A Tale of Two Tiers: India's Social Security Divide - A Call for Universalism

New Delhi, [July 17, 2025] – As India proudly celebrates 77 years of independence, a critical question lingers over its commitment to universal social security: Why do millions of Central and State Government employees remain outside the purview of the Employees' State Insurance (ESI) Act, 1948, a cornerstone social safety net for the organized sector? This is not merely an administrative anomaly; it is a fundamental debate on equality, justice, and the very spirit of a welfare democracy, a question that deserves the informed scrutiny of citizens worldwide.

The ESI Act: A Promise of Comprehensive Protection

Enacted in 1948, the ESI Act's preamble clearly articulates its noble purpose: "to provide for certain benefits to employees in case of sickness, maternity and employment injury and to make provision for certain other matters in relation thereto." It's a comprehensive social insurance scheme, offering not just medical care to the insured and their families, but crucially, cash benefits for wage loss during sickness, maternity, disablement due to injury, and even unemployment. This holistic safety net is vital for vulnerable workers, ensuring that a health crisis or job loss doesn't spiral into destitution.

The Exclusion: Section 1(4) Proviso and its Implications

The contentious point lies in the proviso to Section 1(4) of the ESI Act. It exempts government establishments whose employees are "otherwise in receipt of benefits substantially similar or superior to the benefits provided under this Act." This is the legal basis for why permanent Central and State Government employees are typically not ESI beneficiaries. They are covered by schemes like the Central Government Health Scheme (CGHS) and a raft of other service benefits.

The Inherent Paradox: "Superior" in Some, "Inferior" in Others

Herein lies the crux of the moral and practical dilemma:

• Where CGHS (and related government benefits) shines: CGHS provides comprehensive medical care with access to a wide network of often high-end private hospitals, particularly in urban centers, frequently on a cashless basis. Critically, government employees also benefit from extensive paid leave provisions (sick leave, maternity leave), which directly mitigate wage loss during illness or childbirth. They also have established pension, provident fund, and gratuity schemes, alongside coverage under the Employee's Compensation Act for job-related injuries. This overall package is indeed financially substantial and offers a perceived higher quality of medical access in some aspects.
• Where CGHS is undeniably "inferior" to ESI: CGHS, in its direct medical provision, does not offer any cash benefits for wage loss. While government employees have paid leave, the ESI's direct statutory cash payouts for sickness, maternity, disablement, and particularly, unemployment allowance, represent a distinct and robust component of social security that is absent in CGHS. This is not a minor difference; it's a fundamental aspect of social insurance, designed to protect the very livelihoods of workers.

The Discrimination Quandary: A Two-Tier System?

The situation becomes even more stark when we consider contractual employees in the very same government establishments who are covered by ESI. This creates a deeply troubling paradox: contractual workers, often with less job security and fewer other benefits, receive a comprehensive ESI package, while their permanent counterparts, merely due to their employment status and the existence of a separate (though in some aspects incomplete) benefit structure, are excluded from a universal social security scheme.

This dichotomy raises serious questions about Article 14 (Equality before Law) and Article 21 (Right to Life) of the Indian Constitution. While the government may argue that the totality of benefits for permanent employees is "substantially similar or superior," critics contend that an absence of direct wage-loss compensation through an insurance mechanism, alongside fragmented social security provisions, inherently creates an unequal playing field. Is it not a form of discrimination to deny a universally applicable social insurance benefit to one group while extending it to others within the same ecosystem?

The Wage Ceiling: A Barrier to Progressive Coverage

Further complicating matters is the ESI wage ceiling (currently ₹21,000 per month). While legislatively enabled by the ESI Act itself (Section 2(9)(b) and Rule 50), it means that employees who rise above this income threshold are eventually excluded from ESI coverage. In contrast, CGHS offers continuous medical coverage to government employees regardless of their salary growth. This difference highlights ESI's focus on lower-income segments, but also its limitation for employees whose economic status improves, potentially leaving them in a gap if they no longer qualify for ESI and lack other comprehensive coverage.

A Call for Universalism and Integration

After 77 years, the time is ripe for a deeper introspection into India's social security architecture. While progress has been made in extending social protection, the fragmentation and explicit exclusions remain a challenge. Is it not the democratic imperative of a welfare state to strive for a truly universal, integrated, and equitable social security system that covers all citizens, irrespective of their employment type or employer?

The benefits of integration are clear: streamlined administration, reduced disparities, enhanced trust in state institutions, and a genuine safety net that leaves no citizen behind. The challenges are immense – financial implications, administrative complexities, and the need to harmonise disparate systems. However, these challenges are not insurmountable for a nation with India's aspirations and capabilities.

The informed citizenry of India, and indeed the world, must ponder: Does the current fragmented approach truly align with the constitutional ideals of social justice and equality? Or does it represent a "shame on Indian democracy" that, even after decades, a truly unified and comprehensive social security umbrella remains an elusive dream for a significant portion of its workforce? It's a debate that demands courage, foresight, and a renewed commitment to the welfare of every single employee who contributes to the nation's progress.

Sources

Rajnish Ratnakar

rajnishratnakaradv@gmail.com