Social Safety Net

Social Safety Net

Context: Around 53% of all the salaried workforce does not have any social security benefits in India, Says the Periodic Labour Force Survey Annual Report 2021-22.

Social safety nets are non-contributory transfer programs generally targeted to the poor or those vulnerable to shocks, e.g. 

  • Cash transfers are either targeted or not, either conditional or not.
  • Food or other in-kind distribution. 
  • Public workfare jobs.
  • General price subsidies, e.g., for food or fuel.
  • Fee waivers for essential services such as health or education.

Importance of Safety nets 

  • Safety nets enable households to make better investments in their future.
  • Safety nets help households manage risk e.g., health risk.
  • Safety nets help communities create assets.
  • Safety nets help governments make beneficial reforms that improve growth prospects.

Status of Safety Nets in India

  • According to the Periodic Labour Force Survey Annual Report 2021-22, around 53% of all the salaried workforce does not have any social security benefits in India.
  • In India only 1.9% of the poorest 20% quintile of India’s workforce has access to any benefits. 
  • Gig workers, or approximately 1.3% of India’s active labour force, rarely have access to any social security benefit. 
  • Mercer Global Pension Index (2021 MCGPI) ranked India at 40 out of 43 countries. 

Steps taken by Government 

The government has put in place economic safety nets comprising the world’s largest free food program, direct cash transfers and relief measures for small businesses: 

  • Barbell Strategy: The government opted for a “Barbell Strategy” that combined a bouquet of safety-nets to cushion the impact on vulnerable sections of society, with a flexible policy response based on a Bayesian updating of information. 
  • Creation of Fund: The National Social Security Fund was set up for unorganised sector workers, with an initial allocation of just ₹1,000 crore to support schemes for weavers, rickshaw pullers and bidi workers etc. 
  • Push for Digitisation: Government has giving push to reduce human interference to reduce the corruption and get the benefits of social security scheme to citizen e.g., e-Shram platform has enabled the enrolment of approximately 300 million workers while expanding coverage of accident insurance (of ₹2 lakh cover) and disability (of ₹1 lakh cover).
  • Cash transfer: Under Pradhan Mantri Kisan Samman Nidhi (PM-KISAN) a transfer of Rs 6,000 per year in three instalments has been provided.
  • Food security:
    • Pradhan Mantri Garib Kalyan Anna Yojana was launched to provide additional free-of-cost food grains to National Food Security Act (NFSA) beneficiaries 5 kg per person per month, over and above the regular monthly NFSA foodgrains.
    • One Nation One Ration Card: to ensure PDS benefit for people in transit, especially migrant workers.
    • Ujjawala Scheme: under the scheme the target was to release 8 Crore LPG Connections to the deprived households by March 2020.
  • Employment Security 
    • Pradhan Mantri Garib Kalyan Rojgar Abhiyaan (PM-GKRA) was launched for immediate employment & livelihood opportunities to returnee migrant workers.
    • Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS): It aims to enhance livelihood security in rural areas by providing at least 100 days of wage employment in a financial year to at least one member of every household whose adult members volunteer to do unskilled manual work. 
    • Aatmanirbhar Bharat Rojgar Yojana (ABRY) was launched to reduce the financial burden of the employers and encourages them to hire more workers, implemented by EPFO.
  • Housing 
    • Pradhan Mantri Awas Yojana – Gramin and Urban: To achieve the objective of providing “Housing to All” by the year 2022.
  • Credit
    • PM SVANidhi Scheme to provide working capital loan to urban street vendors to resume their businesses.


  • Low Budgetary Allocation: The budgetary allocation by the government has always been limited E.g., In national social security fund, the amount was a pittance when compared to a requirement of over ₹22,841 crore as estimated by the Centre for Budget and Governance Accountability. 
  • Increasing Burden: It is estimated that the cost of providing social protection to the poorest 20% of the workforce would be in trillions, a cost of approximately 0.69% of GDP in FY20.
  • Accessibility: Approximately 91% of India’s workforce works in the informal sector which lacks access to social security. 
  • Coverage: While the Code on Social Security (2020) merged existing social security legislation, it dealt fundamentally with formal enterprises and did not cover informal ones.
  • Compliance Burden: Presence of a complex process to register for social scheme and low awareness is leading to less coverage e.g., e-Shram puts the burden of registration on informal workers, who are required to furnish a self-declaration and share their Aadhaar card.
  • Complex and Confusing Processes: The existing social security framework has become complex, with overlapping areas of authority between the State and Centre, and confusing definitions being used such as between a platform worker, an unorganised worker and someone who is self-employed.
  • Migrant Worker: Migrant workers often face discrimination and suspicion from authorities in their working area, which hinder the effective utilisation of the schemes by them.

Global Practices 

Brazil’s General Social Security Scheme 

  • It is a contribution-based scheme, substituting income loss for a worker and his family, whether in partial or full. 
  • This covers any situation due to an accident at work, a disability that prevents the worker from working, death, an illness/medical treatment etc. 
  • Even income loss that occurs due to a worker being imprisoned is covered by the low-income insured. 
  • Unemployment insurance is paid from worker support funds, and health care is covered through the Unified Health System. 
  • The Constitution itself has established that if there is a lack of funds, the National Treasury will step in.
  • Social security benefits can be availed of with a simple phone call or a visit to a bank, with no requirement to submit endless documents.

Way forward 

  • For Worker: 
    • For formal workers the government should expand employer and employee contribution under the Employees’ Provident Fund Organisation (EPFO) system. 
    • For informal workers with meaningful income, whether self-employed or in an informal enterprise, partial contributions can be elicited.
    • Government should persuade informal enterprises to formalise and expand their total contribution to the fund.
  • Unemployed Individual: For those who are unemployed or have stopped looking for work, or do not earn enough, the government should step in to make provision for employment and provide for the social security initiatives. 
  • Easy and Wholistic Coverage: Greater support is required for financing social security for most of the India’s labour force.
    • There should be a push for a pan-India labour force card and an expansion of existing successful schemes such as the Building and Other Construction Workers Schemes to other categories of workers. 
    • Such expansion requires a loosening of existing restrictions on benefit portability, having a 90-day mandatory cooling period, as well as a more straightforward registration process.
  • Domestic Worker: Special provisions should be made for domestic workers owing to their uncertain employment. The government should promote the idea of organised domestic worker association.
  • Strengthening Existing Schemes: Government should also strengthen the existing schemes, for example the Employees’ Provident Fund (EPF), the Employees’ State Insurance Scheme (ESI), and the National Social Assistance Programme (NSAP), with budgetary support and expansion of coverage. 
  • Raising Awareness: Government should give a more significant push to raise awareness about social security to ensure that more workers are aware of the available benefits.
    • Organisations such as the Self-Employed Women’s Association which run Shakti Kendras (worker facilitation centres), may be funded to run campaigns to provide greater information on social security rights, along with services and schemes that the government offers.

With occupations becoming more on-demand and hire/fire rules growing, India’s workforce is becoming increasingly job insecure. To ensure that the rewards of growth trickle down while providing a sense of social stability, policymakers must abandon supply-side tweaks in favour of measures that promote equitable growth. 

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