Ayushman Bharat to UPS: Are Indians getting ‘social security’ finally?

Providing social security to India’s vast population is an arduous project. The country has been taking efforts to reach that goal since its Independence.

Recently, the pace of rollout and improvement of social security schemes has picked up even more.

Does this mean Indians finally have social security? The answer is complicated.

We take a look.

Ayushman Bharat for senior citizens

The most recent action in providing social security to all Indians has been the Union Cabinet approving health coverage for all senior citizens aged 70 and above under Ayushman Bharat.

The landmark move means that all citizens over 70 will have a health cover of Rs 5 lakh, regardless of how high or low the family’s income is.

This expansion aims to cover six crore senior citizens from 4.5 crore families, ensuring universal health access to an aging population.

This is important because PM-JAY is designed to provide a Rs 5 lakh health cover per family based on their socio-economic situation and according to certain income criteria. With the nod from the cabinet, the above 70 will be the first age cohort to receive complete coverage.

Unemployment allowance

Unemployment allowances are another social security measure in place in India. At the national level, the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) provides a daily unemployment allowance to applicants who don’t receive work within 15 days of applying.

Thousands of Indians also get unemployment allowances. Most of these are provided through various state-level schemes that offer a set amount of financial assistance per month to unemployed people.

Recently, the proper delivery of the allowances to the people who need it the most has come under the scanner.

Pension Scheme for government employees

The Unified Pension Scheme (UPS), approved in August this year, may be considered another milestone in India’s evolving social security landscape.

The UPS offers an assured pension of up to 50 per cent of their average basic pay for the last 12 months to government employees who have served for at least 10 years.

This pension system includes inflation protection and a minimum pension of Rs 10,000 per month. For families, the scheme provides a family pension equivalent to 60 per cent of the employee’s pension after their death.

Traditionally, pension schemes that fall under the purview of social security are fully funded by the government. That is not the case with the UPS. Part of it is funded from the employees’ overall pay.

Still, given India’s context, and its current economic position, the UPS may be seen as a tailored form of social security.

Pension for private sector employees

For private sector employees, the National Pension Scheme (NPS) and Employees Provident Fund (EPF) contributions make for a good safety nets. However, like UPS, these do not fit into the framework of traditional social security schemes.

For private employees, EPF and NPS is funded partly by the employee, and partly by the employer. The contribution from employers is also optional in case of NPS. EPF contributions are mandatory, while NPS is voluntary.

The NPS was recently enhanced.

The full Union Budget 2024 announced that the NPS contribution limits for private sector employers will be increased from 10 per cent to 14 per cent of the employee’s basic salary.

Moreover, getting pension will also be made easier for those enrolled in the Employees Pension Scheme (EPS), which is closely linked to EPF. EPS pensioners will be able to get pension from any bank or branch from January 1, 2025 onwards.

With each subsequent policy introduction and enhancement, India moves closer to a tailor-made social security system.

Social security eludes many Indians

Despite these positive developments, India still faces challenges in creating a fully inclusive social security system.

Currently, formal social security provisions, such as provident funds, health coverage, and gratuities, are available primarily to workers in the organized sector.

A significant portion of the Indian workforce— particularly those in the unorganized sector, which includes daily wage laborers and gig workers— remain excluded from these benefits. Although Welfare Funds sponsored by the Central and State governments provide some support, these are limited in scope and reach.

The Code on Social Security, 2020 seeks to address this gap by extending social security coverage to gig workers, platform workers, and unorganised labourers. Section 113 of the Code outlines provisions for the registration of these workers, aiming to bring them under formal social security schemes.