These are new programmes or expansions of older programmes since 2015, that extend the coverage of life and accident insurance as well as old age pension to working adults in the unorganised sector. The principal difference from the NSAP pensions discussed earlier, is that these are programmes where the beneficiary and the government both contribute. Enrollment and contributions are voluntary and they operate via Jan Dhan accounts.
Atal Pension Yojana is for those between 18 and 40 years. The person contributes until the age of 60 at which point they can receive the pension. The pension amount varies between I1,000 and I5,000 per month. The central government contributes I1,000 per annum or 50 per cent of the annual contribution, whichever is lesser. The accidental death or disability insurance, PM Suraksha Bima Yojana, is available to those between ages 18 and 70. The premium is I12 per annum to avail of accident insurance worth I2,00,000. The life insurance programme, PM Jeevan Jyoti Bima Yojana, is available to those between ages 18
and 50. An amount of I2,00,000 is paid to the nominee on the death of the insured. The annual premium to be paid by the beneficiary is I330. All schemes operate via Jan Dhan accounts and require Aadhar linked accounts.
Mehrotra (2020) notes that the total cost to the central government of these programmes is unclear and the government has only committed to meeting these costs for its term in office. Thus, these are not legally binding entitlements such as PDS or MGNREGA. Further, he argues that the international evidence favours mandatory programmes over voluntary ones, since enrollment
6. India’s social protection architecture
Yojana, an old-age contributory pension scheme for unorganised workers very similar to the Atal Pension Yojana. This is intended for unorganised sector workers with monthly incomes up to I15,000 per month and of an entry age group of 18-40 years.
Workers enrolling in this pension plan should not be covered under the NPS, ESIC or EPFO.24 This is a comparatively new scheme and the total enrolment so far is only around 4.5 million, a miniscule
fraction of the informal workforce for whom it is intended. As in the case of welfare boards, either mandatory registration or the presence of a strong union or public campaign are essential to ensure awareness and enrolments under such programmes.
Unfortunately enrollment under this scheme has taken a large hit during the pandemic declining sharply from 1.6 million in 2019-20 to a mere 130,000 in 2020-21.25
We do not go into the details on these schemes here. The reader is referred to Mehrotra (2020) for further information.
6.3.2 / Welfare boards or funds
26These are bipartite or tripartite bodies that regulate conditions of work and provide social security benefits to workers in particular occupations or industries. They can be either tax/cess based or contribution-based. Tax-based funds exist centrally for beedi workers, dock workers, construction workers, cinema workers, and certain types of mine workers. A dedicated cess is levied on the relevant goods or services, and the funds thus raised are earmarked for providing benefits to the workers registered under the board. But most of these
funds, including the most well-known Building and other construction workers BOCW board (discussed in more detail later), do not provide social insurance (pension, death and disability benefits, maternity benefits). Rather the funds are used to support healthcare and education
expenses, housing etc.
State-level welfare boards have tended to be contributory. Kerala has been a leading state in the creation of welfare boards, covering around 54 per cent of informal workers as early as 2004 (NCEUS 2006). These include funds for autorickshaw drivers, construction workers, and agricultural workers.
The major benefits provided are provident fund, gratuity, monthly pension (old age), disability and accident cover, health cover, unemployment relief, educational allowance, housing assistance, marriage assistance and funeral expenses. Mehrotra (2020) observes that contributory funds have not been successful due to problems in raising funds.
We consider two examples in further detail, the BOCW and the Mathadi (headloaders) Welfare Board, that hold lessons for the way ahead.
Examples of relatively well functioning contributory state welfare boards are the Mathadi Boards set up under the Maharashtra Mathadi, Hamal, and other
Manual Workers (Regulation of Employment and Welfare) Act 1969. This model has been highlighted by the ILO and the National Commission on Labour-II as well as the National Commission for Enterprises in the Unorganised Sector (NCEUS) have underlined the importance of creating something similar for other unorganised sector workers. Our discussion here is based on Jatav and Jajoria (2020) as well as a consultation with a representative of the Hamal Panchayat, a union of headloaders that has played a key role in ensuring proper functioning of the welfare fund.27
Examples of relatively well functioning contributory state welfare boards are
the Mathadi Boards set up under the Maharashtra Mathadi, Hamal, and other Manual Workers (Regulation of Employment
and Welfare) Act 1969.
Over the years, the Mathadi Act and the Hamal Panchayat union have built a model that provides daily wage workers comprehensive social security, including provident fund, gratuity, bonus, health coverage, life insurance, accident coverage, maternity benefits, paid leave, and assistance for childrens’ education. There are 14 broad types of employment scheduled in the act in connection with manual operations including loading,
unloading, stacking, carrying, weighing, measuring, and other similar works. There are 34 registered Mathadi Boards in Maharashtra.28
The Act took 11 years to implement after being passed in 1969 and two unions, the Rashtriya
Hamal Panchayat and Mathadi Kamgar Union were actively involved in the formulation and implementation of the Act. Problems that have plagued other boards, such as lack of awareness among workers, lack of registration, non- transparency in funds utilisation etc. have been addressed in this case by active involvement of workers via the unions. It shows that formalising daily wage workers who do not have fixed
employer-employee relationships is indeed possible.
But the experience also reveals that creating a functional system for providing benefits where employers of casual workers bear at least some of the costs, is not an easy task. Box 6.1 gives the key features of this model.
Box 6.1 : The Maharashtra Mathadi Model
Maharashtra’s Mathadi Kamgar Boards set up under the Maharashtra Mathadi, Hamal, and other Manual Workers (Regulation of Employment and Welfare) Act 1969 are examples of relatively well- functioning welfare boards. The key features of the
‘Mathadi model’ are as follows:
1. It does not depend solely on public resources because contributions are drawn from workers, employers and the government.
2. Both employers and workers have to register themselves with the district level Mathadi boards.
3. A Mathadi board at the district level has members representing employers, workers, and the state government. Further members representing the state government cannot be more than one-third of the total members representing both the employers and unprotected workers.
5. The boards pay workers’ wages, after collecting earnings and levy from employers. Workers’
contributions are deducted before wages are paid.
6. The model closely follows ILO’s tripartite system and promotes collective bargaining for wages.
7. There is a provision for an unemployment allowance (‘disappointment money’) at the rate of minimum wages. These are paid by the assigned employer in case they fail to assign work to the worker.
8. Unlike many other labour regulations, there is no minimum enterprise size (number of workers) required to be able to provide benefits.
Hamal Panchayat, the union that has been instrumental in the implementation of this system, emphasises the importance of mandatory registration, making the Board in charge of wages
6. India’s social protection architecture
At the other end of the spectrum, in terms of effectiveness as a social protection programme, is the BoCW. As we saw in Chapter Two, workers in the construction sector, which account for roughly 12 per cent of the total workforce, and predominantly engage in casual work, have been severely impacted by the Covid-19 shock. India has in place two Central Acts pertaining to the regulation of the conditions of work and the provision of a measure of social security. These are the Building and Other Construction Workers (Regulation of Employment and Conditions of Service) Act (1996); and the Building and Other Construction Workers Welfare Cess Act (1996).
The Acts are applicable to every establishment that employs ten or more workers in any building or construction work, wherein the project is worth more than I10 lakh. The Welfare Funds proposed in the Act are to be financed by contributions from beneficiaries, levy of a cess on construction works at a rate ranging between 1 and 2 per cent of the construction cost incurred by an employer, and non-mandatory grants by the State/Central governments. Every construction worker between the age of 18 and 60, and who has been engaged in construction work for not less than 90 days during the preceding 12 months is eligible for registration as a beneficiary.
Under these umbrella legislations, all State governments are expected to enact their own legislations and through their respective State Building and Other Construction Workers Welfare Boards (constituted under the BOCW Act) utilise the cess fund. As per Section 22 of the BOCW Act (1996), the cess fund can be used to provide assistance to a beneficiary in case of an accident;
give pension to those who have completed the age of 60 years; sanction loans and advances to a beneficiary for construction of a house and on prescribed terms and conditions pay premia for group insurance scheme of the beneficiaries; give financial assistance for the education of children
of the beneficiaries, for medical expenses for treatment of major ailments, payment of maternity benefits and make provision and improvement of such other welfare measures and facilities as may be prescribed. Further, the Board may grant a loan or subsidy to a local authority or an employer in aid of any scheme approved by the respective state government for the welfare of building workers in any establishment.
Since registration is voluntary and not mandatory, and since the kind of concerted union activity seen in the case of the mathadi workers has been absent, both registration rates and utilisation rate of funds collected have been low. Of course, the construction workforce is far larger and more dispersed than the mathadi workers, who are concentrated in some district towns in Maharashtra. While the registration rates in the BoCW stand at about 52.5 per cent at a national level, there is considerable heterogeneity across states, with rates as low as 11 per cent in Assam and 18.6 per cent in Bihar (Jha 2020). It has also been pointed out that there are problems in renewal of registration of workers. For example, in Maharashtra, there were about 0.56 million registered construction workers in 2016, of which only 50 per cent of the total registrations were found to be valid. In Delhi, too, the process of new registrations and the renewal of old ones is very slow (Jha 2020). Other studies have pointed to problems of selective registration, non-updation of identity cards, enrolment of non-construction workers as beneficiaries, and corruption.29
Another challenge pertains to the issue of collection of cess at the stipulated rate of 1 per cent of the total cost of construction and its proper distribution among workers. The Lok Sabha’s 38th Standing Committee on Labour noted that there is no proper mechanism of collection of cess and its transfer to the boards.30 Also, in many cases, there is an under- assessment of cess. The report of the Committee also noted that the utilisation ratio of the cess
funds stood at only 39 per cent nationally in 2019.
Here too, there is considerable heterogeneity across states. While states such as Kerala, Karnataka and Chhattisgarh spent more than 80 per cent of the funds collected, in states such as Maharashtra, Delhi and Gujarat which collect the largest amount of cess, less than 10 per cent was utilised.
Last, but by no means the least, migrant workers are preponderant in the construction industry. This raises the issue of portability of their registration and benefits. For instance, there is no clarity what happens when a worker who is attached to a contractor migrates from one state to another (Mehrotra, 2020).31 It is also important to note that most migrant workers engaged in this sector come from poor economic and social backgrounds, lack education, and often live in worksites. Organising such workers is also extremely challenging, though organisations such as Aajeevika Bureau and several others, including traditional labour unions, have been trying interesting models in this regard.32