Development of Social Security in India

Social security in India includes a variety of statutory insurances and social grant schemes bundled into a formerly complex and fragmented system run by the Indian government at the federal and the state level and is divided into three categories: non-contributory and tax-payer-funded, employer-funded and lastly, joint-funded (contributed by both the employer and the employee and partially contributed by the government). The system has since been universalised with the passing of The Code on Social Security, 2020. These cover most of the Indian population with adequate social protection in various situations in their lives. The Central Government of India’s social security and welfare expenditures are a substantial portion of the official budget and as well as the budgets of social security bodies, and state and local governments play roles in developing and implementing social security policies. Additional welfare measure systems are also uniquely operated by various state governments. The government uses the unique identity number (Aadhar) that every Indian possesses to distribute welfare measures in India. The comprehensive social protection system of India can be categorised as the follows: social assistance (in the form of welfare payments in cash or kind funded through taxations) and mandatory social security contributory schemes mostly related to employment. The Code on Social Security, 2020 is part of the Indian labor code that deals with employees’ social security and have provisions on retirement pension and provident fund, healthcare insurance and medical benefits, sick pay and leaves, unemployment benefits and paid parental leaves. The largest social security programs backed by The Code on Social Security, 2020 are the Employees’ Provident Fund Organisation for retirement pension, provident fund, life and disability insurance and the Employees’ State Insurance for healthcare and unemployment benefits along with sick pays. There is also the National Pension System which is increasingly gaining popularity. These are funded through social insurance contributions on the payroll. While the National Food Security Act, 2013, that assures food security to all Indians, is funded through the general taxation. With the passing of the social security code by the Indian Parliament, the fragmented social security system was universalised, resembling the social security systems of most developed countries.

The Indian Social security Schemes for organized sector have been influenced by these factors:

(i) British policy to raise labour cost in the established industries.

(ii) A policy of corporate paternalism leading to variety of benefits like promoting loyalty of employees.

(iii) In the post-independence era, the emerging of welfare state concept which has lead to a series of welfare and protective legislation based on relevant international labour standards.

(iv) Many of the social security and welfare measures become statutory obligation of employers.

(v) Due to rapid industrialization there was a need to promote the commitment to work force for industrial and urban life.

In India due to rapid industrialization a new class of Industrial proletariat was created having a rural background and with every little social and material resources. For them there was a great need of systematized help through social security agencies. The non-industrial classes were also in urgent need of social security which was due to industrialization in 19th century.

Indian social reformers, labour welfare organization and many progressive employers persuaded the govt to undertake social security measures as a protection for the workers against few of contingencies.

Indian Govt. appointed a committee of enquiry and the committee reported that steps should be taken by mill owners to alleviate the distress caused by the unemployment. It further recommended that a voluntary gratuity schemes should be introduced but unfortunately no action could be taken for its implementation.

In 1929 Government of Bombay was the first to give a proposal for enacting Maternity act. It was observed the productivity depends upon the quality of labour which further primarily depends upon its quality of labour which further primarily depends upon its quality of labour which further primarily depends upon its health, nutrition, literacy, social values and customs.

The Bombay textile Labour Enquiry observed, “that in all pursuits a high standard of efficiency can be expected only from persons who are physically fit and free from mental worries. That is only from persons who are properly trained. Properly housed, properly fed and properly clothed.”

It is understood that to neglect the labour is to neglect productivity as finally the welfare of country lies in their welfare. To build up a stable labour force with full commitment was only possible by creating a genuine welfare state of an affairs, good perception and psychological feelings for creating good moral habits.

Status of Social Security in India during Pre-Independence Period

The evaluation of social security in India can be studied broadly in two segments.

1. Pre-Independence Period
2. Post-Independence Period

There was large scale industrialization in Indian from 1850 especially in the Textile Industries. But as workers being totally unorganized no attention could be paid towards the welfare.

Pre-Independence Period and Social Security of Workers

In 1877 first labour unrest took place at “Empress Mills Nagpur” for improving their wages. In 1890 first Trade Union Bombay Mill Hands association was formed under the leadership of N.M. Lokhande.

In 1885 the first Fatal accident Act was passed. Inspite of these workers were living under very poor inhumane conditions. There were no provisions of any measures for social security before 1920.

In 1920 International Labour Organization gave a boost to labour welfare and social security schemes. In the convention of 1929 of ILO the workers social security schemes. In the convention of 1929 of ILO the workers social security was considered as of high importance. Then there came the appointment of strong recommendations on labour welfare and social security.

After the first world war, due to Indian National movement. British Government started thinking about the employees and accordingly (i) Workmen’s compensation Act, 1923 (ii) The payment of wages Act’ 1936 (iii) Minimum wages Payment Act (iv) Maternity Benefits Act were passed from time to time Mr.B.R. Ambedkar was appointed as a ‘labour member of the victory’s council” after second world war.

“The Whitley Commission” recommended that some suitable measures should be taken to restore health to the workers. On the recommendation of the commission and in the consultation with the “standing Advisory Committee of Labour and Industries” the government agreed for a contributory Medical scheme in which both employer and employee will contribute towards a common fund.

In 1937 a contributory Health Insurance scheme was formulated. At the same time , the Bombay Textile enquiry Committee also recommended the formulation of health Insurance Scheme in which the (i) employer (ii) Employee and (iii) The state Government contributed towards the fund.

In 1940 during the first Labour Minister’s conference the need for sickness Benefit fund was felt. In 1943 Indian Government appointed a commission under the chairmanship of B.R. Ambedkar and its report was submitted in 1944.

B.R. Ambedkar commission strategy recommended the upper age limit of 60 years and employment was divided into three categories- permanent, temporary and casual. The employer was required to pay contribution towards insurance schemes for all the workers, whereas only permanent and temporary workers were required to pay their contribution.

In 1947, the Industrial dispute Act was enacted with the main objective was to make provisions for the investigation and settlement of industrial disputes. Most important contribution of employee’s State insurance Act 1923.

Post–Independence period and Social Security

In 1947 India got Independence and Indian Government intensified the labour welfare and social security measures. In 1948 employees state Insurance was duly modified and that was beginning of the era of Social Insurance of Indian labour.

“In 1952 international Labour Organization provided the expert advice of eight experts on social security for long six month for proper implementation of the schemes of employee state Insurance Act. They devised and advised the method of its administration, the development of the panel system of medical benefit and training of the necessary staff in order to extend the scheme throughout the country.”

In 1948 Indian government made certain important amendments in existing Indian factories act 1934 and came with an entirely new nomenclature “The factories act 1948” with a main purpose of regulating conditions of work in manufacturing establishment for ensuring adequate health, welfare measures, hours of work and leave with wages.

In 1948 Indian government made certain important amendments in existing Indian factories Act 1934 and came with an entirely new nomenclature “ The Factory Act 1948” with a main purpose of regulating conditions of work in manufacturing establishment for ensuring adequate health, welfare measures, hours of work and leave with wages.

In 1948 the Government enacted Maximum wages Act for prevention of exploitation of labour due to payment of unduly low wages.

In 1952 Government enacted Employee’s Provident fund and miscellaneous provision act with a main objective of providing substantial measures of financial security and timely monetary assistance to industrial works and their families.

‘Besides this’

(i) “The Assam tea plantations provident fund act 1995.” The personal injuries (Compensation Insurance) act, 1963.

(ii) The seamen’s provident fund Act 1966

(iii) The plantation labour Act 1951

(iv) The (central) maternity benefit Act, 1961

Were enacted for providing social security to weaker section of the society where there were more chances of exploitation and victimization.