IAS Gyan

Daily News Analysis


19th August, 2023 Economy

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Picture Courtesy: varuntripathi.com

Context: In June, the ESIC added 20.27 lakh (2.027 million) new members to the Employees State Insurance Scheme. This indicates that these individuals are now covered by the social security benefits provided by ESIC. Additionally, 24,298 new establishments were registered and brought under the ESIC's social security umbrella during the same period. This suggests that more companies or workplaces are now participating in the scheme.


  • The provisional payroll data from ESIC indicates that the new member additions were in the form of new employees. Specifically, 20.27 lakh new employees were added in June 2023.


  • Age Group Distribution: Among the new employees added a significant portion (9.77 lahks or 48.22%) were in the age group of up to 25 years. This suggests that a substantial number of new job opportunities were created for young individuals.
  • Gender Enrollment: The gender-wise analysis of the payroll data showed that 3.87 lakh female members were enrolled in the ESIC scheme in June. This indicates an effort to extend social security benefits to a diverse workforce.
  • Transgender Employees: The data also indicated that 71 transgender employees were registered under the ESIC Scheme during the same period. This is a positive step towards inclusivity and providing social security benefits to all segments of society.

Overall, these numbers highlight the efforts of ESIC to expand its coverage and provide social security benefits to a wider range of workers, including young individuals, women, and transgender individuals. It also suggests that there is a trend of job creation and formalization of employment opportunities in the organized sector in India.

Employees' State Insurance Corporation (ESIC)


  • The Employees' State Insurance Corporation (ESIC) was established in India in 1952 under the Employees' State Insurance Act 1948.
  • The Act was enacted to provide comprehensive social security and health insurance to workers in the organized sector.
  • The Act covers establishments employing 10 or more employees, with some exceptions based on wage levels and location.
  • The ESIC is a statutory body and an autonomous corporation under the Ministry of Labour and Employment, Government of India.


  • In 2017, the monthly wage limit for coverage under ESIC was raised from Rs. 15,000 to Rs. 21,000. This means that employees earning up to Rs. 21,000 per month would be eligible for coverage and benefits provided by ESIC.
  • In 2019, the rate of contribution for ESIC was reduced from 6.5% to 4%. This contribution is split between the employer and the employee. The employer's share was reduced to 3.25%, while the employee's share was reduced to 0.75%.

ESIC's functioning and the benefits it provides to employees in the organized sector

Healthcare Services

  • ESIC's network of hospitals, dispensaries, and clinics ensures that insured employees and their families have access to medical care when needed. This provision is crucial for maintaining the health and well-being of workers and their dependents. By offering medical treatment, medicines, and hospitalization services, ESIC contributes to improved health outcomes and reduced financial burdens on employees during medical emergencies.

Cash Benefits

  • ESIC provides financial assistance to insured individuals during various periods of need. This includes sickness benefits for employees who are unable to work due to illness, maternity benefits for pregnant women, and disability benefits for those who suffer from employment-related injuries or diseases. These cash benefits provide a safety net that helps employees manage their financial obligations during challenging times.

Maternity Benefits

  • ESIC recognizes the importance of supporting women during pregnancy and childbirth. Maternity benefits, including paid leave and medical assistance, enable pregnant employees to receive the care they need while also easing their financial concerns during the maternity period.

Employer-Employee Contribution

  • The dual contribution system, where both employers and employees contribute to the ESIC fund, ensures that the financing of social security benefits is a shared responsibility. Employers contribute 4.75% of the wages, while employees contribute 1.75% of the wages. These contributions form the financial basis for providing healthcare and cash benefits to insured individuals.

Coverage and Compliance

  • ESIC covers a wide range of industries and establishments, aiming to include as many eligible workers as possible. This coverage is essential for extending the benefits of formal employment to a larger workforce. By encouraging coverage and compliance, ESIC contributes to formalization, ensuring that workers are entitled to legal protections and benefits.

Inclusive Approach

  • ESIC's commitment to inclusivity is evident through its extension of benefits to various segments of the workforce. By including women, transgender individuals, and people with disabilities, ESIC promotes equity and equal access to social security benefits for all employees, regardless of their background or identity.


Social Security

  • ESIC plays a pivotal role in providing a social safety net for employees. Offering health and social security benefits ensures that workers and their families are protected during times of illness, injury, or disability. This safety net reduces the financial stress that can arise due to unforeseen circumstances, allowing employees to focus on their recovery and well-being without worrying about their livelihood.

Healthcare Access

  • ESIC's provision of accessible and affordable healthcare services is significant on multiple fronts. It not only improves the health outcomes of insured individuals and their families but also contributes to the overall public health of the nation. By offering medical treatment and services, ESIC reduces the strain on public healthcare facilities and helps maintain a healthier workforce.

Formalization of Employment

  • ESIC's coverage encourages the formalization of employment relationships between employers and employees. When employers participate in the ESIC scheme, they are more likely to provide benefits and protections to their employees, leading to improved working conditions and job security. Formalization also strengthens the regulatory framework of the labour market, fostering a more organized and accountable employment sector.


  • The inclusive approach of ESIC is a significant step towards social justice and equality. By extending benefits to marginalized groups such as women and transgender individuals, ESIC ensures that all segments of the workforce have access to social security. This not only addresses historical disparities but also helps build a more inclusive and equitable society.

Steps Taken by India

Coverage Expansion

  • India has consistently worked towards expanding the coverage of ESIC to include a larger number of establishments and workers. By bringing more industries and establishments under ESIC's purview, the government aims to ensure that a broader segment of the workforce receives social security benefits. This expansion helps bridge the gap between formal and informal sectors, offering protections to employees who might not have had access to such benefits before.

Digital Initiatives

  • The adoption of digital technology has been a crucial step in modernizing ESIC's operations. This includes the introduction of online portals and platforms that facilitate processes like enrollment, contributions, benefit claims, and more. Digitization streamlines administrative processes, improves transparency, reduces paperwork, and enhances the overall efficiency of the system. It also makes it more convenient for both employers and employees to access information and services.


  • Recognizing the importance of inclusivity, India has taken proactive steps to ensure that ESIC's benefits extend to transgender individuals. By acknowledging their rights to social security benefits, India is promoting equality and non-discrimination. This move not only provides tangible benefits to transgender employees but also sends a strong message about the importance of inclusivity and diversity within the workforce.

These steps collectively demonstrate India's commitment to enhancing the effectiveness of ESIC and making social security benefits more accessible and relevant to a wider spectrum of workers. The coverage expansion, digital initiatives, and inclusive policies reflect the government's endeavour to create a more comprehensive and equitable social security framework that aligns with the changing dynamics of the workforce and society 


Informal Sector

  • The informal sector in India is characterized by a large number of workers who often lack formal employment contracts and social security benefits. Extending coverage to this sector is challenging due to factors such as the transient nature of employment, limited documentation, and lack of awareness. Without coverage, these workers are more vulnerable to economic shocks, health crises, and a lack of social protection. Addressing this challenge requires innovative strategies to ensure that even informal sector workers can access social security benefits.

Enforcement and Compliance

  • Ensuring that employers comply with the requirement to enrol their employees in ESIC and make contributions is a significant challenge. Non-compliance can result from various factors, including lack of awareness, financial constraints, or deliberate evasion. This leads to gaps in benefit distribution and undermines the effectiveness of the system. Effective enforcement mechanisms, robust monitoring, and awareness campaigns are necessary to improve compliance rates and bridge these gaps.

Quality of Services

  • While ESIC aims to provide healthcare services, the quality of these services can vary across different facilities and regions. Some ESIC institutions might face challenges related to infrastructure, medical equipment, skilled staff, and overall service quality. Ensuring consistent and high-quality healthcare services is crucial for meeting the healthcare needs of insured individuals. Investments in healthcare infrastructure, staff training, and continuous monitoring are essential to address this challenge.

Way Forward to improve the effectiveness of the Employees' State Insurance Corporation (ESIC)

Outreach and Awareness

  • Strengthening outreach efforts involves actively engaging with employers, employees, and communities to raise awareness about ESIC's benefits. This can include workshops, seminars, informational campaigns, and collaborations with industry associations. Clear communication about the advantages of being part of ESIC can lead to increased enrollment and better utilization of the services.

Targeting Informal Sector

  • Initiatives focused on the informal sector should be designed with the unique characteristics of informal employment in mind. This might involve simplified enrollment procedures, mobile enrollment camps, or partnerships with local organizations to reach out to informal workers in their communities. Tailoring strategies to the specific needs of informal workers can help bridge the coverage gap.

Healthcare Infrastructure

  • Investments in healthcare infrastructure are crucial to ensuring that ESIC's medical services meet high standards of quality. Upgrading facilities, ensuring the availability of medical equipment, and providing training to medical staff can enhance the overall healthcare experience for insured individuals. Quality healthcare services further motivate people to participate in the ESIC scheme.

Digital Transformation

  • Further digitalization can simplify processes, making it more convenient for employers and employees to access services and information. This might involve developing user-friendly mobile apps for enrollment and claims, providing online access to contribution and benefit history, and ensuring a seamless digital experience for all stakeholders.

Inclusive Policies

  • Continuously evaluating and updating ESIC's policies to ensure inclusivity is essential. This involves actively seeking input from diverse groups, such as women, transgender individuals, and people with disabilities, to understand their specific needs. Policies that address these needs can foster a more equitable and accessible social security system.

Effective Enforcement

  • Strengthening mechanisms for enforcing compliance among employers is crucial for the sustainability of ESIC. This might involve introducing penalties for non-compliance, improving monitoring systems, and creating a transparent reporting mechanism for violations. Regular audits and inspections can help ensure that eligible employees are covered.


  • The Employees' State Insurance Corporation (ESIC) holds the key to a more secure and inclusive workforce in India. Through targeted outreach, inclusive policies, digital advancements, and investments in healthcare, ESIC can bridge gaps in coverage, enhance the quality of services, and ensure equitable access to social security benefits. By addressing challenges and fostering compliance, India can forge a path forward that strengthens the foundation of social protection, promoting the well-being and resilience of its workforce for years to come.


Q. How can the Employees' State Insurance Corporation (ESIC) enhance its coverage for the informal sector, ensure compliance among employers, and elevate the quality of healthcare services, all while maintaining an inclusive approach to benefit a diverse workforce in India?