FE Editorial : Serving 370 million

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: Social security is much talked about now-job losses, especially in the unorganised sector, are increasing. The term in this context means pensions and or/provident fund and insurance (life, medical, unemployment, disability). The Constitution’s Directive Principles require the government to introduce social security. But that argument won’t take us anywhere. Let’s recognise that most existing social security schemes evolved in industrialised countries, where there were clear employer-employee relationships (such as factories) and delivery could be through employers. That has doubtful replication in India where 50% of employment is self-employment. In the absence of employers, delivery is possible if there is a national identification system. Even China has this through household registration systems, which is an even more important issue when it comes to subsidisation. So, that’s the first step India has to take. Third, we need to decide whether benefits will be fixed income streams or linked to returns from funds, with premiums paid. This leads to the question how does one subsidise if below poverty line (BPL) households cannot afford to pay premiums? How does one identify the poor, a problem India still hasn’t resolved? Choice is another ignored aspect. If social security is introduced, isn’t it better to permit people choice, instead of mandating delivery through inefficient government organisations? Lastly, flowing from earlier questions, how does the government finance such schemes?