In what can be called one of the most ambitious social welfare schemes of the Modi-led government, the Labour Ministry has drafted a plan to provide universal social security coverage for the poorest fifth of the country. The plan, for which Rs 1.2 lakh crore is likely to be set aside, will greatly benefit those employed in the unorganised sector and lack any kind of social security coverage.
Close to 90% of India's total workforce is in the unorganised sector and many don't get even the minimum prescribed wage. The proposal is part of a bigger scheme that's being planned for all individuals.
This broader programme envisages three categories - the poorest 20%, who will get a government payout; those who subscribe on their own and formal sector workers who will need to set aside a fixed proportion of income toward the scheme said an Economic Times report.
The Labour Ministry has reportedly sent the proposal to the Finance Ministry so that the modalities of its funding could be worked out.
The scheme will have two tiers. The first of these comprises mandatory pension, insurance (both death and disability) and maternity coverage and the second, optional medical, sickness and unemployment coverage, the ET report said.
In the organised sector, the employer deducts Provident Fund at a source which is around 25% of the basic salary. In most companies, along with employee's contribution, the company also contributes to it and together the amount goes into PPF account. Each employee has a PPF account number which does not change when the employee changes his job.
The new scheme envisaged by the government is aimed at providing a similar social and financial security to the people working in unorganised sectors.