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