Category Archives: Benefits

Wages: The foresightful Sec. 2 (22) !

It was 1989-90. An employer, a well-known business magnate, having many business interests in many fields, had paid Rs. 10 as Attendance Bonus to his employees who attended factory on all the 26 working days in a month. The Insurance Inspector (Now, SSO) reported that the employer had not paid contribution on that amount. Notice in Form C-18 (Ad hoc) was issued in 1991-92. The amount claimed as contribution on omitted wages was around Rs. 1600/-.

The employer’s representatives attended hearing and explained their stand. They said that it was not an amount paid as per any settlement between the employees’ union and the management. It was not a bilateral decision. It was an unilateral one and could be withdrawn at any time. It was paid quarterly and not monthly. The employer was, therefore, not required to pay contribution to the ESIC on this expenditure, they said. When asked, pointedly, how the employees were made to understand that they would be paid Attendance Bonus if they had attended factory on all the 26 days, the representatives said that the management had put up a notice in the canteen to that effect, wherein it had also been mentioned that it was unilateral, that it could be withdrawn at any time and that it would be paid once in a quarter.

Final orders were issued under Sec. 45-A, after the hearing was over, determining the contribution payable. Employer’s contentions were recorded and reasons given.

It was explained in the order issued under Sec. 45-A that

  • the very fact that the employer had displayed a notice in the canteen proved that the Attendance Bonus had been paid as per specific terms of contract.
  • there was an express contract, and that it was not unilateral, because there had been clear communication of mind, the consensus ad idem, and the ingredients of offer and acceptance were there.
  • the amount was ‘payable’ every month but was postponed and paid once in three months.
  • the amount being ‘payable’ every month, this case fell within the first portion of the definition of the term wages and not within the third portion of it.

Contribution was, therefore, claimed on the entire amount. After a few months, the employer’s representative who came to the Regional Office for some other purpose, said that the CEO had ordered the issue to be challenged in the court of law.

When asked how the CEO expected to win the case, the representative said that the CEO referred the matter to court, because he was paying a standing counsel every month without getting any work done by him. He therefore, wanted to give some work to the standing counsel. The employer paid the dues later with further interest, after the court verdict.

What are those different parts of the definition of the term ‘wages’? Wages Page 1 Another major employer did not pay contribution on Conveyance Allowance. When the ESIC asked for contribution, the employer went to court, where his stand was upheld. The judge had reasoned that the ESIC would not have claimed contribution if the employer had given season-tickets to his employees or reimbursed the expenditure. As the employees actually incurred expenditure on conveyance, it was not wages, the Court reasoned.

But, the fact was that it was not a case of reimbursement. The payment was not in kind. It was an amount paid in cash. The court had traversed the extra mile arguing that the ESIC would not have demanded contribution, if the employer had reimbursed it or had given season tickets. The court had overlooked the fact that the employer had, actually, paid in cash. This fact on record had been ignored by the court. The argument could also be that the employer could have given to his employees grocery, cloth and other domestic requirements too and then paid less contribution only on the remaining carry home pay.

What happened in this case was that our counsel had failed to bring it to the knowledge of the court the first part of the definition of the term ‘wages’ which refers to the payment in ‘cash’. When an amount is paid in cash, the liability to pay contribution arises automatically, unless exempted under the fourth part of the definition of the term ‘wages’. Because, there is no system to ensure that the employee spends a particular allowance only for that purpose.

The Act, therefore, does not lay stress on the nomenclature used by the employers to pay remuneration to his employees. ESIC is not obliged to give cognizance to the terminology used by the employer in this regard. Wages Page 2 ESIC officers would see only whether the payment fell within the parameters specified in the definition. Many such attempts at evasion to pay contribution had been resisted successfully, only because of the great definition of the term ‘wages’ under Sec. 2 (22). Otherwise, the contribution would have been very less resulting in meager amount of cash benefits to the working population, making it difficult for them to sustain themselves during the period of sickness and disability.

The term ‘wages’ had, thus, been defined in a very thoughtful and foresightful manner in the year 1948. It has withstood numerous onslaughts from various minds with fertile imagination.

Compare this with the contents of Sec. 45 AA which had been drafted very loosely and rushed through as an Amendment in the year 2010 making one wonder whether law-making process in the nation had become so ineffective and inefficient in the nation.

It is time the ESIC turned a new leaf and sent its young officers for training on Legislative Drafting conducted by the ILDR of the Ministry of Law & Justice, to prevent recurrence of such anomalous situations. Legislative drafting NB: The Note in Pdf is available in the following link:

Training Note Wages

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Sorry! No ‘hostages’ there, Mr. Finance Minister!

The following are the excerpts from the speech of the Finance Minister, Mr. Arun Jaitely while presenting the Budget of the Government on 28.02.2015:

“61. Madam Speaker the situation with regard to the dormant Employees Provident Fund (EPF) accounts and the claim ratios of ESIs is too well known to be repeated here. It has been remarked that both EPF and ESI have hostages, rather than clients. Further, the low paid worker suffers deductions greater than the better paid workers, in percentage terms.

62With respect to the Employees Provident Fund (EPF), the employee needs to be provided two options. Firstly, the employee may opt for EPF or the New Pension Scheme (NPS). Secondly, for employees below a certain threshold of monthly income, contribution to EPF should be optional, without affecting or reducing the employer’s contribution. With respect to ESI, the employee should have the option of choosing either ESI or a Health Insurance product, recognized by the Insurance Regulatory Development Authority (IRDA). We intend to bring amending legislation in this regard, after stakeholder consultation.”

(http://www.thehindu.com/news/resources/full-text-of-budget-201516-speech/article6945026.ece)

 

We, first of all, thank Mr. Arun Jaitely that he has chosen to consult the stakeholders before making amendments to further his observations on ESI Scheme.

In regard to his proposal to allow option to the employees to choose either ESI or a Health Insurance product, recognized by the IRDA, we have already brought out the well-known fact the medical benefit provided by the ESIC is just one of the many benefits and that it has close connection with important cash benefits like Sickness Benefit, Extended Sickness Benefit and also Sickness arising out of pregnancy and Sickness arising out of Confinement, Sickness arising out of premature birth of child or miscarriage.

In the present write-up we would like to remind the Minister just one fact which might not have been brought to his notice by the overzealous bureaucrats who wanted to please him so that he could, in turn, please the private players who would be pleased if the ESIC, which affects their area of operation, is not there.

The Minister has gone on record having said that the ESIC does “have hostages, rather than clients”.

The fact is that the ESI Scheme is run by government. Mr. Arun Jaitely belongs to that Government now. And his statement implies that he is of the opinion that the Government of India does have hostages through its ESI Scheme and not clients.

But, the employers through whom and with whose  active co-operation the scheme is run, would not and cannot say that they are held hostages. The ESI Act is not a compulsory provision. Because, the employers are free to get themselves and their employees totally exempted from ESI coverage.

Sections from 87 to 91-AA deal with exemptions. If the employers are able to provide benefits which are ‘substantially similar’ or ‘superior’ to those provided by the ESI Corporation, they can, as a matter of right, demand exemption from coverage under the ESI Scheme.

It is so simple. There is a format in the ESIC offices for this purpose. There are three columns in it. The first one lists out the benefits provided by the ESI Scheme. The next column is to be filled in by the employer recording the benefits that he provides. The third column is intended to be filled by the employer wherein he would say whether, in his own assessment, the benefits provided by him are ‘substantially similar’ or ‘superior’. Let them assess themselves first that way, before coming to the Minister and saying that the ESIC is holding them and their employees hostages.

The ESIC had successfully challenged all the employers, on many an occasion, whether they were ready to provide benefits on par with those provided by the ESIC. But, none came forward.

The Private Players do not want to provide all the benefits provided by the ESIC. Their intention is not to provide ‘social security’ but to ‘earn profit and throw a portion of it to all the political parties’.

But, ESI Act is for the welfare of humanity. It has kindness in-built. The deficiencies in providing service were and are only man-made and they can be set right by committed leadership backed by the Labour Ministry committed for honesty and transparency in running the organization. “Cleaning corruption is like cleaning the stair-case. It must start from the top”. There had been many an illustrious era that the ESIC has seen in its 63 years of existence, although it had seen many dark spells too.

ESIC has the capacity and can make the nation strong economically, if it is well-run.

We, therefore, request the Hon’ble Finance Minister not to rely only upon the convenient filenoting submitted by his pliant bureaucrats without studying the 210 years-old poignant and heart-rending history behind the ESIC.

 Slide1

The Finance Minister may better advise the employers to give all kinds of cash and medical benefits to their employees in a better manner than what is provided by the ESIC and seek proper exemptions as per the existing law itself. There is no need for amendments of any kind to the ESI Act, 1948, if the advice given to him by the bureaucrats was to free the ‘hostages’. For ready reference, we provide, in the following link, a presentation on the provisions in the ESI Act, 1948 that govern Exemptions:

 Exemptions

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Filed under Amendment 2015, Benefits, For Trainees, Inspections, Powerpoints

Run the ESIC corruption-free! Do not run down the ESIC!!

“What ideas individuals may attach to the term “Millennium” I know not; but I know that society may be formed so as to exist without crime, without poverty, with health greatly improved, with little, if any misery, and with intelligence and happiness increased a hundredfold; and no obstacle whatsoever intervenes at this moment except ignorance to prevent such a state of society from becoming universal.”

 

Robert Owen, 1.1.1816 when he opened the

Institute for the Formation of Character.

 

The ideal of all matured human beings would only be to see a society that is free from poverty, ill-health and crime so that human potential is allowed to develop in a positive manner increasing the happiness of the living beings all around. In this backdrop, the organisations that provide variety of social security measures to the humanity play a pivotal role. In the Indian context, the ESIC provides and is intended to provide an unmatched security-net to the insured population.

But, with the assumption of power by the BJP, there are many forces acting from within the ESIC and the Ministry of Labour to sabotage the noble scheme. While there can be no arguments for status quo, or to justify the status quo, the steps taken to bring changes must be to improve the social security measures and not to expose the ordinary people to money-sharks in the medical insurance sector. But, the politicians find it irresistible to yield to the moneybags. So, acton is being taken by some people in power to dilute the benefits provided by the ESIC and make it easier for the moneybags to poach into the territory of the ESIC to make money for themselves and for the politicians who yield to their pressure.

Private sharks are compelling the persons in power to introduce exemption clause for pre-existing diseases in the ESI Act too so that they can loot the common people easily.

Are the politicians in power going to yield? Will the bureaucrats sit up, take notice of the evil designs of those private sharks and stand up agains the politicians who work for the welfare of those sharks?

Politicians and Bureaucrats nexus

The simple question is that what is better for the well-being of the humanity must be allowed and encouraged to prevail. And that decision should not be left to a few ministers and bureaucrats only. There must be proper discussion beforehand with all the stakeholders. Our experience shows that the MPs who were required to analyse the issues deep had abdicated their responsibility when the Amendments to the ESI Act were brought in, in the year 2009 / 2010. They did not, simply, care. They did not want to know. The Ministry of Law had behaved in a peculiar manner by clearing the proposal for large scale amendments with scanty analysis. The Parliamentary Standing Committee of Labour had allowed itself to be hoodwinked by the bureacrats. What is more, the CAG who comes in after everything is over has also not done his work properly, when he presented his report of 2014. He did not probe into the construction matters.

Private players are welcome even now

There is no law which denies private players enter into the field of Social Security even now. Already, in the year 1980 itself, the NIIC started certain schemes to introduce PTDB, PPDB, etc., Even they wanted to be housed near ESIC office in Maharashtra so that they could canvass the insured persons covered under the ESI Act. But, they could not find their attempts attractive.

When we talk of privatisation of social security, we must, first of all, know whether it is a service or business.

  1. If this is considered as service, the private players have, practically, no role in it.
  2. If it is considered as a business, there is no need for any new legislation to permit or prevent them.

Corruption of private players in Life Insurance Sector

LIC was not brought into existence, in the year 1956, to do business. It was brought into existence to prevent the private players from continuing with their malpractices. The main intention of nationalisation was to provide “Complete security to policyholders” and to “Conduct the business with the utmost economy and with the full realization that the money belonged to the policyholders.” Because, the mismanagement and malpractice by the private players “had lead to liquidation of as many as 25 life insurance companies in the decade after independence. Another 25 insurance companies had during the same period so frittered away their resources that their business had to be transferred to other companies. All these cost financial losses and consequent suffering to several policyholders who had entrusted their hard earned saving to the care of the company management. This misuse of power, position and privilege by these companies in the private sector was one of the most compelling reasons that influenced the decision of the government of India to nationalize the life insurance industry in 1956.”

Our experience with private corporate service providers

 The issue is whether we have any intention to learn anything from history, both past and contemporary. The ESI Corporation is meant to provide security-net to the lower strata of the society.

Private Bus transports

What is the experience of the common people with the long distance private bus transporters? Do they have any intention to serve villages? Do they not concentrate only on connecting cities?

Even within Delhi, do we not find that. It is left only to the public sector DTC to ply buses during the off-peak hours in the early mornings and nights, while the peak hour is the only preferred hour for private operators?

Private telecom service providers

It was only for the purpose of favouring the private players in the mobile telephony segment, the BSNL was not allowed to enter into that area for long. It was the strident fight of the employees that enabled the BSNL to enter into Mobile market. What is our experience with the BSNL and the private telecom service providers? What is our experience with the grievance redressal system of the private service providers who are invisible when you want to talk to them? One-sided phone calls which can ask you for money and other details but you cannot talk back. Once you complain to somebody, even if you talk back after one minute, you will talk to somebody else and not the same person. They choose to remain invisible when receiving complaints. There is no scope for meeting any person who has some authority at least to deal with the issue. But, you have RTI weapon when it comes to BSNL.

RTI only for BSNL and not for other private players

Is there any private telephone service provider who is governed by the provisions of the Right to Information Act, 2005? (More on the role of politicians and top level bureaucrats to corrode the BSNL from within can be seen in the article: https://flourishingesic.info/2013/09/30/when-the-bsnl-employees-lost-their-ltc/ )

Private Hospitals vis-a-vis Leprosy and TB

How many private corporate hospitals treat patients suffering from T.B or Leprosy?

ESI Corporation can honestly throw a challenge to the private operators, if need be. No private corporate player can afford to provide the cash benefits that are extended by the ESIC. Moreover, the proprietary interests of the private players and the resultant harassment faced by the working population are on record as could be seen from the “Oxford Book of Legal Anecdotes – Michael Gilbert”. No common man in India can afford to fight against such injustices inflicted by the private operators. ESIC is kindness inbuilt. This is a public trust with no proprietary interest. If the ESIC is allowed to co-exist with the private players, if anybody’s ideology necessitates allowing such private players, it can be proved within a short time that nobody can surpass ESIC then too.

Social Security and the USA

Franklin D Roosevelt, in his message to the Congress in 1934, felt that the first objective of any nation would be the security of its men, women and children. That this security is provided mainly through the Social Security measures implies that the governments have the primary role in providing that security and it cannot be subjected to the commercial interests. Franklin D. Roosevelt said, while signing the Social Security Act, on 14th August, 1935, that Act was, “in short, a law that will take care of human needs and at the same time provide the United States an economic structure of vastly greater soundness.”

“The threat to stability of Social Security has been apparent for decades. For years, political leaders have agreed that something must be done… We can postpone action no longer. Social Security is a challenge now; if we fail to act, it will become a crisis. We must save Social Security and now have the opportunity to do so.” – President George W. Bush – May 2, 2001.

 

In India, the Centre has not so far given any amount as Grant to the ESIC. The experience of Peru, the only country that ventured to privatise social security was not an example to be emulated but a warning. “Some of the PAYG (Pay As You Go) systems distribute their benefits very inequitably. Since most Latin American countries rely or relied heavily on indirect taxation to subsidize social security benefits, the poor contribute disproportionately to services they probably will never receive.” (Partial) Privatization Social Security: The Chilean Model – A Lesson to Follow?Roland Eisen.

The scheme must be run only by government so that there is a larger base

 The ESI Scheme in India which collects only 1.75% of wages as Employees Contribution is still viable for almost 6 decades without any assistance from Central Government, only because it is compulsory and also because the field of dispersal of benefit load is larger. This is in sharp contrast to the position obtaining in smaller countries where the employees contribution is much more, ranging from 27 in Germany to 69-73% in Scandinavian countries.

 Corruption is the main problem in India

Maintenance of toilets in bus stands has been privatised for long. What is our experience with those toilets under private managements? Can the officials in charge have any control over their activities of these private players, who are the source of ill-gotten money for the politicians. People suffer in silence every day in every bus stand, only because of corruption, both political and bureaucratic. Our nation must demonstrate that it could do, at least, smaller things efficiently in a corruption-free manner.

If the persons in power can ensure a corruption free society, then social security provided by the ESIC need not be privatised.

If they cannot put in place a corruption free society, then social security provided by the ESIC should not be privatised.

Non provision of Primary Care is a real threat

Non-attention to Primary Care in the nation is a real threat to the ESIC in providing even Primary Healthcare. Health services in India are provided through a three-tier setup namely primary, secondary and tertiary. Primary care is the healthcare provided at the primary level of care, which is the first level of contact of the community with the health system. Cases which are more complex and need specialised care are referred to the secondary (District hospital) and tertiary level (Regional and national hospitals).

Primary Health Care was accepted as the best approach to achieve the goal of ‘Health For All’ in the Conference of the World Health Organisation held at Alma Ata in 1978. ‘Health For All’ is defined as an attainment of a level of health that will enable individuals to lead a socially and economically productive life. ‘Health For All’ was envisioned to be attained in the year 2000.

The fundamental focus of this approach is on universality, comprehensiveness and equity in health. There is an intricately intertwined relationship between Primary Care to be provided to all and the Primary Healthcare to be provided by the ESI Corporation to the persons covered under the ESI Act. Non-observance of the medical requirements by the poor affects the rich directly in the long run. It is, therefore, in the self-interest of the rich to care for the poor.

For the success of the ESI Scheme, Prof B. P. Adarkar wanted the certain extra measures to be taken. His stand was that the ESI Scheme should not be “saddled with burdens legitimately belonging to other branches of social insurance”. He made four assumptions for the success of the ESI Scheme. They were

(a) the adoption of a scheme for Unemployment Insurance and creation of new employments in the post war period,

(b) the establishment of a scheme of Old Age Pension,

(c) the adoption of certain pre-medical measures like education in health and improvement in environment hygiene besides regulation of wages and rigorous enforcement of factory laws and finally

(d) a National Health Drive.

So, it is in the interest of the ESIC also to influence the Governments at the Centre and in the States for a National Health Drive to focus attention on Primary Care.

The political costs of inequality are recognized and accepted as being too high. The economic costs of fighting the effects are also high. Citing some research, the BBC also noted that for each dollar spent on poverty causes, seven dollars were saved on consequences.”

Success:

 The intention of the government must be to ensure proper medical care to the public through public sector.

 

Paul Krugman

The present attempts at weakening the ESIC and diluting its benefits with the aim of enabling the private players to poach into the territory of the ESIC is anti-common man. The ESI Scheme can ensure tremendous success, if only there is intense desire to run the scheme corruption-free.

 

 

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Sickness Benefit and Extended Sickness Benefit: The impact of Budget.

This is the second article in the series, on the announcement of the intention of the Government to free the employees from being held hostage by the Government of India itself, through ESIC. The former one is available at https://flourishingesic.info/2015/02/28/making-esi-medical-facilities-optional-abdication-of-responsibility/

The essential questions now, after the employees choose private operators for medical benefit, are “Who will provide Sickness Benefit? And, on whose certificate? And, what is the monitoring mechanism?”

Or, has the BJP chosen to do away with the Sickness Benefit altogether?

Have the officials who suggested this proposal examined all the issues of various dimensions involved in it?

The people who are farm workers are paid only for the day of actual work. If they fall sick they would not be able to go for work and will be confined to bed to take rest. There would be no income for them for those days of abstention from work. On the other hand, they would have to spend money for medical treatment during that period. That expenditure must be meted out from their savings or by borrowing.

The same was the case with industrial workers before the ESIC came on the scene. It was this kind of situation, the loss of income during certain period coupled with the necessity of incurring medical expenditure during the same period, that was sought to be answered to by the ESI Scheme. Once covered under the ESI Scheme, the employees get medical treatment and medicines from the ESI medical institutions. The period for which they are required to be on abstention from duty is decided by the medical officers of the ESIC who issue certificate to that effect. The employees get around 60-70% of their wages in cash for those periods of abstention as Sickness Benefit for a maximum of 91 days in two consecutive Benefit Periods, which is actually one full year.

Now that the overenthusiastic BJP regime has declared its intention to free the employees from being held hostages by the Government of India (as invented by Mr. Jaitely), will the BJP stalwart explain the consequences of his decision on Sickness Benefit?

Maybe, they would not want to step back for reasons of prestige. They may even declare that the private medical institutions would issue certificates, which must be honoured by the ESIC Branch Offices.

Or, they may say that there will be no Sickness Benefit at all.

Anyway, if the former is the solution given by them, another question arises. The Medical Officers of the ESIC are monitored through a system of Medical Referees of the same organisation. What will be the system to monitor the private agencies that provide treatment and issue certificate to the employees?

Extended Sickness Benefit

Moreover, what will be the fate of the celebrated and important Extended Sickness Benefit?

No certification in the UK for Cash Benefit

Significantly, there is no system of certificates being issued by the medical officers in the UK. They provide only treatment and recommend the period of leave. It is the employees who decide the period of abstention and get cash benefit for those periods from post offices. Can Mr. Jaitely usher in that era? In India, we could not bring it into force for the past 40 years, only because of the general tendency of choosing to remain on leave for the entire period of 91 days. Our society did not become that mature, at least, up to 1989.

That was the reason for the introduction of the words ‘strike’ in Sec. 63 and Sec. 97 (iv-b) of the ESI Act in the year 1989. One would be happy if the Indian society has become so mature that the Government considered it unnecessary to retain these checks and balances.

Or, another method is to make the Sickness Benefit totally unattractive, by reducing the percentage of the benefit. But, as per ILO mandate, it cannot be reduced below 45% of the wages earned.

So, the alternative is to change the beautiful, time-tested and war-withered-veteran, the Sec. 2 (22) and modify the definition of the term ‘wages’.

Wages can, hereafter, be defined as the basic pay only which may be decided only by the employer and it may even, for example, be just 10% of the total wages. So, even if the Sickness Benefit were increased to 100%, the quantum of benefit would not be attractive to the Insured Person.

No need to worry how he would sustain his family during the period of Sickness and Extended Sickness that runs into two years, i.e, 730 days. Mr. Jaitely, the Finance Minister, has now the authority to believe that such people would fend for themselves.

Adharkar was prophetic!

Pity, a Noble scheme of the Government of India has fallen, for quite some time, already, into the feeble hands of the corrupt and inept! Prof. Adharkar was prophetic. He said that the success of the ESI Scheme depended not only on the honest working of the ESI Act by all concerned. But, by introducing some more measures by the Government. He wanted that the ESI Scheme should not be “saddled with burdens legitimately belonging to other branches of social insurance”. Therefore, while formulating the ESI Scheme, he made four assumptions for its success. They are:

  • Adoption of a scheme for Unemployment Insurance and creation of new employments in the post war period,
  • Establishment of a scheme of Old Age Pension,
  • Adoption of certain pre-medical measures like education in health and improvement in environment hygiene besides regulation of wages and rigorous enforcement of factory laws and, finally,
  • National Health Drive.

While some steps had been taken in respect of items 1 and 2 during the past 60 years, the required importance has not been given to items 3 and 4. Consequently, Adharkar’s  dreams which were actually achievable and have been achieved in many countries are becoming distant dreams for Indian common people, with the present Government vying with the former one in diluting labour laws. Moreover, ESIC is blamed when it faces and suffers from the negative impact of the non-performance of the politicians on these four areas.

The root cause of all evils!

The only solution for all the problems is to compel all the political parties to make the source of funds of all these parties totally transparent. That alone will strike at the root cause of all the ills plaguing the nation in various spheres.

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Making ESI Medical facilities optional: Abdication of responsibility!

 

It is said that the Government of India is going to make the ESI Medical facilities optional. It is also said that the employees would be given option to choose medical insurance of private operators.

First of all, ESIC does not provide medical facilities only. Medical Benefit is just one of the five major benefits provided by the Government of India to the working population through the ESIC. The other four are cash benefits provided in the contingencies of sickness, maternity, disablement and in the event of fatal accidents. No private player can ever match the benefits provided by the Government through the ESIC. It is not necessary for one to cudgel one’s brains to go through the monumental document of Sir William Beveridge, and the passionate report of the compassionate Prof. Adharkar to understand how and why it must be the duty of the Government of India to provide these benefits to the working population.

Even The Hindu conceded editorially on 01.01.2005 that “The package (of benefits provided by the ESIC) can rarely be matched by private employers on their own because of the heavy costs involved – not to mention the disinclination among employers, with honorable exceptions, to operate health care systems for their workforce”

It is the Government, which runs the ESIC. As far as the medical benefit is concerned, the Government can run the hospitals and dispensaries very well. It can control corruption, if it wants to. But, the political parties that came to power successively were not interested in proper running of the administration. They wanted to have the power of transfer of the officers of the ESIC, for mala fide reasons. The financial strength of the organisation, appreciated by the Economic Times in 2003 was weakened deliberately and more than Rs. 15000 crores of ESIC funds frittered away for questionable purposes.

ESI Scheme is the backbone of the nation’s economy. Just like the backbone, it remains invisible. So, the sensation seeking media – even major media – did not care what was going on in the ESIC when so many things went awry.

BJP is definitely leading the country in the wrong direction. We have to learn from USA and Cuba about the provision of medical benefits to the people of the nation. US is a warning and Cuba is  an example. Poor in USA go to Cuba for treatment. (Of course, not only those employed in factories but others as well).

Whatever be the ‘ism’s they are calling, nothing could succeed in India or any nation, for that purpose, unless corruption is controlled. And, corruption can, really, be controlled.

Making the source of finance for every political party transparent is the first step to eradicate corruption. Unless BJP comes forward to enact appropriate law for this purpose, they cannot make the people believe they are the saviours of the people. Because, as things stand, the political parties collect money from corporates and the people in that party share that money among themselves. Funny, these people quote scriptures in public, to the public.

 

When Tony Blair laid down office as the Prime Minister of the UK, his personal worry was how to settle his personal loans. In India, no councillor of Municipality would remain a debtor after a single tenure in office as councillor. What to talk of Ministers who are fond of aristocratic life style!

ESI medical benefits are supposed to be really qualitative. The pharmacopeia is of WHO standards. Still, it is the unwillingness and greed of the politicians in power and the corrupt motive of the officials, which prevent the ESI medical institutions from reaching greater heights.

Mediclaim policies of private institutions are not the panacea for it. There are many other practical problems posed by the latest decision of the Government, which wants to abdicate its responsibility on this score. They will be dealt with later, in public interest.

An article underscoring the importance of this social security scheme is uploaded in the following link, for those who would like to know the history behind the scheme.

Click  for Articles here.

Sickness Benefit?

Now, more than anything else:

Who will provide Sickness Benefit? And, on whose certificate? Has the BJP chosen to away with the Sickness Benefit altogether? Has it examined the issues involved in it? Pity indeed!

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Ms. Mamatha Banerjee happy with the ESI Hospitals in Kolkata!

“The excellent performance of the ESI Hospitals in West Bengal run by our labour department has been recognized by the Centre. An incentive grant of Rs 22.33 crore has been provided, which is first time ever to be received by any ESI Hospital in the country,” the CM posted on her Facebook page on Saturday.For more:

http://timesofindia.indiatimes.com/india/Mamata-Banerjee-praises-Centre-on-Facebook/articleshow/45084287.cms

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Mr. O. Abdul Hameed, former A.C, on ESIC Medical Colleges!

(Mr. O.A. Hameed, former Additional Commissioner of the ESI Corporation, has written the following in the Facebook, which is reproduced here for the benefit of the readers)

“After seeing ESIS from within the organisation at several level and at several States including its Corporate HQ and then from Industry in two States and one UT, I feel ESIS scheme has utterly failed in its primary goal. For me the primary goal is to provide satisfactory medical care with greatest emphasis on primary medical care through the dispensaries. Why do I say primary medical care is much more important ? The object of the scheme is to to prevent absenteeism due to sickness by keeping workers healthy, and by keeping their dependent healthy and in case of illness, to ensure that they are cured as early as possible, so that they can join back the economic activity and contribute to their own need-satisfaction as also the national production and productivity. Primary medical care is also the most accessed benefit unlike cash compensation since every one in family need to go to a doctor for small to major ailment and while wast majority go to primary medical centers, those needing super-specialty would be a fraction. If you take a group of 1000 IPs/family member during a period of one year, we may find that at least 900 would need to go to a doctor at least once during the year, whereas not more than 5 would need super-specialty care. It is in the Primary care role, ESIC failed miserably, by asking the contributing person to go to State Government, while enforcing contribution! Panel system in major state provide no medical care at all, just leave certification and primary medical cares dispensaries in most state is very poorly managed. ESIC has been taking the stand that medical care is responsibility of State and it is difficult for them to take over. When ESIC can not run primary care dispensaries, providing basic infrastructure and personnel, they are now embarking on very expensive step of medical education by setting up over 15 medical colleges besides PG centers, nursing colleges, para-medical colleges etc. It is like, if you can’t provide dal-roti, provide chocolate cake and to do that set up several air conditioned cake factory!”

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But, things had, long back, gone beyond the stage of consideration of this valuable advice. So many projects running into hundreds of crores of rupees were sanctioned, in the year 2008-09 itself, for construction of buildings for the Medical Colleges, even before the Parliament passed Amendment Bill in the year 2010.

Event that Amendment came into existence by deceiving the Parliamentary Committee. Ministry of Law did not want to go into the merits of the issues raised by Mr. A. Veerappan. Herculean attempts made by him to convince the Members of Parliament met with improper response by those members. Only a few workers unions in Chennai and Banagaluru raised voice of protest. Parliamentary approval was managed on the last day of the session. For more on them, click on these links. (https://flourishingesic.info/2012/10/11/prof-adarkar-and-esic-medical-colleges/) & (https://flourishingesic.info/2012/09/13/no-time-to-read-so-esic-got-medical-colleges/)

Now, there are buildings but no medical colleges, Ayanavaram being the best example. Land had been alienated to CMDA too, unnecessarily without any authority. (https://flourishingesic.info/2013/02/21/executive-powers-of-the-chairman-standing-committee-of-esic/)

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A reader from London has sent an email which describes the situation very appropriately, with precedents. Excerpts:

“… I am reminded of the 3rd Law of ‘The 48 Laws of Power’, written by American strategist Robert Greene and the said 3rd Law is reproduced under:

“Conceal your intentions. Keep people off balance and in the dark by never revealing the purpose behind your actions. If they have no clue what you are up to, they cannot prepare a defines. Guide them far enough down the wrong path, envelop them in enough smoke, and by the time they realise your intentions, it will be too late.”

I am sure that you will agree that the above law holds good on all the issues raised by you in your write-ups, as the real intention of the powers-that-be behind such reckless actions are indeed malafide, but camouflaged to hoodwink the gullible public….Now coming to the yet another issue of manifest misuse of administrative powers and total lack of accountability …. of such powers-that–be, but conveniently forgotten with the passage of time, as the public memory is too short, as the adage goes.  … give a thought on the so called ‘Census’, futile exercise undertaken in all Regions, ordered at gun point, in the year 2007, involving considerable expenses at the cost of stake holders’ hard earned money, but with no useful result to the organisation. …”

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Readers may please go through the Comments below as they contain important information.

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Theory & Procedure on ‘Employment Injury’ – A Presentation!

A powerpoint Presentation on the theory and procedure pertaining to Employment Injury is given below. Hope readers will find it useful.

Employment Injury

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When the BSNL employees lost their LTC…..

Q 1. Why did the BSNL employees lose their LTC and the benefit of encashment of Leave?

A. Because, they did not care to know what was going on, when their Management was leading the BSNL in wrong direction to land that organisation in the red. These employees simply were imagining that it was not necessary for them to know anything about what was going on at higher levels of the organisation.

Q 2. When did the BSNL employees start evincing interest in knowing what their Management was doing?

A. They became alert and curious to know what was ailing their organisation, only when they lost promotion prospects and started stagnating in their career, when they were about to lose their service benefits one after the other, when they were offered VRS, and when the BSNL Management started saying openly that the financial position was not okay with it.

Q 3. What do the employees of BSNL do now?

A. They delve deep into the issue and examine where their Management went wrong. They show keen and real interest in extending the reach of the BSNL to new areas, where people want BSNL broadband but the BSNL Management is showing royal indifference to their suggestions so that the  situation would facilitate the private players to make money in those areas. They are not happy when their Management tells them not to bother themselves about expansion but just to maintain whatever they already have. They want the management to purchase new machinery and equipment to match the services rendered by private operators. They want vibrant BSNL. They protest against the slackness of the company in making fresh investments. “The new machinery is not being bought by the company which is hitting the growth prospects badly” said Mr. Nalawade, Secretary of BSNL Employees’ Union. (Indian Express – Dec 16, 2011).

Q 4. Could things have been different in BSNL?

A. Possibly, if the employees (Staff and Officers) and their Federations had woken up earlier to save the organisation and raised these demands at that time itself. These Federations could have taken the unlawful activities of the Management of the BSNL to the knowledge of the public in time. They could have played their role effectively in averting the calamity. But, they did not do anything when they knew that things were going wrong. The Federations of the employees did not act when they should have acted. In other words, whatever they are doing now could have been done by them earlier. That could have changed the scenario.

Q 5. What is the reason for BSNL to remain in the red?

A. Interference of the politicians in power. The BSNL management should have been given freehand to run its affairs in a competitive market. They should have ensured that the Management was functioning effectively and also objectively without there being any misuse of power by the bureaucrats. But, the politicians did not permit professional management of BSNL. They wanted to favour the private players by curtailing the role of the BSNL in the nation. “In the past four years, BSNL has accumulated a loss of Rs.25,258 crore spectrum as payments for 3G and broadband spectrum depleted its reserves and expansion plans were hobbled because of political interference and litigation, harming its ability to compete with private companies such as Bharti Airtel Ltd and Idea Cellular Ltd.” (Live Mint. Aug 06, 2013).

As long as they are governed by the ministry and ministers and not their own board, whether they get government help or not will not make a difference, said B. K. Synghal, former managing director of Videsh Sanchar Nigam Ltd (now Tata Communications)” . This is what many Ministers do when they are given power to play a role in the Administration. They have their own commitments to so many that they spare no chance to make the organisations under their control to cater to their various needs. They do not allow autonomous bodies function autonomously. Honest bureaucrats who run those autonomous bodies are found by them to be inconvenient. If there are dishonest bureaucrats, these Ministers, instead of pulling them up, join hands and and make hay. There are and were some exceptions, but they are rare and are not encouraged. As a result, many honest bureaucrats develop a tendency to seek transfer out so that they were not required to be party to the misdeeds of such ministers. This makes the designs of the Ministers easier.

Q 6. What are the suggestions by ‘experts’ to revamp the BSNL?

A. “In 2009, a panel consisting of technocrat Sam Pitroda and banker Deepak Parekh had recommended that the government sell a 30% stake in the company to the public and also cut its staff by 100,000.” (Ibid.).

Q 7. What is the need to sell 30% stake of the PSU?

A. These ‘experts’ have their own axe to grind. They do not want BSNL to flourish. The BSNL does, in fact, have the potential to provide cable connection to the Televisions of all the house-holds in India. They can facilitate people seeing all channels or any channel of their choice at a much cheaper cost. At one stroke all the private DTH service providers and cable connection providers would vanish from the scene. That would facilitate the common people immensely. But, such an arrangement is not convenient to the politicians in power, irrespective of the party in power, as the BSNL would not give money to them, in black or in white while the private players do, in both. That is why these salesmen of the nation are out to sell the government undertakings to private people. Earlier too, a successfully-run VSNL was, unnecessarily, sold to private hands by the erstwhile rulers.

Moreover, these politicians do not bother to enforce RTI Act in the institutions of Airtel, Tatadocomo and other private service providers. But, the BSNL and MTNL are subjected to it. When all are in the same field, if the private players are also subjected to RTI Act, the money squandered away to the politicians by these private players would become known to all. The politicians and the so-called experts are, therefore, not for it.

The politician-top level bureaucrat-businessman nexus is all out to spoil the BSNL and the nation too, in that process. The very salary drawn by the top-brass of the private service providers and the top-level officers of the BSNL would show that the gap is extreme. Likewise, a comparison of the lower level workers in both would show that the BSNL pays them reasonably while the private service providers pay just pittance and have contracted the work out. While BSNL and MTNL pay all its employees well, the rich and poor gap is made very very wide in the offices of the private service providers. The Indian society does not grow on healthy lines with such private players around. An unjust society is created by these private players duly encourage by the politicians and the ‘experts’ who are out to sell the nation.

Q 8. The VSNL’s former Managing Director blamed the interference and control by the Ministers over the BSNL for the problems faced by the BSNL. But, who is blamed by the Minister for the ills of BSNL?

The Minister blamed the employees and accused them of inefficiency. The BSNL is not permitted to function even upto its Equipped Capacity. The Working Capacity is just two third of the Equipped Capacity. Still, the employees are blamed in public to justify privatisation of telecommunications. But, the VSNL was sold, by the BJP-run government even when that undertaking had been run efficiently by the officials.

Junior Vihadan - January 7, 1996

Junior Vihadan – January 7, 1996

Q 9. Is the financial position of the BSNL still in the red?

A. Yes. Their letter dated 06.05.2013 says so. The text of the letter is given below (Emphasis supplied).

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BHARAT SANCHAR NIGAM LTD

(A Government of India Enterprise)

Bharat Sanchar Bhawan H.C. Mathur Lane, New Delhi-01

No. 13-1/2013-PAT(BSNL)                                                                                                                                                                                                         Dated: 6-May-2013

To

All Heads of Telecom circles.

All Heads of other Administrative units.

 

Sub: Expenditure Control in BSNL.

In partial modification of BSNL letter No. 7-8/2010/EF/Part/1 dated 05.09.2011, the competent authority has decided that as financial performance of BSNL is not improving, All India LTC facility will remain frozen for all BSNL Employees till further orders. However, the employees who cross the age of 59 years shall be allowed to avail one All India LTC during the last year of their retirement.

Other terms & conditions of the above letter dated 05.09.2011 will remain unchanged.

Sd-

[Sheo Shankar Prasad]

Assistant General Manager (Pers.V)

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Q 10 . Who is the ultimate sufferer now that the BSNL is in the red?

A. (1) The common public of the entire nation, especially the rural folk, because once the BSNL is out, the private players can form a cartel and loot the entire nation, the way the cement cartels and oil cartels do, at present and

(2) The employees of the BSNL who chose to remain ignorant in the blissful belief that they were just employees and were required to do only the duty assigned to them and were not required to spare time or tax their brain to know what was actually going on in the top echelons of the organisation. Their promotions, perquisites and career are in jeopardy today, as they remained, until yesterday, totally unconcerned about the events that actually involved them and were to affect them.

Q 11. What is the moral of the story?

A. ———. (Readers to fill up the blank).

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ESIC: A review in Heavens ! – Episode II

It so happened that we had a chance, recently, to visit the Heavens, and come back too. What we saw and heard there were found to be worth sharing. Hence this attempt. 

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What Mr. Wagner asked raised the curiosity of everyone. They requested him to explain the facts without putting questions.

Mr. Wagner continued, “There was one Mr. Charles Ponzi. He collected money from a lot of people promising that he would pay them very high returns. Attracted by his promises, people poured in money. ‘He promised investors outrageous returns of 50 percent in 45 days, or 100 percent in 90 days. Ponzi paid these investors using money from other investors, rather than with actual profit….He bought a mansion in Lexington, Massachusetts, with air conditioning and a heated swimming pool. He reportedly made $250,000 a day.”

“How could he pay so much?” asked Mr. Beveridge.

“Yes. He paid money to the investors from the deposits made by the subsequent investors. He could not invest the deposits properly in any venture to make profits. He did not pay the investors from dividends that he got any source.”

“How long could he go on like that?”

“His reasoning was that as long as the inflow is more than the outflow, there was no problem for him. That was the reason he could continue with the scheme for so long. He could run the scheme only for two years. When The Boston Post started investigating and bringing out the facts, the scared depositors stopped paying further. Naturally, it caused the bubble to burst.”

“A lone man had brought sufferings to millions.” concluded Mr. Dingell. There was sullen silence there for some time.

Mr. Murray broke the ice. “But, the United States Social Security Administration has not learnt any lesson. These administrators also want to run the Social Security Scheme just like that of Ponzi scheme although they labour so much to portray that they are not managing it like the Ponzi scheme”.

“Yes. They say, ‘As long as the amount of money coming in the front end of the pipe maintains a rough balance with the money paid out, the system can continue forever. There is no unsustainable progression during the mechanism of pay-as-you-go pension system and so it is not a pyramid or Ponzi scheme’. But, this very concept is Ponzi Scheme only.”

Mr. Adharkar intervened. “But, we did not conceive of the ESI Scheme in India that way. We wanted the scheme to be the backbone of the nation’s economy. Our concept was making the scheme largely self-sustaining and stronger in the long run.”

(Economic Times: 05.02.2003: Please click on it for bigger image)

(Economic Times: 05.02.2003: Please click on it for bigger image)

Mr. Beveridge nodded in assent. He said, “Yes. Indians managed the ESIC funds very well. If they had continued with that trend, the scheme would have become self-sustaining in the long run. For example, their surplus of about Rs. 16000 crores would have earned them, on proper investment @ 10% interest per annum, a sum of Rs. 1600 crores. That was equivalent to the revenue generated in Maharashtra and Tamilnadu combined together. Or it was equivalent to the revenues generated in many other states. Once you have the economic strength to run the scheme with your own funds, you are stronger economically and provide better security net for the posterity forever.”

“But, what is the problem now? They can continue that way.” said Mr. Dingell.

“No. Things are different now. The surplus funds have been frittered away in the name of establishing medical colleges and constructing buildings for them.”

“How is the scheme being run, then?”

“By increasing the wage limit of the employees coverable under the Scheme. That appears to be the only way, once all the Medical Colleges start functioning. You know, these medical colleges do not collect donations like the private medical colleges. There is no income through them, but only expenditure. And, the expenditure is very huge. If you compare the revenue generated in a region with the expenditure required for the medical colleges in those regions only, you will be alarmed to think of the consequences.”, said Mr. Adharkar.

“But, can the Indians increase the wage limit everytime they find the money available is inadequate?”, said Mr.Wagner.

“Yeah. That’s what makes Mr. Adharkar sad”, said Mr. Beveridge.

There was a wry smile in the face of Mr. Adarkar. “That is not the only thing that makes me sad” , he said.

“What else?”, demanded Mr. Beveridge.

“The brazen interference of politicians in the transfers and postings of the officers in Group A and Group B level in the ESI Corporation. That is wrecking the system. The Labour Ministers do not want to stabilise the system so that it works for public welfare. They want to play godfathers to one or the 0ther officer and force the Director General to yield. In the process, the officers who are the beneficiaries of such favours from the Ministers demonstrate their loyalty to the Minister and not to the organisation. The pr0blem was there earlier in respect of one or two stray cases, earlier. But, it was Mr. Sahib Singh Verma who wanted to institutionalise his interference in the matters of transfers and postings of senior officers. It was resisted fiercefully. Yet, he could have his way in some cases. Fortunately, because his political party lost the elections he could not meddle with the ESIC and EPFO anymore. But, his successor Mr. Sis Ram Ola also followed the footsteps of only Mr. Sahib SinghVerma. It was only Mr. K. C. Rao who put an end to it in the year 2005. He put the organization, again, on the right path. But, many Indian politicians could not resist the temptation of demonstrating that they are mightier. They believe in the present and, therefore, care for their show of strength only. They do not care for establishing corruption-free system in the institutions.  India, therefore, goes the Haiti way. That makes me sad”, said Mr. Adharkar.

“Oh, My!, I am tired of hearing all these things. I need a break, yaar!”, said Mr. Murray.

“Okay, let us make a move, then! We assemble here next week and discuss about the Haitian examples and warnings, the importance of transfer policy of officers, the consequences of the interferences by the Labour Ministers in the transfers and postings of officers in the ESIC and the EPFO and the necessity for the public to know the facts as all these administrative matters affect only the public and the nation, at last.”

“I agree. The Social Security System of every nation is too big to be left only to the Labour Ministers to be run by them as they please. The public must know why these Ministers have such irresistible temptation to play with the transfers and postings of the senior officers in the ESIC and the EPFO. A trip down the history is essential. Mr. Adharkar has, rightly, drawn the Haitian example. Let us discuss it next week”, concurred Mr. Beveridge.

(Continued in Episode-III)

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Readers who would like to know more of the Ponzi Scheme and the Social Security Scheme in the USA may please click on the following links please for some facts. The opinions expressed therein are subjects of discussion, if not subjects of controversy:
http://mises.org/daily/5658
http://www.youtube.com/watch?v=oh-NqdmEDq4

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