment of welfare funds for certain other classes of workers such as fish processing workers and salt workers. The Study Group on Social Security of the National Commission on Labour had recommended that a welfare fund might be set up for each of the major employments with large number of person employed therein such as agriculture, beedi building and construction industry, etc. and that there might be a common welfare fund for all the remaining workers.

There are different types of welfare funds in the country. They differ in their functions and in the ways they are financed ..

Some of the welfare funds such as those relating to head load workers have undertaken to regulate the employment and the conditions of service of the workers in addition to providing them welfare benefits while others are confined to providing welfare benefits only The Study Group on Social Security of the NCL has expressed the view that welfare funds are more successful where they have the power to regulate employment and conditions of service and has therefore suggested that the Mathadi Board model should be extended to head load workers and security guards in all States and also to beedi workers, fish processing workers and salt workers.

As regards financing of welfare funds, the Study Group on Social Security of the NCL had stated as follows:

" The welfare funds should be contributory but the contributions that workers could make to such funds would be small and would not by themselves without a matching contributions by either the employers or the government be adequate to provide them meaningful social security. The employers would therefore have to make more significant contribution to the welfare funds . But it would not be easy to collect contributions from the employers except where they are required to obtain a permit or a license or where they are required compulsorily to register themselves.. In other cases collection of contributions would require an effective administrative machinery which might not be cost effective.

" ….the only alternative is for the Government to provide the supplementary financé to the funds by levying a tax in the form of a cess or surcharge at a rate which would yield sufficient revenue "

Recommendations of the ILO concerning welfare funds
The team of the ILO which studied Social Protection of Unorganised Sector in India has made the following recommendations concerning Welfare funds:

"Kerala is the state that invented welfare funds, of which it has 35 in operation- for workers in specified occupations and sectors. It is recommended to define an umbrella type of legislation with a standard set of basic operating policies and procedures and a standard set of benefits for all workers. For achieving greater integration between the various funds the following conditions need to be fulfilled:
· the definition of uniform benefits and contribution rates;
· innovation in the investment of funds;
· integrating the various administrations currently operating the 35 welfare funds.

Welfare funds operated by th Central or State governments are appropriate in industries and activities where workers are geographically concentrated, and welfare benefits for them can be financed through a cess or a surcharge relatable to the manufacture or sale of their output. There is scope for the extension of this modality."

The Unorganised Sector Workers Bill 2003
One of the important recommendations of the Second National Commission on Labour was that an umbrella type of law should be enacted for the unorganized sector "which would guarantee a minimum of protection and welfare to all workers in the unorganized sector and would leave it open to the government to bring in special laws for different employments or sub-sectors if experience indicates the need for it "

Having regard to this recommendation the Union Government has drawn up a Bill called the Unorganised Sector Workers Bill 2003, for regulating the employment and conditions of service including welfare of workers in the unorganized sector . This Bill has been discussed in several seminars and workshops and has been amended several times Recently it was reported in the newspapers that the draft bill which was cleared by the Group of Ministers ( Later it was also reported that the cabinet had asked the Union Labour Minister to revise the Bill. The specific comments of the Cabinet on the Bill have not been reported.)

The Bill provides for the establishment of one or more welfare funds in each state. Considering the number of employments in the Schedule to the Act it is moot question whether it will be feasible to established welfare fund for each employment It may therefore be necessary to group the employments so as to have fewer number of welfare funds. Even so it would appear that there will be numerous welfare funds in the country and administration of such a large number of funds will not be easy .

The Study Group on Social Security of the NCL had therefore recommended that while a separate welfare fund might be established for each of the major employments employing large number of workers the remaining workers representing the bulk of the unorganized sector might be covered under a common welfare fund on area basis instead of on employment basis

Area based schemes

The ILO in its Report on Social Protection for the unorganized sector has recommended that in order to unversalise access to social protection to the self employed and workers in the unorganized and informal sectors a reasonable alternative to the various occupation based schemes currently in vogue would be to design a scheme on area basis "which would move away from the vertically organized employment schemes towards a person centred approach with the aim of covering all workers within a compact geographical area.'

The idea of area based insurance schemes seems to be much akin to the Beveridge Plan recommended by Lord Beveridge in the UK in 1942. The main feature of the Plan was that it was applicable to the entire population

The National Commission on Labour has observed that such schemes are eminently suitable for application to the workers in the unorganized sector who are too numerous to be covered under occupation based schemes It has recommended that area based welfare funds or insurance schemes should be tried out on experimental basis in some States before extending them to other States.

It is interesting to note that the Government of Madhya Pradesh has adopted this technique in the recently passed Unorganised Sector workers Welfare Bill which provided for the establishment of two welfare funds on area basis one for rural areas to be called Madhya Pradesh Rural Unorganised Workers Welfare Fund and the other for urban areas. To be called Madhya Pradesh Urban Unorganised Workers Welfare Fund .

Subsidised Insurance Schemes

One of the models for providing a measure of social security for workers in the unorganised sector is insurance. The Government of India as well as several State Governments have launched a variety of schemes for the benefit of the weaker sections of the people through the Life Insurance Corporation of India and the General Insurance Corporation of India.

The Government of India had earlier launched the following schemes through the L.I.C.
1. Landless Agricultural Labour Group Insurance Scheme'
2. Group Insurance Scheme for the beneficiaries of the IRDP.
3. Group Insurance Scheme for the Weaker sections.
4. Rural Group Insurance Scheme.
5 . Jeevan Suraksha.

Janashree Bima Yojana
These schemes have since been replaced by a new Scheme called Jana Shree Bima Yojana. Brief particulars of this Scheme are given in annexure I

:It is basically a subsidized insurance scheme. The premium payable for coverage under the scheme is Rs.200 of which Rs.100 is payable by the insured person and the balance is paid out of a social Security Fund maintained by the LIC It has become a popular scheme and large number of workers have been covered under the Scheme . Some of the major groups who have been covered under the scheme are also mentioned in the annexure

Krishi shramik Samajik SurakshaYojana 2001

The Government of India have also introduced another insurance scheme for the benefit of agricultural workers called Krishi Shramik Samajik Suraksha Yojana 2001 which was previous called Khetihar Mazdoor Bima Yojana. The introduction of this Scheme was announced on 18th of May 2001 at the end of the inaugural session of the 37th Indian Labor Conference . and it is reported to have been actually launched with effect from July 1, 2001 To begin with the scheme was to be implemented in clusters of 5 to 6 villages each in 100 carefully chosen districts. It is understood to have been introduced in fifty chosen districts to begin with. Brief particulars of the Scheme are given in annexure II

Universal Health Insurance Scheme
The Union Finance Minister announced the introduction of a new health insurance scheme for the poorer classes of people. It was inaugurated by the Prime Minister on the 15th of July. Brief particulars of the scheme as per announcement of the Finance Minster are as follows:

For a large majority of our less advantaged citizens, easy access to good health services is just not there. In order to correct this and offer health protection of some choice, the public sector general insurance companies have been encouraged to design a community-based universal health insurance scheme during 2003-04. under this scheme, a premium equivalent to Re.1 per day (or Rs.365 per year) for an individual, Rs.1.50 per day for a familt of five, and Rs.2 per day for a family of seven, will entitle eligibility to get reimbursement of medical expenses up to rs.30,000 towards hospitalization, a cover for death due to accident for Rs.25,000, and compensation due to loss of earning at the rate of Rs.5o per day up to a maximum of 15 days. To make the scheme affordable to BPL families, the Government has decided to contribute Rs.100 per year towards their annual premium. Full details of the Scheme are given in annexure .

New Pension Scheme for Central government Employees

The Government approved on 23rd August 2003 the proposal to implement the budget announcement 2003-4 relating to introducing a new restructured defined contribution pension system for new entrants to Central Government service, except to Armed Forces, in the first stage, replacing the existing system of defined benefit pension system. The new system will also be available, on a voluntary basis, to all persons, including self-employed professionals and others in the unorganized sector. However, mandatory programmes under the Employee Provident Fund Organisation (EPFO) and other special provident funds would continue to operate as per the existing system under the Employee Provident Fund and Miscellaneous Provisions Act, 1952 and other special Acts governing these funds. The basic features of the new pension scheme are given in annexure III

Varishta Pension Bima Yojana

The Union Financé Minister in his budget speech for the year 2003-04, having regard to the fact that the income of the non pensionable retirees who were banking on the interest income on their investments had been declining due to fall in the interest rates, announced a scheme to protect their income It is called the Varishta Pension Bima Yojana. This scheme which is administered by the LIC guarantees an annual return of 9% in the form of a monthly pension . under this Scheme, a pensioner or any other senior citizen above the of 55 years of age, can on payment of a lump sum amount get benefits calculated at 9 percent per annum in the form of a pension. On his death the initial amount deposited will be returned to the spouse / nominee under the policy. The minimum and maximum monthly pensions proposed were Rs.250 and Rs. 2000 per month. This monthly payment will start from the month following the payment of th lumpsum amount by the citizen. The difference between the actual yield earned by the LIC , on the funds invested under the scheme, and the assured return of 9% will be reimbursed to the LIC annually by the Government. The details of the Scheem are given in annexure V

Insurance Scheme for Handloom Weavers

The new Insurance Scheme for handloom weavers to be implemented through United India Insurance co. Ltd. was introduced by the Government of India in the year 1997-98. An annual premium of Rs.120 payable under the scheme will be shared between the Central Government State Government and handloom weavers in the ratio of 60:40: 20. The amount of Rs.60 per weaver ( Rs.40 towards State share and Rs.20 as weaver's contribution) is to be deposited with the local branch of the United India Insurance co. Ltd. for each of the weavers to be covered . The Central government contribution of Rs.60 per weaver will be deposited immediately thereafter with the United India under intimation to the State Government

The insurance policy will be operative on a year to year basis. The policy will be issued in the name of the handloom weavers on receipt of the premium.

Benefits /Insurance package

Objects covered Risk covered Sum assured
Rs
Dwelling Loss of damage due to 10,000
fire lightning, flood,
inundation cyclone,
storm etc.
Life and limbs Death only 1,00,000

Loss of use of two limbs 1,00,000
or two eyes; or one limb
and one eye

Loss of one limb or one eye 50,000

Permanent Total disablement 1,00,000
From injuries other
than named above

Hospitalisation Hospitalisation including 2,000
Reimbursement of expenses
incurred upto specified limits
for treatment of injury or
illness

Eye Testing Cost of spectacles and testing 190
Eyes upto Rs.150+Rs.40

Maternity Benefit Reimbursement submit to limit 750

State Schemes
Gujarat
In some cases State Governments concerned are sharing the premium payable by the insured persons.

Gujarat Government has insured
(i) about 38000 anganwadi workers and an equal number of helpers under the Jana Shree Bima Yojana for which the premium is paid as follows:
Social Security Fund of the LIC Rs.100
State government Rs.50
The worker/helper Rs.50

(ii) 74.82 lakh unorganized workers in the State in the age group of 14-70 under the Group Insurance Scheme of the Oriental Insurance Company Under the scheme, the workers are insured for a sum of Rs.20,000 in the event of death by accident and Rs.10,000 in case of major disability . A sum of Rs.242.17 lakh has been provided for payment of premium for the year 2003-04

(iii) 89 lakh students of primary schools and 31 lakh students of secondary and higher secondary schools for Rs.25000 and Rs.50000 each respectively round the clock at a cost of Rs.72 lakhs under a scheme called Vidya Deep A sum of Rs.343 lakh has been provided for the entire plan period 2002-07

(iv) 1082 journalists for a sum of Rs.50000 each under a Group Insurance Scheme for which a provision of Rs.5 lakh has been made in the budget.

Delhi
The Delhi Government has decided to provide insurance cover to all those below the poverty line (BPL) in the age group of 18-60 This was decided at a cabinet meeting recently. The Scheme will benefit about 400,000 BPL families. An expenditure of Rs.2 crore will be incurred in paying the premium at the rate of Rs.50 per person

The LIC will receive applications processed and forwarded by the DSFDC along with th premium of Rs.100 ( Rs.50 from the beneficiary and Rs.50 from the Government of Delhi )

Under the Scheme in the event of death of the insured person due to natural causes, the nominee will get Rs.20,000 , incase of death or disability due to accident, he /she will get Rs.50,000. In the event of loss of both eyes or two limbs Rs50,000; will be paid and in the case of loss of one eye and one limb Rs.25000 will be paid

The beneficiaries of the scheme will also be covered under the Shiksha Sahyog Yojana and get a benefit of Rs300 per child per quarter with a ceiling of two children

The Delhi State SC/ST/OBC /minorities and Physically Handicapped Financial Development Corporation has been designated as the nodal agency for the scheme and the Social Welfare Department will place Rs1 crire at the disposal fo DSFDC for the current year

Other States such as Andhra Pradesh and Karnataka have insured many other classes of workers under the Janshree Bima Yojana. Brief particulars of some of these schemes are given in annexure II

Group Insurance Schemes of the LIC
Life Insurance Corporation of India has introduced a system of group insurance schemes to provide inexpensive life insurance cover to weaker sections of the society. There is no medical examination for the insurance cover and insurance is effected through cooperative societies trade associations or other representative bodies of occupational groups. The master policy is issued to the society or association which assumes responsibility for collecting the premium and settling the claims. In some cases the premium payable by the insured persons is subsidized partly or wholly by the Central Government, State government, the nodal agency or the employer concerned. The group insurance scheme for Landless Agricultural Labourers and the group insurance scheme for IRDP beneficiaries were wholly subsidised by the Central Government. The group insurance schemes for weaker sections belonging to approved occupations were partly subsidized by the LIC itself. The special scheme of Insurance cum Retirement Benefit for workers in the Unorganised Sector in Tamil Nadu was subsidised by the State government. The Handloom Workers Group Insurance Scheme in Gujarat is subsidised by the nodal agency , the Gujarat Handloom Development Corporation. The Life Insurance Scheme for employees of Shops and Establishments is subsidised by the respective employers. There are many other group insurance schemes which are not subsidised.
The group insurance schemes provide insurance cover for a period of one year at a time. The number of schemes and the number of persons who have joined them vary from year to year.
Introduction of a group insurance scheme presupposes the existence or formation of a group on occupation or other basis. The various types of groups in respect of which group insurance schemes have been or may be introduced are:
(a) cooperative societies of persons engaged in the same or similar occupations
(b) registered associations or unions formed by persons who are engaged in the same or similar trade, skill, profession or occupation;
(c) groups of people for whom welfare organizations have been set up;
(d) low paid employees of municipal and other local bodies including universities research institutions hospitals, etc.
In rural areas there are many cooperative societies looking after the interests of their members such as cotton growers, milk producers, handloom weavers, fishermen, and such others. Registered associations and unions of workers such as railway porters, mathadi workers, hotel workers, and such others. Beedi workers, cine workers, mine workers etc.; for whom welfare funds have been set up could be formed into groups for purposes of group insurance. Sweepers and scavengers employed by a municipalities could also be constituted into separate groups for the purpose.. The foregoing classification is however not exclusive or exhaustive. In forming groups the point to be noted is that the risk factor should not vary by inclusion therein of persons exposed to different kinds of hazards so that estimation of the liability for payment of insurance benefit and the income required to meet the same may not become too difficult. The scheme seems to be ideally suited to self employed workers belonging to a particular profession, occupation or trade.
Some of the essential requirements of a group insurance scheme are as follows:
· There must be a representative organization to which the Master Policy may be issued and which will take the responsibility for administration of the scheme; for example, Director of Handlooms for the Handloom Weavers
· The persons who are to be covered should be identifiable and the representative organisation should maintain an up to date register of members which should normally be fool proof. A registered association or union with clearly defined rules for entry and exit of members and which maintains a list of members will be ideally suited for this purpose.
The organizations representing the members should be responsible for collection of the premia from the insured persons and to pay the same to the insurance company .
Where there is a tripartite body to regulate employment of a class of workers such as the Dock Labour Board or the Method Workers Board it can perform this function easily

The insurance corporation would require data about the age and other particulars of the insured persons to make an actuarial assessment of the liabilities and the contribution to be collected. The representative organisations would have to furnish the data. Where the target group is very large and such data are not available or are not maintained it would be difficult for the insurance corporation to make proper assessment and the rates of contribution and benefits would have to be determined ad hoc and adjusted on the basis of experience.

Micro Insurance
Various groups of self employed workers and workers in the informal economy have over the past few years set up their own social protections systems These consist in pooling resources and risks for members of the group. They are generally based on the principle of insurance and most concern access to healthcare . They are described in general terms as micro insurance schemes by reference not to the scale of the system but to its capacity to handle very small flows of income and expenditure . World wide such mechanisms are still relatively few in number but they are growing rapidly

In India the ILO , through its STEP programme is promoting the development of micro insurance schemes. It has prepared a compendium of micro insurance schemes and is helping the formation of more such schemes

The Ninth Five Year Plan also has envisaged that the design of future social security system in the country should be location specific and largely self financing The Tenth Five Year plan also seeks to encourage the extension of coverage of social security measures for the unorganized workers by "setting up of the cooperatives, self help groups, mutual benefits associations, managed and financed by the occupational groups /workers and voluntary health insurance and pension schemes " It does not appear that either the Central or the State governments have taken any specific action in pursuance of these recommendations of the Planning Commission but it is clear that the future course of action lies in this direction

Public -Private Partnership in Social Protection

In India the entire system of social development , including social protection generally and social security in particular is based on the principle of public private partnership . The current trend appears to be to expand such partnership. The Prime Minister in his address to the National Development Council at its last meeting held in December 2002 sought the endorsement of the Council to the PPP model for development in all sectors of the economy

"We have to forge public-private partnerships in the widest possible range of activities in both physical and social infrastructure to leverage private sector resources and skill for development……I would like the NDC [National Development Council] at this meeting to endorse the norm that once PPP model contracts are validated, they should be the standard modality for financing projects and schemes in each of these sectors."

--Atal Bihari Vajpayee, the Prime Minister of India in its inaugural address to National Development Council on December 21, 2002.

The Public distribution system through which provided food security to the people is based on partnership among the Central Government and State Governments on the one hand and private agencies who operate the fair price shops on the other.

The self employment schemes through which employment security is sought to be provided is based on the principle of social mobilization through self help groups .. The Swarnajayanti Gram Swarozgar Yojana focuses on organization of the poor at grassroots level and state assistance for promotion of self employment is given to such groups .
Urban employment programme and women's employment programmes are also based on the same principle.

In the field of health, peoples' committees are being formed for management of public hospitals. The Rogi Kalyan Samitis appointed by the Government of MP have been acclaimed as representing the best practices in public administration . similar committees are being appointed in other States as well,.e.g. Karnataka has appointed Arogya Rakshana Samitis for management of government hospitals in that State.

The Government of Karnataka has handed over the Super Speciality government hospital at Raichur to the Apollo Group for management

The Governments of Karnataka has also decided to entrust the management of Primary Health Centres to private medical colleges and NGOs The government of Gujarat had also earlier handed over the management of primary health centers ina district to SEWA-Rural. The arrangement has since been discontinued but perhaps it is beign tried in other districts with other NGOs.

In the area of pensions also partnership between public authorities and private agencies appears to be the current trend .The new pension scheme for Central government employees which is open to the 300 million workers in the unorganized sector
envisages management of pension funds by fund managers in the private sector.
This trend is ;likely to be accelerated in the future.

Benefits

The National Commission on Labour has stated at one place that certain provisions like maternity benefit , child care, workmen's compensation, medical benefits and other elements of social security and safety should be applicable to all workers. irrespective of the size of the establishment or nature of activity

At another place the Commission has recommended that social security measures for the unorganized sector should include health care, maternity and early child care, provident fund benefits, family benefits, amenities including housing, drinking water, sanitation, etc. compensation for employment injury, retirement and post retirement benefits , cover in cases of loss of earning or the capacity to earn , schemes for the upgradation of skills, education of workers , elimination of child labour , forced labour and unfair labour relations and practices.

The ILO Convention concerning minimum standards of social security requires provision to be made for nine types of benefits which are known as the nine branches of social security . Of these, the Unorganised Sector Workers Bill 2003 provides for the following social security benefits
Medical care
Sickness Benefit
Employment Injury Benefit
Invalidity benefit
Maternity benefit
Oldage Benefit including pension
Family Benefit
Survivors' Benefit

The list excludes unemployment benefit which is one of the important benefits in these days of large scale retrenchment taking place in the wake of liberalization and globalisation of the economy

The Union Labour Minister is reported to have stated that the Unorganised Sector workers Bill which was cleared by the Group of Ministers provides for (i) a medical cover up to Rs.30,000 for each worker and five members of his family through the Universal Health Insurance Scheme . when he falls ill and that (ii) . each worker will have a life insurance cover of Rs.1lakh and (iii) that he will get Rs500 per month a pension after the age of 60.

Financing

For all this a worker below he age of 35 will pay a Rs.2 per day to become a member , his employer can also volunteer to participate in the Scheme by contributing Rs.200 per employee per month for which he will get income tax rebate.. A worker who is above the age of 35 the rates of contribution will be slightly high. In the case of self employed persons the employers' share will be paid by the Government

The Scheme is expected to cost Rs.1000 crores in the next 10 years for covering about 5 million workers

Asked about the funding of the scheme the Union Minister of Labour is reported to have said that the contributions from the workers employers and the government might be sufficient. He however indicated that that an additional surcharge of 40 paise on petrol could be levied to generate additional funds for the scheme

Administration
The scheme will be implemented through the Employees Provident Fund Organization and the Employees State Insurance Corporation who will be required to reduce their cost of administration

Annexure 1

JANSHREE BIMA YOJANA

The Central Government in the year 1988-89 set up a SOCIAL SECURITY FUND of Rs.100 Crores and LIC of India was entrusted with the responsibility of managing this Fund. The purpose of this fund is to finance the Life Insurance Group Schemes for weaker and vulnerable sections of the society.

This fund has provided a solid foundation for extending group insurance cover to the toiling sections of our society in a big way.

Janashree Bima Yojana was inaugurated on 10th August 2000 by the honorable Prime Minister of India.

The salient features of the scheme are as under :

Object :
The object of this scheme is to provide life insurance protection to the rural and urban poor persons below poverty line and marginally above poverty line.

Eligibility:
(i) Persons between age 18 years and 60 years.
(ii) In addition to persons under BPL, even persons marginally above poverty line may be covered provided they belong to identified vocational groups.
(iii) Persons living in one area even if they belong to identified vocation is established like taxi drivers and auto rikshaw drivers can be grouped for the scheme, if nodal agency is one.
(iv) The group will be identified and notified by LIC in consultation with State Government/ Nodal Agency.
(v) Minimum Membership should be 25 under both, Rural Poor and Urban Poor.

Benefits
(A) In the event of death of the members of Sum Assured of Rs.20,000 will become payable, to the nominee.
(B) Accident Benefit : In the event of death by accident or Partial/Total Permanent Disability due to accident the following benefit shall be payable to the nominee.

(i) On death due to accident Rs.50,000
(ii) Permanent total disability due to Rs.50,000
accident
(iii) Loss of 2 eyes or 2 limbs OR Rs.50,000
one eye and one limb in an accident
(iv) Loss of one eye or one limb in an Rs.25,000
accident

Premium:

q Initially, Rs.200/- per member to be shared as under.
q 50% of the premium to be paid by members or Nodal Agency or State Government at the time of submitting proposal and subsequently on each annual renewal date.
The balance 50% of the premium will be borne by Social Security Fund.
q Experience Rating Adjustment will be allowed after 3 years on the basis of claim experience, if the group is of minimum 2000 members. even if the group is small and if the claim experience is adverse, we may review the rates.
q Nodal Agency shall mean the Panchayats, NGOs, Self Help Groups and any other institutionalized arrangements.
q The Nodal Agency will act for and on behalf of the insured members in all matters relating to the Scheme.

Claim Procedure :

The beneficiary of the deceased member will be required to furnish the original death certificate to the Nodal Agency who will arrange to forward the same along with the claim papers to LIC i.e. the Branch which has originally finalized the scheme. LIC will settle the claims by sending A/C Payee Cheque directly to the beneficiary. In case of accidental claim police inquiry report will also be required to be submitted. The detailed procedure will be mainly on the lines of the procedure of Social Security Group Schemes.

Vocational /occupational groups :

Existing Groups -
q The existing 24 occupational groups will continue in the same form for renewal of the Schemes. If the scheme is not renewed on the Annual Renewal Date and consequently the scheme lapses, the members of such schemes will necessarily opt for the new scheme.
q The existing 24 groups are :
Beedi Workers, Brick Kiln Workers, Carpenters, Cobblers, Fishermen, Hamals,
Handicraft Artisans, Handloom Weavers, Handloom and Khadi Weavers, Lady
Tailors, Leather and Tannery Workers, Papad Workers attached to 'SWEA',
Physically Handicapped - Self Employed Persons, Primary Milk Producers,.
Rickshaw Pullers/Auto Drivers, Safai Karmacharis, Salt Growers, Tendu Lead
Collectors, Scheme for the Urban Poor, Forest Workers, Sericulture, Toddy Tappers,
Power-loom Workers, Hilly Area Women.
q The existing Scheme at the time of renewal will have option to switch over to new scheme on revised terms.

New Groups -

q The vocations will be, for example, on the basis of groups like workers in-
(i) food stuffs like khandsari
(ii) textile
(iii) manufacture of wood products
(iv) manufacture of paper products
(v) manufacture of leather products
(vi) printing
(vii) rubber and coal products
(viii) chemical products like candle manufacture
(ix) mineral products like earthern toys manufacture
(x) other related cottage industries to be identified by nodal agencies and also other groups as identified by the Nodal Agency and approved by LIC

Approval of groups :

The vocational groups identified by the Nodal Agencies will be approved by LIC.

Scheme benefits :

Original/ New Janshree
Previous SSGS Yojana

(a) Premium Total Rs.50/- p.a. Total Rs.200/- p.a.
per member (50% per member (50%
borne by SSF) borne by SSF)

(b) SA-Cover in event of death
under normal circumstances 5,000/- 20,000/-

(c) Death due to accident 25,000/- 50,000/-

(d) Permanent total disabilities
due to accident 25,000/- 50,000/-

(e) Loss of 2 eyes or 2 limbs or
1 eye and 1 limb in an
accident 25,000/- 50,000/-

(f) Loss of 1 eye or 1 limb in an
Accident 12,500/- 25,000/-

Note :

All New Social Security Schemes should only be entertained under Janshree Bima Yojana.

The existing SSG Schemes at the time of renewal will have option to switch over to new scheme of Janshree on revised term or renewel on existing term.

If the scheme is not renewed on the ARD and consequently the Scheme lapses, the members of such schemes will necessarily opt for the new scheme.

Shiksha Sahayog Yojana

Another scheme called Shiksha Sahayog Yojana has been introduced under which an allowance of Rs.100 per month is paid to the children of parents living below the poverty line t and studying in 9th to 12th Standard to meet their educational expenses so that the needy students are not deprived of the opportunity to continue their education for want of funds . This will be available to subscribers of the Janashree Bima Yojana.

Khadi Karigar Janashree Bima Yojana

The KVIC and the LIC introduced a new group insurance scheme called Khadi Karigar Janashree Bima Yojana. Brief particulars of the Scheme are given below:

Eligibility
Persons aged between 18 years and 59 years
Self employed Khadi artisans associated with Khadi institutions which are affiliated to
KVIC/state and UT Khadi Boards

Benefits

Natural death Rs.20,000
Death due to accidents Rs.50,000
Permanent total disability Rs.50,000
(Loss of two eyes, two limbs , one eye
and one limb , due to accident)
Permanent partial disability Rs.25000
Educational benefit Rs.1200 per child per annum
( Add on facility without any
additional premium . Educational
expenses are met by way of scholarship
upto two children of artisans studying
in Class IX to XII)

Premium

Subscription by artisan Rs.25
Contribution by Khadi institution Rs.50
Contribution by KVIC Rs.25
Contribution from Social Security Fund Rs.100

Social security Group Insurance Scheme for women in selected remote/rural /hilly areas
The Scheme provides Life Insurance protection to Bread-Winner Women living below poverty line in Remote Rural Hilly Areas i.e. 47 Districts in 7 State of U.P., M.P., Meghalaya, H.P., Assam, Tamilnadu and Orissa in the first phase.

Women living below poverty line should be aged more than 18 years but less than 60 years in the above stated areas.

Introduction of the scheme and administration including settlement of claims shall be the rough the Nodal Agency. The Nodal Agency in the said case shall be the Department of Social Welfare of respective State Governments.

Note : In the Northern Zone, all districts of the State of Himachal Pradesh have been included under Shimla Division.

State Schemes

Group Insurance Scheme under Janashree Bima Yojana of the L.I.C for Rickshaw Pullers in the State of Andhra Pradesh, subsidized by the Government of A.P.
1. The Scheme:
Premium of Rs.100/- per rickshaw-puller will be paid by the Government of A.P. and another Rs.100/- per worker will be met from the Social Security Fund of Government of India. The Government of Andhra Pradesh has paid an amount of Rs.2.00 crores being the premium to the LIC to cover two lakh Richshaw-pullers in the State. Hence, no premium needs to be paid by the Rickshaw-pullers under the scheme.

2. Eligibility:-
(a) Rickshaw Pullers (Hired or Own Rickshaw) who are normally earning heir livelihood as Rickshaw Pullers.
(b) Age not less than 18 years and not more than 60 years.

3.Benefits:-
Natural Death Rs.20,000
Death due to Accident Rs.50,000
Permanent total disability Rs.50,000
Loss of two eyes or two limbs or one eye
and one limb due to accident Rs.50,000
Loss of one eye or one limb due to accident Rs.25,000

Scholarships will be provided to about 20,000 Children of Rickshaw Pullers studying 9th, 10th or Intermediate, @ Rs.300.00 per Quarter per child by the LIC. Further detailed guidelines will be issued separately.

4.Enrollement of Rickshaw Pullers as beneficiaries under the Scheme:
The enrollment of rickshaw-pullers will be conducted by the Mandal Revenue Officer, who is also nominated as the Registering Authority under this Scheme. The individual Rickshaw-puller will be enrolled as beneficiary under the Scheme, and the particulars for enrollment as beneficiary has to be completed as per the enclosed Format in APG-JBY - I. The information in the Format APG-JBY - I will be retained in the Office of the MRO.

The consolidated Membership data under the Scheme will be furnished by the MRO in the Format APG-JBY - II, and this data has to be furnished both Online and also by Floppy to the District Collector for consolidation at the District Level.

The District Collector will consolidate the Membership particulars (in Format APG-JBY-II) of the Rickshaw-pullers in the District, and furnish the same by Floppy to the Commissioner of Labour for onward transmission to the LIC Divisional Office, Hyderabad. The District Collector is also requested to put the particulars of the Rickshaw-pullers as per the Format in APG-JBY-II Online.

5. Claims in case of death:
The Rickshaw-puller covered under the Scheme is eligible for benefits in case of accidental death or natural death during the period of the Scheme for one year. The claims for death will be submitted by the MRO as per the enclosed Format in APG-JBY - III.

6. Claims for Scholarship for the children of Rickshaw Pullers studying in classes 9th, 10th and Intermediate (I & II).
The LIC is extending the benefits of the Scholarship to the children of Rickshaw-pullers studying in classes 9th, 10th and Intermediate. The applications for scholarships will be submitted by the Member beneficiary, along with the counter signature of the head of the educational institution, in Format APG-JBY-IV(1). The consolidated claims for scholarships from the LIC has to be submitted by the MRO in the Format APGJBY- IV(2).

7. Monitoring of the Scheme:
The Scheme for the Rickshaw Pullers will be monitored by the District Collector at the District Level. The MRO will function as the Registering Authority under the Scheme at the Mandal Level. The Scheme will be centrally monitored by the LIC at their Divisional Office at Hyderabad. All claims under the Scheme, i.e., death, disability and scholarships, will be forwarded by the District Collector to the Divisional Manager, LIC Divisional Office, Hyderabad, through the Commissioner of Labour.

The Commissioner of Labour will submit periodical report regarding the progress and implementation of the Scheme to the Government from time to time.

Annexure II
Khetihar Shramik Samajik Suraksha Yojana 2001

Object:
The object of the scheme is to provide life insurance protection, periodical lump sum payment, survival benefit and pension to the agricultural workers

Eligibility

(i) Persons between the age 18 and 50 years.
(ii) Persons following one or more of the following agricultural occupations in the capacity of a labourer on hire, whether paid in cash or kind, or partly in cash and partly in kind,
(a) farming,
(b) ) dairy farming
(c) ) production cultivation, growing and harvesting of any horticulture commodity,
(d)raising of livestock, bee keeping or poultry farming and
( e) any practice performed on a farm as incidental to or in conjunction with the farm operation
(iii) Minimum membership should be 20

Benefits ( while the membership is in force)

(A) Death
On death before age 60
(i) payment of the sum assured along with return of accumulated amount with interest to the nominees
(ii) Payment of an additional sum assured of Rs.30,000 in case of death due to accident along with return of accumulated amount with interest to the nominee

(B) Disability
In disability due to accident before age 60
(i) In case of total permanent disability , i.e., loss of two eyes or two limbs of loss of one eye and one limb , Rs.50000
(ii) In case of partial disability , i.e., loss of one eye or one limb Rs.25,000
(C) Survival Benefits
Lump sum survival benefits will be provided at the end of every 10th year after entry into the scheme till the member attains 60 years of age. The lump sum amount will depend upon the accumulation in his/her account. Further lump sum benefit will be paid only if the membership is in force.

(D) Pension
Pension will be apid to the meber on reaching age 60. The amount of pension will depend upon the accumulated balance in his account and he annuity rates at that time. Further , if member has paid for a minimum period of 10 years , then at least Rs.100 per month pension will be payable.

Premium

The member will pay Rs.365 per annum , payable quarterly/ half yearly/yearly. Double the amount will be paid from the Social Security Fund

Nodal Agency
Gram Panchayat will be the nodal agency , who with the help of NGO/SHG or any other agency will identify the agricultural workers, organize them into groups of minimum 20 and submit the proposals to LIC

Withdrawal before 60 years

In case of withdrawal of membership before reaching age 60 due to nonpayment of premium, only accumulated amount of his own contribution, i/e/, at the rate of Rs.25 per annum with interest shall be paid to the member/ nominee in the event of survival/death

The membership can be revivied by payment of arrears of premium with interest thereon

Claim Procedure

The beneficiary will have to submit the claim form, through the Nodal agency, o avail of the survival benefits.

The nominee of the deceased member will be required to furnish the original death certificate to the nodal agency who will forward it to the LIC (P&GS) unit along with the other claim papers In case of accidental claimFIR, Polic Inquiry Report wll also be required to be submitted.

LIC will settle the claim by sending Account Payee cheque directly to the beneficiairy

Annexure III
Universal Health Insurance Scheme
This policy will be available to groups of 100 or more persons
Benefits
Medical Reimbursement
The policy provides for reimbursement of hospitalization expenses upto Rs.10,000 to an individual /family subject to the following sublimits:

A. (i)Room, Boarding expenses upto Rs.150 per day
(ii) if admitted in ICU upto Rs.300 per day

B Surgeon, anaesthetist, consultant Upto Rs. 4,500 per
Specialist fees, nursing expenses illness. injury

C Anaesthesia, blood , oxygen, OT upto Rs.4,500 per illness
Charges, medicines, diagnostic injury
Material, & x-ray, dialysis, radiotherapy
Chemotherapy, cost of pace maker
Artificial limb etc
D Total expenses incurred on any one illness upto Rs.15,000

Personal Accident cover

Coverage for death of the earning head of the family( as named in the schedule) due to accident : Rs.25,000

Disability cover
If the earning head of the family is hospitalized due to an accident /illness a compensation of Rs. 50 per day will be paid per day of hospitalization upto am maximum of 15 days after a waiting period of 3 days

For purpose of this policy Hospital means
· Any hospital/ nursing home registered with the local authorities and under the supervision of a registered and qualified medical practitioner
· Hospital/ nursing home run by government
· Enlisted hospitals run by NGOs /trusts/selected private hospitals with fixed schedule of charges
· It should have minimum 15 beds( 10 in case of class 'C' cities having a population less than 5 lakhs) with fully equipped OT, fully qualified nursing staff round the clock and fully qualified doctor should be in charge round the clock.
· Hospitalisation should be for a minimum period of 24 hours. However, this time limit is not applied to some specific treatments and also where due to technological advancement hospitalization for 24 hours may not be required.

PREMIUM

For an individual Re. 1.00 per day Rs. 365/- per annum
For a family up to 5 Re. 1.50 per day Rs. 548/- per annum
( including the first 3 children )
For a family up to 7 Rs. 2.00 per day Rs 730/- per annum
( including the first 3 children and dependent parents)

PREMIUM SUBSIDY FOR BPL FAMILIES

For families below the poverty line the Government will provide a premium subsidy of Rs. 100/- per family

MAIN EXCLUSIONS:

· All pre-existing diseases
· All diseases contracted during the first 30 days from the commencement date of the policy provided that in the opinion of the panel doctor/s the insured person could not have known about the existence of the disease or its symptoms at the time of making the proposal AND had not taken any consultation, treatment for the disease prior to taking the insurance.
· Some of the diseases such as Cataract, benign Prostatic Hypertrophy, Hysterectomy, hernia, Hydrocele, Fistula in anus, piles, sinusitis, Congenital internal disease are not covered in the first year of the policy.
· Corrective, cosmetic or aesthetic dental surgery or treatment.
· Cost of spectacles, contact lens and hearing aid.
· Vaccination, inoculation, change of life or cosmetic treatment or surgery, HIV, AIDS, Sterility, Venereal Disease, Intentional Self-injury, use of Intoxicating drugs/Alcohol.
· Primarily diagnostic expenses not related to sickness/injury.
· Treatment for Pregnancy, Childbirth, miscarriage, Abotrion, etc.

CLAIM SETTLEMENT

Claim settlement to be done through TPAs mentioned in the schedule or by the insurance company. To be made cashless as far as possible through listed hospitals.

OTHER FEATURES

ANY ONE ILLNESS
Will be deemed to mean continuous period of illness and it includes relapse within 60
days from the date of last consultation with the hospital.

AGE LIMITATIONS

This Policy covers people between the age of 3 months and 65 years.

FAMILY

Means earning head, spouse and up to maximum of three dependent children. Dependent parents can also be included.

FLOATER BASIS

The benefit of family will operate on floater basis i.e., the total reimbursement of Rs. 30,000/- can be availed of individually or collectively by members of the family.

Annexure IV
New Pension scheme for Central Government Employees
2. The Government approved the basic features of the new pension system; and setting up of an interim pension fund regulatory and development authority (PFRDA).
3. The main features of the new pension system are given below:
· The new pension system would be based on defined contributions, which will use the existing network of bank branches and post offices etc. to collect contributions and interact with participants allowing transfer of the benefits in case of change of employment and offer a basket of pension choices.
· The system would be mandatory for new recruits to the Central Government service except the armed forces and the monthly contribution would be 10 percent of the salary and DA to be paid by the employee and matched by the Central Government. However, there will be no contribution from the Government in respect of individuals who are not Government employees. The contributions and investment returns would be deposited in a non-withdrawable pension tier I account. The existing provisions of defined benefit pension and GPF would not be available to the new recruits in the Central Government service.
· In addition to the above pension account, each individual may also have a voluntary tier-II withdrawable account at his option. This option given as GPS is proposed to be withdrawn for new recruits in Central Government service. Government will make no contribution into this account. These assets would be managed through exactly the above procedures. However, he would be free to withdraw part or all of the 'second tier' of his money any time. This withdrawable account does not constitute pension investment, and would attract no special tax treatment.
· Individuals can normally exit at or after age 60 years for tier-I of the pension system. At exit the individual would be mandatorily required to invest 40 percent of pension wealth to purchase an annuity ( from an IRDA-regulated life insurance company). In case of Government employees the annuity should provide for pension for the lifetime of the employee and his dependant parents and his spouse at the time of retirement. The individual would receive a lump-sum of the remaining pension wealth, which he would be free to utilize in any manner. Individual would have the flexibility to leave the pension system prior to age 60. However, in this case, the mandatory annuitisation would be 80% of the pension wealth
.
Architecture of the New Pension System
· It will have a central record keeping and accounting (CRA) infrastructure, several pension fund managers(PFMs) to offer three categories of schemes viz. option A, B and C.
· The participating entities(PFMs and CRA) would give out easily understood information about past performance, so that the individual would be able to make informed choices about which scheme to choose.
Regulatory Authority
· An independent pension fund regulatory and development authority (PFRDA) will regulate and develop the pension market. PFRDA will develop its own funding stream based on user charges.
· Till such time when a statutory PFRDA is established, an interim PFRDA, on the pattern of SEBI and IRDA, should be appointed by an executive order.
· The interim PFRDA is to be headed by a Chairman with a status of not less than a Secretary to the Government of India and would be appointed by the Central Government. Other members the interim body, not exceeding four in number, of whom not more than two shall serve full time, shall be selected by the Central government from amongst persons having experience and knowledge in economics, finance, legal and administrative matters with one person from each discipline.
Investment strategy
· There will be different investment choices such as option A, B and C. The option A would imply predominant investment in fixed income instruments and some investment in equity. Option B will imply greater investment in equity. Option C weill imply almost equal investment in fixed income and equity.
· Pension fund managers would be free to make investment in international markets subject to regulatory restrictions and oversight in this regard.
· It is proposed to evaluate market mechanisms (without any contingent liability) through which certain investment protection guarantees can be offered for the different schemes.
( In this connection the findings of Prof Carmelo Mesa Lago with respect to the privatized pension Schemes of Latin America reproduced elsewhere in this issue of the journal are relevant and may be seen)
Tax treatment
· Pension contributions and accumulation would be accorded taxpreference up to a certain limit, but benefits would be taxed as normal income.

Scope of the New Pension system

· The option of joining the new system would also be available to the State Governments and as and when they decide , the new system would be capable of accommodating the new participants

· Mandatory programmes under the employees provident fund organization and other special provident funds would continue to operate as per the existing system. However, individuals under these programmes could voluntarily choose to additionally participate in this scheme

Gautam Bharadwaj of Invest Indi aEconomic foundation who was coordinator of the OASIS report has explained the significance of the new scheme in the following words:
"For severl decades , pension liabilities in the form of unfounded prmises made by governments to earlier generations have been accumulating . This new system will enable the central and state governments to gradually move to a fully funded pension scheme over the enxt 35 years. Importantly, it would for the first time provide a vehicle for the over 300 million informal sector workers and others who are currently excluded from formal pension provisions, to save for their retirement in a well regulated environment. This in turn will contribute to greater oldage income security for our workforce as India enters its demographic transition

Equally significant are the core design principles adopted for the new system . This is a defined contribution system with individual retirement accounts. It will offer important choices and rights to members. A set of competing professional asset managers will mange the retirement savings of workers. The system will offer portability and lower transaction cost through centralized record keeping and administration. This is the first system of its kind in Asia and will empower India's workforce to take control of when and how they want to retire. What is noteworthy is the political commitment shown by the government. There is today a high level of awareness about the need for pension reform as also a broad based policy consensus on the way forward.

The list of specific initiatives is also encouraging.. The finance ministry is setting up the PFRDA which will supervise this new pension scheme. Many state governments are also becoming more conscious . states like Tamilnadu and Karnataka have even begun considering various policy alternatives for systemic improvements. The EPFO has recently announced several important improvements and reforms which include a reengineering of EPFOs business processes, centralized record keeping and administration and improved services for their members.

Annexure V
VARISHTA PENSION BIMA YOJANA

Government of India in the UNION Budget 2003-2004, announced the launch of 'Varishtha Pension Vima Yojana' for citizens aged 56 and above. The scheme is being launched to provide an annual return of 9%. This is a Government subsidized scheme and LIC has been given the sole privilege to operate the scheme.

Eligibility:

· Indian citizens of age 55 years and above are eligible.
· Only one person from a family can apply.
· Age proof required.
· Premium to be paid out of savings of the member and should be paid by cheque, Demand Draft or Banker's cheque payable on the branch of the Bank which is member of the Local Clearing House.

Benefits:

· Pension during the lifetime of the pensioner
· In the event of the unfortunate death of the pensioner, purchase price will be returned to the nominee
· Minimum pension Rs. 250/- per month i.e., Rs. 750/- per quarter, Rs. 1,500 per half year and Rs. 3,000 per year.
· Maximum Pension Rs. 2,000/- per month.
· Mode of Payment of penasion:- Monthly, Quarterly, Half-Yearly & Yearly.

Benefit Illustration:

An investment of Rs. 1,00,000/- will fetch a pension of Rs. 9,381/- yearly or Rs. 4,585/- half-yearly or Rs. 2,267/- quarterly or Rs. 750/- monthly. The amount of pension may vary according to the amount invested subject to the minimum and maximum ceilings prescribed.

Premium:

Only single premium is payable i.e., premium to be paid in lumpsum.

Minimum premium- Rs. 33,335/-
Maximum premium-Rs. 2,66,665/-

( See Table)

Pension Mode Purchase price for Purchase price for
minimum pension maximum pension
of Rs.250/- p.m. of Rs.200/- p.m.

Monthly 33,335/- 2,66,665/-

Quarterly 33,085/- 2,64,675/-

Half-yearly 32,715/- 2,61,710/-

Yearly 31,980/- 2,55,845/-

Annuity Rates

The annuity rates fro Rs.1000/- purchase price for different modes of annuity paymentsa are as below:

Yearly : Rs. 93.8069% p.a.

Half-yearly : Rs. 91.7045% p.a.

Quarterly : Rs.90.6767% p.a.

Monthly : Rs.90.0000% p.a.

These rates are not age specific.

Dayanand Social Security Scheme , Goa

In the year 2001 the LIC launched a scheme called Dayanand Social Security Scheme in Goa.. The project with th motto, "Freedom from Hunger 'targeted senior citizens , handicapped person, single women and widows. Around 12,200 people have been covered under the scheme so far ( September 6 2002)

The scheme offered insurance cover and protection, including pension benefits, to senior citizens , the physically handicapped and destitute women. Apart from this 24 professional categories were brought under the scheme that included toddy tappers, coconut pluckers, rickshaw , truck and taxi drivers, motor cycle pilots, fishermen, and agricultural workers. It also included self employed persons and any person who did not have adequate monetary support after retirement.

Under the Scheme Goa has agreed to pay about Rs.100 crore over five years.

Once a person is covered by the Scheme he /she can avail of pension upto about rs.500 per month. The individual would not have to wait for the pension amount to accumulate as the sate will bear the costs.