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Government Plans to Strip EPFO & ESIC Powers to Manage Corpus Through Social Security Law

The government plans to strip central organisations Employees’ Provident Fund Organisation (EPFO) and Employees’ State Insurance Corporation (ESIC) of the power to manage social security corpus of nearly 10 crore employees as part of a move to create a single window system for social security benefits at state level and increase the number of subscribers fivefold. 

Under the proposed labour code on social security, the labour ministry is pushing for setting up social security boards in states as single point contacts as it believes the EPFO and ESIC will not be able to cater to the vastly increased workload, said officials. 

They said the move would not only help extend social security cover to more than 50 crore workers across the country but also increase compliance on the part of the employers, along with creating a single window system across states for all kinds of social security including medical insurance, maternity benefits and disability cover. 

“Considering the scale of coverage, it will not be administratively feasible for a centrally managed organisation to run such a massive scheme,” said a senior government official, who did not wish to be identified. 

A pilot project will be launched in a few districts and depending on its success the idea would be scaled up across India over the next few years once the proposed legislation on social security code is passed in Parliament, said the official. 

The proposal envisages setting up of social security boards that will be independent and autonomous executive bodies comprising state officials, representatives of the Centre, employers’ representatives as well as trade unions to represent employees. 

Once the social security code is approved by Parliament, the government will notify a few districts where the idea will be tested. The Centre will frame the basic social security scheme that would be applicable to workers across the country to ensure migrant workers continue to enjoy benefits under the scheme. 

Although most trade unions have opposed the move and boycotted national consultations held by the labour ministry, the ministry is determined to go ahead with the proposal, said that official.

Source:ET