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Beware of the Demolition Squad, Mr. Prime Minister! ESIC is the symbol of Civilisation!!

During a meeting of the ILO in the year 1922, When many other countries had introduced various social security measures the Indian Government was wavering. So one member said that among the civilised countries, India was the only country where there was no social security measure. That was an indication that the world considered social security measures as an index of civilisation. The nature of benefits provided in every country under the Social Security Scheme is the indicator of the degree of civilisation achieved by the people of that county.

When Mr. Joshi, the Indian member heard the aforesaid comment in the world body, he got provoked and said that India would bring in legislation for compensation for employment injury. The Workman’s Compensation Act, came into existence next year in 1923 only because of that promise of Mr. Joshi, the Indian representative, in that world body. That was how India took her first step to enter into the civilised world.

The Royal Commission of Labour which toured India for two years from 1929 to 1931 submitted its report stating that the incidence of sickness was more in India than in any other country and the need for sickness insurance was more in India than in any other nation.

The Beveridge Report

The Committee headed by Sir William Beveridge examined the issues pertaining to labour  for one and a half years and submitted, in November 1942, an exhaustive report which paved way for a civilised society. His report aimed at ‘shaping the economy to serve the people’, while the rich and powerful had vested interest in ‘shaping the people to serve the economy’.

Sir William Beveridge in 1944. He became hero overnight when his report was tabled in the House of Commons in December, 1942. Photo Courtesy: The Guardian, U.K.

Sir William Beveridge in 1944. He became hero overnight when his report was tabled in the House of Commons in December, 1942. Photo Courtesy: The Guardian, U.K.

ESI Corporation was not born in a day. It took more than a year and half for Prof. Adharkar to go through the report of Sir William Beveridge to adapt it to Indian conditions. Comprehensive analysis was made on the issues relevant to our nation. The report was submitted by him on 15.08.1944. Consequently, when the ESI Act was enacted in 1948, the responsibility of running the Scheme was vested in the Government.

Art. 41 insists on “Public” Assistance

The founding fathers had rightly entrusted the responsibility of running the Social Security Scheme to the Government only. That was why Art. 41 of the Constitution directs, as under:

“The State shall, within the limits of its economic capacity and development, make effective provision for securing the right
◦ to ……,
◦ to …………,
◦ to public assistance in cases of unemployment, old age, sickness and disablement, and in other cases of undeserved want”.
The Art. 41, thus, gives direction to the State that in cases of Sickness, disablement and in other cases of undeserved want, the State is to provide “PUBLIC ASSISTANCE” . The State cannot, therefore, make provisions for “private assistance” and wash its hands of the affairs. The responsibility for Maternity relief was placed on the shoulders of the Government only as per Art. 42.

ESIC reviewed repeatedly

The scheme was made operational in 1952. Many Committees had reviewed the ESI Scheme periodically. They were: The ESIS Review Committee (1966), the Estimates Committee of Parliament (1969-70), the Committee on Perspective Planning (1972), the High Powered Committee on Amendments to the ESI Act (1978), the ESIS Review Committee (1982), Committee on Perspective Planning (1993) and The Report of the Working Group on Social Security for the Tenth Five Year Plan (2002-2007). The meeting of this Working Group said, as under in its Minutes dated 03.07.2001:

“There is need to take new initiatives to extend the spread and reach of the existing social security schemes being administered by the Employees’ State Insurance Corporation and Employees’ Provident Fund Organisation.“

Six Principles of Beveridge

Beveridge had codified Six Principles of Social Insurance. Two among them were the element of compulsory contribution from each insured person and his employer and the “Unification of Administrative Responsibility” through a single Social Insurance Fund. The report of Prof. Adharkar also emphasised the same. The Scheme in India is run by the Government to assure the insured population and the employers that the funds would be managed as per rules, the scheme would be run corruption-free and the defaulting employers and erring employers would be penalised by the State itself. That was a guarantee to other employers and employees that there would be equality in applying law. The grievance redress mechanism under any Government would be open and transparent.

Best financial management in ESIC

The Scheme had been run in a satisfactory manner, in spite of many negative actions of the corrupts and zombies, within the organisation and in the enforcing machinery of various State Governments. If the political leaders had been more committed in the welfare of the people, the Scheme could have done much better. Even in spite of all the pitfalls, the Scheme had been better managed financially than any other public sector autonomous body until the year 2007. Better than private units. The Economic times 05.02.2003 would testify to it.

Economic Times 5 2 2003 copy

Overbearing and misguiding bureaucracy

Any dilution of the the scheme would be challengeable successfully in Court of Law and would expose the Government having fallen victims to the misleading notes of the bureaucrats. Politicians falling victims to the bureaucracy had been brought out very clearly in the famous serial ‘Yes, Minister’. Indian scenario is not different in any manner. Occasions are numerous when the elected Ministers just sign on files as desired by the bureaucrats. India has seen many bureaucrats becoming Ministers and Prime Ministers too, only because the elected politicians could neither understand nor cope with the tactics used by the bureaucrats to bend them to the will of the latter.

During the discussion in the House of the People on 23.03.1992, Mr. A. B. Vajpayee blamed that the bureaucrats were more responsible for creating economic crisis than the political leadership. His statement is one of the many evidences available to prove that the Ministers are led and are not obeyed by the bureaucrats.

The following are the excerpts from the Indian Express dated 24.03.1992:
“Mr. Vajpayee hit out at the bureaucrats, five or six of them, who kept shuttling between the Prime Minister’s office, the North Block and the Planning Commission, and also the IMF, and said they were more responsible for creating the current economic crisis than the political leadership. These officers should not be entrusted with negotiating the Dunkel proposals at the GATT meetings, he cautioned”.

Intention is only to “reduce” benefits 

Private players are free to provide any kind of benefit that matches and surpasses the ones provided under the ESI Act. There is no need for any adventurous dilution of the provisions of ESI Act. There must be proper in-depth study before embarking on any such adventures. If needed, even a pilot project can be formulated and tested. The international experience on such privatisation must be examined. The information already received by the ILO on this issue was only in the negative about such privatisation. There should, therefore, be no reliance only on the filenotings of the bureaucrats to tamper with the existing system just in order to facilitate private players in social insurance. That would result in the private players playing havoc with the living conditions of the working population.

They enter into this field to make money, to prepare profit and loss account while the ESIC as a State machinery prepares Income and Expenditure account. Any hasty measure to allow private players by diluting the provisions of Exemptions under Sec. 87-91 would, clearly, prove that the intention of the rulers is only to reduce the quantum of benefits that are made available now to the working population in the organised sector.

Customer Satisfaction Survey

The Government of Gujarat had conducted a Customer Sastisfaction Survey among the public when Mr. Narendra Modi was Chief Minister of Gujarat in the early 2000s about the services rendered by various departments, as informed by Shri Hasmukh Adhia, IAS, Secretary, Administrative Reforms & training and Director General, SPIPA, Government of Gujarat, during his lecture in the Indian Institute of Managment, Ahmedabad.

Similar survey proposed in the year 2006 in the ESIC had not materialised. One such survey among the beneficiaries of the ESI Scheme would not be out of place, now, before venturing on misadventures. Gujarat Gas Company Limited conducted Customer Satisfaction Survey to understands its own strength and weaknesses.


It was adjudged the best managed company of the year 2004-05 by the Business Today.


Beveridge worked hard and conducted extensive study on various issues for one and a half years to prepar his monumental document and when it was made public,  he became a national hero overnight in the United Kingdom. In India, the bureaucrats do not show any intention to study the issues and impacts by conducting any study but work hard to demolish the scheme overnight.

A cursory survey had been conducted in Mumbai once in the 1990s. It showed that 85% of the employers wanted the scheme while 85% of the employers did not want it. The Regional Directors of Maharashtra would testify to it. So, any radical change in the concept and structue must be preceded, necessarily, by proper study and analysis from all angles.

ESIC can work wonders

We reiterate that as far as the ESIC is concerned the System is correct but the men need to change their attitude. That can be done, when the political leadership is committed to run the Scheme corruption-free. When done, ESIC can work wonders for the improvement of the nation’s economy and prove to the world that our nation is really a civilised nation.

What is more, India can even surpass many nations and reach the top in the Human Development Index. The Scandinavian countries top the Index at present, only because of social security measures which are run corruption-free. That is civilisation.

For more, read ‘Barbarism and Civilisation: History of Europe in our time – Bernard Wasserstein. 


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Builders : Germans : : Sellers : Indians – Part I

Presentation 1

(Dear Readers, The nation is now in the throes of crisis. Present rulers intend to deny the benefits of 14 labour welfare enactments to the workforce in the factories that employ up to and including 39 ‘workers’ for wages, excluding the ‘persons’ who are performing in administrative, supervisory or managerial functions. This will result in abundant supply of Slave Labour to facilitate Money Sharks to exploit and squeeze labour and share the spoils between them and the politicians who are powerful. The text of the Bill is available in the following link:

The issues involved are going to be analysed in this web-site, in detail. Readers may convey their views to the Ministry of Labour in and before 10.11.2014. Part I of the series is here for the readers to have a birds-eye view of the subject)


It was 11.10.2014. When we sneaked into Heaven, we happened see three persons sitting under a tree in the morning sun. On closer view we found that they were the souls who worked for the welfare of humanity, when on earth. They were Otto Von Bismarck, the Iron Man of Germany, Sir William Beveridge, Father of the Welfare State, and Ernest Bevin, the Minister of Labour in the Cabinet of Winston Churchill. All of them looked sad and it seemed that they were concerned about certain issues. We made an attempt to overhear their conversation. Ernest Bevin said, “Mr. Beveridge! I share your concern. I did not know how the Indian bureaucrats put forward such cases before lawmakers. Although it is said, on theory, that the Executive must do what the Legislature says, the reverse is always the case in India, in practice. I find that the Indian politicians do not know the subjects much and are falling victims to the manipulations of the bureaucrats and become willing tools in their hands. I am afraid what the future holds for the common men in India”. “Yes, many Indian politicians want only the post and glory. They do not want to work to understand the issues and explain their enlightened stand in the forum to which they have been elected. This was the attitude of the politicians of India even when they were members of the Constituent Assembly. Wwhen crucial subjects were discussed in the Constituent Assembly, the members were not ready to extend their stay in Delhi but wanted to catch their trains to go back. They subordinated the national interests to their own personal interests, although they visited Delhi at government’s expense, at that time. The trend continues even now.”

Bureaucrats manage the Politicians

“Yes. I find that it is because of the incompetence of the legislators who know only how to manipulate people to win elections. They do not have the capacity or inclination  to understand and analyse the macro-issues affecting the nation. As a result, many bureaucrats have been, directly, made ministers in the central cabinet, to man important portfolio. The elected MPs are just looking at them helplessly. Consequently, the other bureaucrats also find it convenient to keep the legislators as ignorant as possible,  forever, so that their bureaucracy can have upperhand in the governance of the nation.” “I agree. In India, except in exceptional cases, it is the bureaucracy that runs India. The business-magnates, therefore, find it easy to get things done their way, by patronising the bureaucrats who take care to manipulate the opinions of the Legislature. During the discussion in the House of the People on 23.3.1992, Mr. A.B. Vajpayee blamed that the bureaucrats were more responsible for creating the economic crisis than the political leadership. His statement is one of the many evidences available to prove that the politicians are led by and not obeyed to by the bureaucrats. What has been depicted in the famous serial ‘Yes, Minister’ is  applicable more to India than any other country.” Slide2 At that moment, Prof. Adharkar came to the meeting spot. The others welcome him and asked him if he had seen the draft of the “The Small Factories (Regulation of Employment and Conditions of Services) Bill, 2014”, proposed to be made law. Prof. Adharkar, who looked downcast, did not give any reply but sat down on the floor, near Bismarck. Ernest Bevin prodded Adharkar to speak. Adharkar just threw his hands in despair and did not say anything. Bismarck patronisingly patted Adharkar on his back and said, “What can he do, friends? He had done whatever he could and his role was over on 15.08.1944 when he handed over his report to the Government. But, does anyone care to read it, now? He had enumerated some Fundamental Principles also for the success of social security in India. That too is not read by anyone. At least, the present day politicians can read the 1929-31 report of the Royal Commission of Labour. Many findings reported therein are relevant in the present context too. But, nobody cares, now. That was not the case then. Those were the days when politicians were really concerned about the real welfare of the people. It is natural that Mr.Adharkar is upset.” Beveridge said, “Yes. But, now a days the politicians in India run after moneybags and believe that the poor can be quietened by propaganda and repression. In short, the politicians believe that they can flourish by making the rich really happy and by making the poor believe they are happy.”. Adharkar looked at the other three. He said, “What the Bill is going to do is to take India back to the pre-1923 situation. It was only in 1923 that the Workman’s Compensation Act was enacted. Before that, there was no labour welfare measure at all. Even this was enacted in 1923 only because of some provocative remarks by others in the ILO meeting in 1922. All other labour welfare legislations like the Factories Act, Employees’ State Insurance Act, Minimum Wages Act, etc., came after Independence as a bouquet. But, this Bill intends to undo all this.”

 Bismarck pleased the workers and not the employers

Bismarck agreed. “When I wanted to build a mightier Gemany, I laid stress on labour welfare. I set up separate hospitals for factory workers. I brought into force the Accident Insurance Act in 1883, Maternity benefit provisions in 1884, Sickness and Old-age Pension in 1889 and so forth. The nation flourished because the government took care of the people in the lower strata who work on the field by providing them security for livelihood and incentive to work. Even after Germany was devasted after Second World War, it re-emerged to become a mighty economic power and its monetary unit attained full value within 26 years in 1971. But, India which got peaceful transition of power in 1947 has not seen its rupee attain full value till date. The Indian politicians, in my assessment, do not care for the real development of the nation.” Adharkar said, “Yes. In India, politics is the means for making money. Those who have talent enter politics, become leaders and amass wealth. Those who are not fit for anything also enter politics, work as party-workers with the aim of sharing the party-money. They are in politics not for service to the society but to earn their livelihood. The former and the latter make a perfect combination to cheat the public. You see, Tony Blair. He was worried how he could settle his debts, after he ceased to be the Prime Minister of England. But, in India you cannot find a single Municipal Councillor with debts after his tenure even for a single term. The system is corroded so much. There is, therefore, nobody to care for the commoners. The Bill is just symptomatic of this rot that has set in.” “Is the system so rotten?”, asked Beveridge. Adharkar nodded. “Yes. That is why none of the major political parties is ready to disclose the source of their income to the public, through website, in spite of the direction of the Central Information Commission to that effect. A political party supposed to work for the public and collects money as donations from public for the proclaimed public cause, is duty bound to disclose its complete source of income. But, the politicians are mortally afraid to make the source public, only because they remain there as politicians, just in order to apportion that party money among themselves for their personal consumption. As long as the Indian politicians, including the so-called Communists, fight shy of disclosing their complete source of income, they will run after the moneybags only. They will use their legislating power to further the interests of only the rich, who pay them donations heftily as a quid pro quo. This is the root cause of this kind of Bills. This does not take into account the welfare of the workers. Their tall talks about welfare of the people, patriotism, etc., are nothing but farce.”

Indian politicians pave way for  Forced Labour 

Adharkar continued, “These bureaucrats do, however, have a sense of sadistic humour. They call this Bill a part of ‘reforms’. “Yes, I noticed too” said Beveridge. He continued, “Earlier, these bureaucrats called a bill that permits exploitation of work force as the ‘Bill for improving Safety and Health of Workers’. The Indian politicians and bureaucrats believe in forced labour. But, that will not help evolve a civilised nation, as explained in the  Charter of the International Labour Organisation. All along, I had been saying that the making of a nation is possible only with “willing participation of labour”. But, the Indians do not care”. Slide 3 Ernest Bevin interjected. “I find Indian politicians and bureaucrats pursuing a path which is not followed by the UK, Germany, Japan, Switzerland or the Scandinavian countries. These leaders in India mislead the masses. A simple analysis of the employment position in the beverage industry after the entry of two MNCs would show that the opportunity of employment has become less than what it was in 1990. Profit is the only motive for the businessmen now a days, especially those of MNCs. I had said, in the year 1945 itself, after the Second World War was over, that such profit-motive of the businessmen had resulted in world war. I stressed on the need for providing basis economic security to create fairer conditions of living for the working population also. But, Indian politicians do not realise the need for taking real care of their working population. The business organisations like Times of India editorially welcomes such anti-poor, anti-labour and pro-rich policies as ‘labour reforms’ (14.10.2014). India, with this kind of politicians around, is in the throes of crisis.”

ESI Act aims at extending coverage

“I agree”, said Adharkar, “Our ESI Act was intended to provide social security to the employees in the organised sector and its aim was to cover the factories with ten or more employees and also to extend the scheme to establishments in industrial, commercial and agricultural sectors and thereafter to other areas too. But, the proposed Bill, says that the ESI Act and many other Acts are not applicable to ‘Small factories’ which term has been defined as “any premises wherein a manufacturing process is carried on and which employs less than forty workers”. The exploitation of common man by the economically mightier rich will be more acute, if and when this Bill becomes an Act. The protagonists of this Bill have not explained how the ESI Act and other Acts had worked against the interests of the nation. But, they won’t as their aim is to placate the moneybags and, specially, the MNCs, only and not the commoners”.

 Institutional Economists work for better world

Beveridge said, “ See,  what Communism could not achieve has been achieved by Social Security. The rulers must aim for less gap between the rich and poor. That alone will make the nation civilised and the people happy. But, the basic flaw is that  the Indian politicians do not care for Institutional Economics which focuses on understanding the role of the evolutionary process and the role of institutions in shaping economic behaviour. Indians can do wonders if they fine tune the organisations discharging the work mandated by the Acts to work effectively. But, they propose to drive those organisations out from the factories employing less than 40 workers”. All others were listening to Beveridge with rapt attention. Beveridge continued, “One must read, at least, Edwin E. Witte. He  said that “All or most of the institutional economists have been pragmatists, studying facts, not for their own sake, but to solve problems and to make this a better world to live in”. But, Indian politicians are in a hurry to please the rich and ditch the poor. As you said, unless the source of income of the political parties in India is made transparent, India will continue to be run only by the educated dupes.  It will not become a civilised nation. A nations social security measures and their effective implementations are the symbol of civilisation. One can refer to the Human Development Index in this regard.  Seen in this background, “The Small Factories (Regulation of Employment and Conditions of Services) Bill, 2014” is a move in the wrong direction, where there will be total slavery in the nation. I feel sorry for the common people of India”. Bismarck said, “ I feel very sorry for the poor in India. We, the Germans, built our nation. But, the Indians sell their nation”. Bevin

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Lessons from M/s Lehman Brothers


Leslee Gelber has been at loose ends since losing her job. Ken Linton, center, was ousted before the firm collapsed, and he began shorting its stock. Tom Ollquist, right, sold packages of mortgages and other financial products for Lehman Brothers” – IHT

“Tom Ollquist remembers Sept. 9, 2008 — the day Lehman Brothers laid him off — as if it were yesterday. “You’re not going to believe it,” he told his wife. “I was shot.” Six days later, so was Lehman Brothers. Federal regulators let the foundering firm slip into bankruptcy, a collapse that touched off the most perilous week of the financial debacle, after years of freewheeling lending, trading and regulation produced outsize losses that devastated the banking system and brought the economy to its knees…”

“Some of those Lehman alumni who didn’t manage to hang on to Wall Street jobs are still angry, bitter and confused; many others, like Mr. Ollquist, have moved on in their lives. The luckiest, like Ken Linton, a former Lehman trader, made enough money during the boom years to avoid having to think about their next paychecks.

He spends his time flying jets. Others, unable to find banking jobs, are building new work lives.. And, of course, there are those like Leslee Gelber, who is out of work, professionally adrift, and fearful that Wall Street will bounce back without her….”

They simply obeyed and, therefore, felt they were blameless

“Yet few Lehman veterans, or their counterparts at other banks, blame themselves for the havoc their activities wrought. Instead, they point to the failures of regulators….Mr. McKinney left Lehman a month before the firm collapsed, to join a hedge fund. When asked whether he raised any red flags about problems in Lehman’s mortgage business, he declined to discuss that, or any other aspects of his work at the firm. But he noted that financial companies are responsible for adequately managing their own risks.

Those much further down the corporate ladder from Mr. McKinney, including about two dozen people interviewed for this story, say they don’t feel they deserve much blame for what happened at their firm. They were just following orders, they say”.

“It is very human and understandable to feel the pressure of the time and respond accordingly,” says Karen Brenner, a professor of business ethics and corporate governance at  New York University. “These people were operating in a culture where this behavior was prized and rewarded. But I think it is too easy to say, ‘They made me do it; I don’t have to examine what I did.’ These people are professionals with duties and obligations to clients.”

“I spent a long time being very angry,” says Mr. Schaefer, the former Lehman executive turned gas station owner. “Angry for working so hard and doing so much. More importantly, for my family and all the time I was away traveling — the time I put in away from them. Now all that money I earned, the money paid in stock, is gone. I can’t go back and remake it.”

Even a senior vice president could not raise questions

“Mr. Linton evaluated mortgages that were later sliced and diced into securitized investments. In his 13 years working at the firm, Mr. Linton, 43, impressed many with his intelligence. A native of Northern Ireland, he had earned a doctorate in engineering and computer science before moving to the United States to create models for Wall Street. Lehman laid him off in early 2008

He recalls vividly the days in early 2007 at Lehman when his financial models began to throw up more warnings showing delinquencies and defaults, and he remembers colleagues on his desk raising questions about loan quality.

But he said the firm’s ranking as the top loan originator on Wall Street, not to mention the pressures put on the desk by Lehman’s growth-obsessed leadership, made it difficult for even the most senior executives to raise questions, even a senior vice president like Mr. Linton.

He says he has no qualms about his work at Lehman or its economic after-effects.”

“Anyone at our level who had a different view from senior management would find themselves going somewhere else quick,” he says.

Excerpts from International Herald Tribune

with Thanks.

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Social Security in Europe: Warnings & Examples

Successful social security assures successful economy of a nation. West Germany’s economic miracle of the 1960s was, mainly, due to the successful implementation of social security measures.

Some interesting facts pertaining to the 1990s that highlight the important role played by social security measures in Europe and the manner in which the benefits are utilized or misused are given in this article. The relevant snippets are also made available as image files.

East Europe: 1994


The dispensary conditions are not conducive and are very unhygienic.

Government was not ready to spend on hospitals and medicine, as they were “not productive”.

Financially strapped governments had neglected health care and this resulted in unprecedented crisis.

Health situation was so bad in much of Eastern Europe that it was beginning to affect the ability of some countries to compete effectively on the world market.

Patients bring basic medical equipments to the hospitals.

Bribe in single case is much more than salary.

Doctors must cope with run-down equipment.


Attempts were made to change the medical system from communist model. But, it was basically free, in the communist era. One had only to bribe which was not more than a box of chocolates or flowers.


The director of the hospital threatened that he would close it, as there was no essential facility to treat patients.

Doctors who treat patients privately get them operated in State hospitals and do not pay for the service and equipment.

Eastern Europe:

Entitlement of the people to wide range of medical services that was available in the communist era had begun to diminish and got eroded.

State-run medical institutions paid doctors less than bus drivers.

(Refer to the uploaded article, ‘Creaking Health Care’ –The Hindu: 3.12.1994)

West Europe: 1996

Social Security costs became enormous and the E.U. government exchequers were bleeding, because of unemployment benefits.

The reason was that because of the high economic growth and the generous social security benefits, the West European workers began to imagine that their services were costlier and starting demanding very heavy amount as wages.

The European goods had, thus, lost competitive edge.

Employers and Trade Unions could not agree on terms of revival.

West European manufacturers shifted their factories to east Europe.

Social security system encourages workers with less talent and large families to remain unemployed and live off social security hand-outs.

Foreign workers are seen as blocking jobs for indigenous workers.

High taxation affects the workers and they do not have access to common luxuries.

In smaller economies people set up their own businesses.

“Germany’s entry into the United States system of hire and fire” is described “as socially obscene”.

( Refer to the uploaded article ‘Germany, Belgium resist ‘Alliance for Jobs’ –The Hindu: 2.5.1996 )


Malingering in Temporary Disablement Benefit in Germany.

One has to see to believe it.

( Refer to the uploaded news item with photo in the Times of India: 20.1.2007 )

This, in a country where the general level of honesty is admirable, as could be from one incident cited by Mr. Rahul Singh in the Outlook 27.08.2001.

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