Tag Archives: Privatisation

Lord Yama Dharma Raja discusses Amendment to Sec. 44 !



The Otherworld. The venue is the palace of Lord Yama Dharma Raja. Among those in the assembly were Prof. B.P. Adharkar, Sir William Beveridge, Robert Owen, Jerome Blanqui, Villerme, Daniel Legrand and others.

Lord: “Dear Mr. Beveridge ! I was hovering over the Heaven this morning ,watching the activities of the noble souls here. I was shocked to find you people sitting under a tree morosely. That was why I asked Chitragupta to bring you all here. How come you were sad? This is heaven; there is no reason for any soul here to feel worried. But, why is it that you were in a pensive mood, instead of enjoying the morning sun and the soft-blowing breeze?”

Beveridge: “My Lord ! Prof. Adharkar was sad about the activities of the bureaucrats and the politicians in power in India to amend the Sec. 44 of the ESI Act, 1948. He was the architect of the Act there. He knows the consequences of the amendment proposed by the bureaucrats now. He is, therefore, sad. When he explained the manner in which the Indian politicians go about it, I felt sad too. It so happened that Robert Owen and George Cadbury came that way. They were also shocked to hear about the amendment proposed by the Indian politicians. You might, perhaps, have seen us, then, when we were discussing about it”.

Lord: “Amendment to Sec. 44 of the ESI Act ! Did that make you so sad? I wonder why.  May I know what it is, Mr. Adharkar?’

Adharkar: “Yes, My Lord ! Mr. Beveridge had prepared a monumental document to provide social security to the people. It was published by the British Government in October, 1942. His report had, almost, been copied with some regional variations in many civilised countries. Mr. Beveridge had diagnosed the ills afflicting humanity and attempted to provide remedy only to one aspect of it. The ESI Act in India was inspired by his report on Social Security. But, the present day politicians want to do away with it. They are working for the rich to enable them to make more and more money and do not care for the poor who cannot raise their voice and make it to be heard”.

Beveridge: “Yes, My Lord ! It is the duty of the government to protect the commoners from being exploited by the rich and mighty. The Social Security enactments conceived of by me, work in that direction. The concept of Social Security is to make the world a civilised one. Humanity suffers from five ‘Giant Evils’. They are (i) Disease, (ii) Idleness, (iii) Ignorance, (iv) Squalour and (v) Want. Among these five evils, the last one, the “Want”, can be tackled in a relatively easier manner by the governments of every nation through organised action. The ESI Act was enacted by the Government of India in the year 1948 only for that purpose. But, the present day rulers do not care about the niceties of the concept of Social Security. Their present proposal to amend the Sec. 44 will ruin the entire nation. That is why Adharkar is upset so much”.

Lord: “Why do you feel upset Mr. Adharkar? Should the world stand still, as it was in the Forties? Why not the present day politicians make changes to suit the present conditions of the world? After all, more than 71 years have passed after you had given your report on 15th August 1944”.

Adharkar: “No, My Lord ! I would be happy if the concept of social security had been expanded and more benefits given, as is being done in Germany, Norway or Sweden, both in quality and quantity. But, in India the situation is otherwise. When I presented the report I recommended bringing the workmen who were drawing wages upto Rs. 200 pm, excluding Overtime wages, within the purview of this security-net. When the Act was enacted in 1948, the limit was kept as Rs. 400 pm. That was more than the salary of the District Collector in those days. Even in the 1970s, after the III Pay Commission Report was implemented, the limit for coverage was Rs. 1000 pm. That was more than the salary of the Local Office Manager of the ESI Corporation, who was disbursing the cash benefits. His Basic Pay was Rs. 550 pm, after the implementation of the said pay commission report and his total salary was only about Rs. 650 pm when the report was implemented. The Local Office staff members used to prepare the Dockets of payment to these Insured Persons with more respect, as those insured persons were drawing more salary than their own Local Office Manager. But, now the coverage limit is Rs. 15000 pm which is less than the salary of the employee appointed in the lowest cadre in the ESI Corporation. This itself would show that the scheme had not expanded in the real sense, although the number of persons brought under coverage has increased. But, I feel more concerned about the manner in which the politicians of these days want the government to abdicate its responsibility so that the rich businessmen would enter the field and make a mess of the nation”.

Lord: “How come ? Would such privatisation really make a mess of the entire nation? What is the reason given by these politicians to go for such privatisation?”

Adharkar: “These politicians say that the present scheme has resulted in holding the workers as hostages, within the ESIC fold. They say, in public, that privatisation would give them option to seek better facility elsewhere. But, that is not true, My Lord ! It is these politicians who are primarily responsible for corruption of various shades in large scale in every public organisation, including the ESIC. They spoil the organisation and then cite the same state of affairs to blame the organisation and sabotage it. Except some exceptions, the politicians in power do not come forward to make the organisation corruption-free and provide better service to humanity”.

Lord: “In that case, if corruption in public organisations cannot be prevented,  privatisation seems to be the better option”.

Adharkar: “No, My Lord ! These politicians who are not willing to  run this single public organisation corruption-free, in spite of the existence of effective tools like Conduct Rules and CCA Rules to control and monitor the officers, are not going to make the private organisations, which might venture into this field, to act in a corruption-free manner”.

Lord: “Why do they want private role in social security, then?”

Adharkar:  “Their real intention is not to protect the welfare of the workers but to provide more facility to the rich to make more and more money by opening up the field of social security also for them. The ESI Act came into existence after thorough study of the problems faced by the working population, for over a century. The Report of the Royal Commission of Labour of 1929-1931 necessitated it and the Report of Sir William Beveridge facilitated it. But, the present proposal to amend and dilute Sec. 44 did not emanate from any such public documents. There was no analysis of the experience of other nations, if any, in which such privatisation had been found to be a tremendous success. There was no public discussion on the issue, especially about the nitty-gritties of the nature of service that would be provided by the private players and the manner in which they would be monitored. The way in which the Obamacare was subjected to public discussion in the USA can be recalled in the context. No such discussion did ever take place before the bureaucrats of the PMO conspired to amend the Sec. 44 on the sly.

Lord: “Is it?”

Adharkar: “Yes, My Lord ! The aristocrats control the pliable bureaucracy in the PMO. The proposal to amend Sec. 44 originated from the bureaucrats of the Prime Minister’s Office who are habituated to bypass the Labour Minister’s Office and give directions directly to the Director General to do this and that. The very draft amendment as placed before the ESI Corporation on 07.04.2015. These bureaucrats who wield such unlawful power do not care about the welfare of the people. The very fact that the draft proposal placed on the table on 07.04.2015 received all-round condemnation (***) by the members of the apex body testify to the fact that it did not emanate from the people but from the top, as the brain child of those insensitive bureaucrats. And, those bureaucrats of the PMO believe that they are obliged only to please the rich. They believe that they are not accountable to the public. In regard to their political masters, they believe that the entire nation has been sold to them, once they get majority seats in the Parliament. It applies to all the political parties in India. The tradition of going to the people when they go for some major changes is absent in India. In essence, the Indian politicians do not know what Referendum means. They refuse to learn what UK did in the case of EEC. They just do not want the Indian democracy to mature.”

Lord: “Okay ! What, then, is your proposal to make the ESIC, a public organisation, corruption-free, if you want to retain the social security in public sector forever?”

Adharkar: “Corrupt bureaucrats are of four kinds, My Lord ! The first is Self-centred-Corrupt. The next is Organised-Corrupt. The third is Philanthropic-Corrupt. The fourth is High-fly Corrupt.

(Continued in Part II)

(***) Note: The Minutes of the meeting of the apex body of the ESIC is available at:



(Image: courtesy: internet)


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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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