NAC panel for smart card-based social security benefits

Biometric smart cards issued under the Rashtriya Swasthya Bima Yojana (RSBY) may soon be used to dole out social security benefits to unorganised sector workers.

A working group of the National Advisory Council (NAC) on social security has recommended the card that provides health insurance to 25 million poor under RSBY be used to give maternity benefit, pension upon retirement, life and disability cover, and financial protection against ill health to workers in the unorganised sector.

The group estimated the pension and life-cum-disability schemes would cost the government Rs 43,000 crore, if a worker contributed Rs 500 a year, and Rs 86,000 crore, if the worker’s annual contribution was Rs 1,000.

It recommended the government to roll out the pension scheme for women workers in the first phase, with Rs 1,000 as premium from the centre, state and citizen, and gradually to others over a five-year period.

FUTURE PLANNING Estimated cost of extending life cum disability and pensions
	Option 1		Option 2
Contribution by	Annual payment per household  (Rs)	Total costs to cover 430 million  households  (Rs cr)	Annual  payment per households (Rs)	Total costs to to cover 430 million household  (Rs cr)
Household	500	21,500	1,000	43,000
Total costs central and state governments
States	500	21,500	1,000	43,000
Centre	500	21,500	1,000	43,000
	1,000	43,000	2,000	86,000
Source: National Advisory Council

The maternity assistance scheme would cost the government Rs 12,000 crore, assuming a payment of Rs 6,000 per birth for 20 million births a year, according to the group.

It suggested the definition of workers in the unorganised sector be made inclusive, by bringing all unorganised workers, including those who went in and out of the formal and informal sectors of the economy, under the ambit of the Unorganised Workers’ Social Security Act, 2008.

However, it suggested workers in the formal sector, already registered with and covered by the existing Provident Fund and Employees’ State Insurance schemes, and self-employed workers who paid income tax and were relatively better-off, be excluded.

It also recommended the minimum social security package be implemented through a single window.

And to achieve this, it suggested a special purpose vehicle or an independent authority, the National Social Security Authority, be set up, besides an inter-ministerial committee headed by the finance ministry to take broad policy decisions on the social security schemes.