Introduction – Social Security Schemes in India
A welfare state’s basic element is to ensure that citizens have access to financial protection, healthcare, employment opportunities, and social benefits, particularly regarding vulnerable groups. In a large and diverse country like India, both the Central and State Governments play a crucial role in designing and implementing social security schemes that support the economic stability of millions.
State Governments are responsible for implementing these schemes, adapting them to local needs, and ensuring their effective distribution; while the Central Government is responsible for policy formulation, legal frameworks, and funding. These two-tiered setups contribute to a balanced approach that aligns national objectives with regional priorities in India.
The Indian government has launched multiple social security schemes over the years, including MGNREGA, EPFO, PM-KISAN, Atal Pension Yojana, Jan Dhan Yojana, etc. These programs respond to different needs, from employment to pensions, from insurance to food security and financial inclusion. However, bureaucratic hurdles, lack of awareness, corruption, and the digital divide continue to hamper their effectiveness.
In this article, we will learn about the role of the Central and the State Governments in social security schemes, policy mechanisms, major schemes, implementation challenges, and what can be recommended to improve the current welfare system in India.
Understanding Social Security in India
What is Social Security in India?
Social security is a term used for government policies that provide economic support, medical care, pensions, and other assistance to those in need, particularly the elderly, unemployed individuals, and low-income groups.
Significance of Social Security in India
- Relief from poverty – Welfare programs support underprivileged families.
- Financial Stability – Ensures security of income post-retirement, disability, and unemployment.
- Healthcare Support and Medical Care — Provides access to medical facilities and insurance.
- Employment Generation – Schemes like MGNREGA generate employment.
- Rural Development – Infrastructure projects enhance living standards.
Constitutional Provisions of the Social Security
- Article 41 — Provides the right to work, education, and access to social security services for those in need.
- Article 42 – Ensures just and humane working conditions, including provisions for maternity relief.
- Directive Principles of State Policies (DPSPs) – Ensures social and economic justice.
How is India’s Social Security System Different from That of Other Countries?
- India, in contrast, adopts a targeted approach in providing social security, that is, only to certain categories of beneficiaries, unlike the universal systems of social security followed in developed nations.
- There is a greater reliance on state-sponsored welfare programs compared to employer-funded schemes.
- India is progressively moving towards digitalization and Direct Benefit Transfers (DBT) to reduce leakages and improve efficiency.
Role of the Central Government in Social Security Schemes in India
1. Policy Formulation and Legal Framework
One key role of the Central Government is to draft social security laws and policies to govern welfare schemes. It helps ensure that funding, planning, and regulation are aligned.
Key Legislations
- The Code on Social Security, 2020 – Merges and simplifies various labour laws.
- Employees’ Provident Funds and Miscellaneous Provisions Act, 1952 – Governs retirement benefits.
- Maternity Benefit Act, 1961 – To provide for maternity benefits.
2. Schemes for Social Security are Sponsored by the Central Government
Employment and pension Schemes
- Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) – 100 days of guaranteed wage employment per financial year for rural households is provided.
- Atal Pension Yojana (APY) — Promotes retirement planning among informal sector workers.
Financial Inclusion Programs
- Pradhan Mantri Jan Dhan Yojana (PMJDY) – Aim to provide access to bank accounts to everyone.
- Pradhan Mantri Mudra Yojana (PMMY) – Offers loans to small companies.
Healthcare and Insurance
- Ayushman Bharat – Pradhan Mantri Jan Arogya Yojana (PMJAY) – provides free health insurance to families to the extent of ₹5 lakh.
- Employees’ State Insurance Scheme (ESIS) – Provides health insurance and medical benefits primarily to workers in the organized sector.
3. Prioritization of Budget and Allocation of Funds
- The Union Budget allocates significant funds toward various social welfare initiatives, with State Governments receiving financial assistance from the Central Government for implementation.
- The State Governments receive financial assistance from the Central Government for executing the schemes.
State Governments and Social Security Schemes
- Implementation of Central Schemes at the State level
- State governments adopt and implement these centrally funded programs.
- Schemes like MGNREGA, PM-KISAN, and PMJAY are implemented through a Centre-State partnership model.
- Social Security Initiatives by the state
- Amma Canteen, Tamil Nadu – Affordable food for the poor.
- Delhi Mukhyamantri COVID Assistance Scheme – Financial assistance for families affected by COVID-19.
- Monitoring, Evaluation, and Grievance Redressal
- Execution of the schemes and feedback from beneficiaries is generally under the jurisdiction of the State Social Welfare Boards.
- Grievances are resolved through digital platforms and helplines.
Challenges Implementing Social Security Schemes
- Bureaucratic Red Tape — Delays in disbursements and approvals.
- Leakages and Corruption — Duplicate beneficiaries and wrong allocation of funds.
- Digital Divide: DBT is less effective in rural areas due to limited internet access and digital literacy.
- Awareness Gaps – Many of the citizens are unaware of what they are entitled to.
Legislative Framework of Social Security Schemes in India: The Code on Social Security, 2020
Code Overview and Purpose
The Code on Social Security, 2020 is a set of comprehensive reforms to India’s social security system that repeals and consolidates over 13 existing labour laws related to social security. The Code aims to provide social security benefits to all workers, including those in the organized, unorganized, and gig economy sectors. It aims to create a unified and inclusive framework by integrating and streamlining existing social security schemes.
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The Main Provisions and Their Implications
- Coverage for Gig and Platform Workers – Bring gig workers (such as food delivery personnel and ride-hailing drivers) within the purview of social security schemes.
- Uniform Social Security Contributions – Ensures consistent contributions toward pensions, insurance, and provident funds for workers in both the formal and informal sectors.
- Employees’ Provident Fund (EPF) and Employees’ State Insurance (ESI) coverage extended — EPF and ESI coverage made mandatory for additional categories of workers.
- Setting up a National Social Security Board – The Board advises the Central Government in framing social security schemes.
Effect on Existing Social Security Laws
- Consolidation of Nine Labour Laws – The Code centralizes several existing labor laws, most prominently bringing together the Employees’ Provident Funds Act, Employees’ State Insurance Act, and Unorganized Workers’ Social Security Act.
- Provides Clear Definitions – Defines gig workers, contract workers, and unorganized sector employees for implementation of policies.
- Promotes Digital Social Security Platforms – Streamlines the registration and tracking of beneficiaries using digital tools.
Other Relevant Legislations
Employees State Insurance Act, 1948
- Provides health care benefits and insurance for employees earning up to ₹21,000 per month.
- Offers provision of medical care, maternity leave, and unemployment compensation.
The Employees’ Provident Funds and Miscellaneous Provisions Act, 1952
- Provides retirement fund benefits.
- Requires 12% contributions from both employer and employee to the provident fund.
Maternity Benefit Act, 1961
- Offers 26 weeks of paid maternity leave for working women.
- Guarantee job security and benefits to new mothers.
Unorganized Workers’ Social Security Act, 2008
- Aims to grant social security benefits to unorganized sector workers.
- Initiatives such as the E-Shram portal are now being used for registration.
Social Security Schemes in India for Unorganised Sector Workers
Challenges Faced by Unorganised Workers
- Absence of Written Employment Contracts – Informal sector employees typically have no form of a written agreement, and this opens them to exploitation.
- Lack of Social Security Coverage – Most daily wage workers, domestic workers, and gig economy workers do not have pensions, insurance, or job security.
Government Initiatives
1. Shri. Pradhan Mantri Shram Yogi Maandhan (PMSYM)
Qualifying Guidelines and Benefits
- Targeted at unorganized workers aged 18–40 years who earn ₹15,000 per month or less.
- The scheme provides a monthly pension of ₹3,000 beginning at the age of 60.
- The scheme requires contributions ranging from ₹55 to ₹200 per month from workers, with matching contributions from the government.
2. E-Shram Portal
Objective and Renewal Process
- The E-Shram Portal is designed to register unorganized workers and facilitate the delivery of social security benefits.
- It is Aadhaar-based and issues a Unique Identification Number (UAN) upon registration.
Benefits of the Portal for Unorganised Workers
- Aids in targeted dissemination of advantages like insurance and pension plans.
- Establishes a government database to design worker-friendly policies.
The Effect of Social Security Schemes on Poverty Alleviation: Evaluation of Performance of Major Programs
1. Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA)
Part in Offering Employment and Income Support
- It has consistently addressed challenges related to rural livelihoods and seasonal unemployment.
- Helps in reducing seasonal unemployment by providing manual labour jobs.
2. Public Distribution System (PDS)
Contribution to Food Security
- Provides subsidized food grains to Below Poverty Line (BPL) families.
- Government ration schemes to reduce malnutrition and hunger.
Statistical Insights
- Studies suggest that welfare schemes have contributed to a reduction in extreme poverty by 10–15%.
- These initiatives have reduced intermediaries through the implementation of Direct Benefit Transfers (DBT), thereby increasing efficiency.
The Role of Technology in Improving Social Security Delivery: Government’s Digital Initiatives
1. Direct Benefit Transfer (DBT)
Mechanism and Advantages
- Directly deposits welfare benefits into bank accounts.
- Minimizes government disbursement corruption and delays.
2. Aadhaar Integration
Reducing Fraud and Increasing the Efficiency of Beneficiary Identification
- Aadhaar integration helps prevent duplication of beneficiary records and enhances the accuracy of beneficiary identification.
- However, there remains the risk of duplication of beneficiaries.
3. Challenges and Solutions
Addressing the Digital Divide
- Internet access is limited in many rural areas, curtailing access to digital welfare benefits.
- The problem of limited accessibility of mobile banking and lack of digital literacy can be solved through initiatives that promote mobile banking and digital literacy.
Preserving the Privacy and Protection of Data
- Concerns over personal data leak through Aadhaar data.
- Another problem is that of data breaches and cybersecurity threats.
- Enhancing data security measures and adopting robust cybersecurity protocols can help protect personal information.
A Study of Social Security System: India vs. Other Countries
1. Social Security in Developed Countries
Systems in USA, UK, Germany etc.
- United States: The Social Security Administration (SSA) of the USA has retirement, disability, and survivors’ benefits.
- UK: National Insurance System: pensions; unemployment benefits.
- Germany: Provides generous universal social protection through state contributions.
Key Features and Benefits
- Universal coverage with government-mandated contributions.
- Improved access to health care and unemployment benefits.
2. Lessons for India
Recommended Practices That Can Be Implemented
- Where universal pension coverage can be broadened.
- Establishing strong unemployment insurance.
Implementation Challenges
- High per capita expenditure is required for universal coverage.
- The vast informal workforce necessitates a rethinking of policy approaches.
Importance of Awareness of Scheme of Social Security
1. Current Awareness Levels
- According to our analysis, only about 50% of eligible beneficiaries are aware of the various schemes available.
2. Government Outreach Programs
Government Outreach Programs to Raise Awareness of Entitlements
- Community-Based Financial Literacy Campaigns.
- Awareness programs with NGOs.
3. Improving Accessibility
Streamlining Application Processes
- Digital portals such as UMANG and E-Shram make it easy to apply.
Establishing Support Centers in Rural and Hard-to-Reach Areas
- Registration for social security programs is done at local government offices.
FAQs – Social Security Schemes in India
1. What is the main role of the Central Government in social security?
Central Government drafts policies, finances schemes, and lays down statutes, for the economic security of people.
2. What role do State Governments play in implementing social security schemes?
State Governments customize, implement, and monitor welfare programs at the regional level.
3. What are the key features of social security schemes for unorganized workers?
While schemes such as E-Shram and PMSYM are designed for unorganized workers, programs like PMJAY primarily focus on healthcare benefits for vulnerable populations.
4. How is technology enhancing the efficacy of social security schemes in India?
The integration of Aadhaar, digital platforms, and Direct Benefit Transfers (DBT) has significantly reduced corruption and improved the efficiency of benefit delivery.
Conclusion – Social Security Schemes in India
The role of the Central and State Governments in social security schemes is crucial, as these programs form the backbone of economic stability and poverty alleviation in India. As the Central Government sets policies and funds programs, State Governments implement them at the local level. Yet there are problems to solve: bureaucratic hurdles, digital exclusion, and gaps in awareness. Improving the efficacy of social welfare programs in India will require stronger technology integration, enhanced accountability, and more effective local governance.
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