Employees’ State Insurance Scheme (ESI Scheme), About, Objectives, Coverage and Beneficiaries

Employees’ State Insurance Scheme: ESI Scheme is an integrated measure of Social Insurance provided to the working class of India. Employees’ State Insurance Scheme is important for UPSC Prelims 2023 and UPSC Mains Exam (GS Paper 2- Government welfare schemes for various sections of people, especially the vulnerable sections of the population).

Employees’ State Insurance Scheme in News

In March 2023, the provisional payroll data of ESIC revealed a significant increase in employment with the addition of 17.31 lakh new employees. This growth was accompanied by the registration of approximately 19,000 new establishments, which now fall under the social security coverage of the Employees’ State Insurance Corporation.

• This expansion in coverage ensures enhanced protection for workers. Notably, the data highlights a positive impact on youth employment, as individuals aged 25 and below accounted for the majority of new registrations.
• Specifically, 8.26 lakh employees, constituting 48% of the total additions, belong to this age group.
• These statistics indicate a promising trend of job creation and improved social security coverage for the younger population of the country.

ESI Scheme 2023

The Employees’ State Insurance Scheme is an integrated measure of Social Insurance embodied in the Employees’ State Insurance Act 1948.

• Objectives: ESI Scheme is designed to accomplish the task of protecting ’employees’ as defined in the Employees’ State Insurance Act, 1948 against the impact of incidences of sickness, maternity, disablement and death due to employment injury and to provide medical care to insured persons and their families.
• Beneficiary Selection: Employees of the aforesaid categories of factories and establishments, drawing wages upto Rs.15,000/- a month, are entitled to social security cover under the ESI Act.
  • ESI Corporation has also decided to enhance wage ceiling for coverage of employees under the ESI Act from Rs.15,000/- to Rs.21,000/-.
• Exemptions: Employees, earning less than Rs. 137/- a day as daily wages, are exempted from payment of their share of contribution.

ESI Scheme Scope

The ESI Scheme applies to factories and other establishment’s viz. Road Transport, Hotels, Restaurants, Cinemas, Newspaper, Shops, and Educational/Medical Institutions wherein 10 or more persons are employed. However, in some states, the threshold limit for coverage of establishments is still 20 employees.

• ESI Corporation has extended the benefits of the ESI Scheme to the workers deployed on the construction sites located in the implemented areas under ESI Scheme w.e.f. 1st August, 2015.

• The ESI Corporation has decided to raise the wage ceiling for coverage of employees under the ESI Act from Rs. 15,000/- to Rs. 21,000/-.
• The implementation of the ESI Scheme is carried out on a district-wise basis.
• Currently, the ESI Scheme is notified in 611 districts.

Employees’ State Insurance Scheme Financing

The Employees’ State Insurance Scheme (ESI Scheme) is financed by contributions from employers and employees.

• The rate of contribution by employer is 4.75% of the wages payable to employees.
• The employees’ contribution is at the rate of 1.75% of the wages payable to an employee.

ESI Scheme Coverage and Beneficiaries

In the beginning, the ESI Scheme was implemented at just two industrial centers in the country in 1952, namely Kanpur and Delhi.

• There was no looking back since then in terms of its geographic reach and demographic coverage.
• Keeping pace with the process of industrialization, the Scheme today, stands implemented at over 843 centres in 33 States and Union Territories.
• The Act now applies to over 7.83 lakhs factories and establishments across the country, benefiting about 2.13 crores insured persons/ family units.
• As of now, the total beneficiary stands at over 8.28 crores.

Health Insurance for India’s Missing Middle

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