Rationale Page
Despite India’s spectacular economic achievements, the informal economy in India is but on the rise . The recent Report by the National Commission for Enterprises in the Unorganised Sector (NCEUS), chaired by Arjun Sengupta says that over 86% of the country's working population is engaged in the unorganised sector, and that the majority of women also work in this sector. Yet, in spite of their vast numbers, and their substantial contribution to the national economy (more than 60% of the NDP), they are amongst the poorest sections of our population. An overwhelming 79% of workers in the unorganised sector live on an income of less than Rs 20 a day, according to the report.
As a consequence this economic powerhouse of India has no access to social security benefits in comparison with the organized sector which has been guaranteed various benefits including support from the State exchequer. According to the ILO, some 10% of the whole Indian population does enjoy some level of social protection while some 950 million are excluded!
There have been efforts from both the Central as well as the State governments to provide social security systems albeit to the organized sector workers. The Employees’ State Insurance Scheme (ESIS), the Employee’s Provident Fund Organization (EPFO), the Central Government health Scheme (CGHS) and other State-owned managed- health care facilities through various govt departments- have been the core structures through which the State has setup measures for social security but almost all of them lack quality of service and are restricted in nature.
For the unorganized sector at large, there have been initiatives in the form State-subsidized insurance products for the BPL population (schemes like Universal health Insurance scheme and recently declared Aam Aadmi Yojana for life Insurance), Welfare funds, microinsurance products from commercial insurance companies (thanks to the IRDA Micro Insurance Regulation 2005) in the Partner Agent model and a host of community based -non life, as well as, life micro insurance schemes- including in house mutuals.
These initiatives by the mainstream market (Govt and commercial companies) actors have however failed to get the expected response (for example the Universal Health Insurance Scheme , ) for the main reason that they are framed by a top to bottom regulation framework. The regulation vacuum on the mutual / cooperative insurance sector not only prevent a lot of energies to take forms and provide services but it also exclude de facto people from risk management or claim processes which leads to exclusions, higher claim ratios and subsequently higher premiums.
The huge unorganised sector is serviced by SHG Federations, NGOs, MFI’s, Trade Unions, Cooperatives and Panchayati Raj Institutions and are therefore the key actors to providing social security benefits directly to the population concerned - a fact recognized through the Micro Insurance Regulation 2005 promulgated by the IRDA recognizing them as agents for delivering micro-insurance products. The recent microinsurance leads to a context where these organizations are just simply used as low cost informal agents for commercial players in order to serve the very promising “bottom of the pyramid” without taking the effort to bring this population in the formal sector and therefore providing them with a higher level of redistribution/equity value.
Awareness on social security mechanisms in these (mostly non profit) organisations (MFI’s and some cooperatives are better aware as they many times bundle risk bearing mechanisms with loan products) needs to be built along with the capacities that would make them facilitate such systems in the country.
One major shortcoming is lack of coming together of such organisations and in the context of social security where numbers matter the most it becomes pertinent to cooperate on the various facets of social security. This will catalyze the collating of resources -experiences, which today are scattered all over the country and give a professional platform to bargain better with the Government for having effective implementation of social security systems.
In this context it becomes imperative that Organisations already implementing some form of security measures join hands first and show the way for other organisations.
These voluntary, mostly non-profit organisations, who have been scouting for social security benefits for their members, require easy-to implement- solutions, for initiating such schemes, at the grass root level addressing the shortcomings mentioned above. Though the Partner Agent model has facilitated this process to some extent, it has in the process by regulation, still, left the communities concerned, out of the ambit of management-people at the helm of affairs have missed the oft proven fact -that if any development project has succeeded it has because of people’s active participation. As a consequence, numbers may be achieved through commercial marketing techniques, but on a long term essential goals of risk awareness and resilience capacity are not addressed.
Market solutions for the bottom of pyramid read communities as low end clients. However the challenge lies in not only providing social security to the huge number of the unorganized sector but also in a way where the management solutions of social security schemes are simple. This would enable the communities to run and replicate them on their own -adding the sustainability quotient to the solution. This simplicity implies that there is ownership of the solutions and it replicates as a multiplier effect.
For achieving such outcomes, it then becomes imperative that communities are gathered for collecting practical ongoing evidences of community led models (and there are many) and the same is analysed, presented and discussed with the government.
The government has been committing resources through various ministries and national programmes (the NRHM and RSBY being the most recent and comprehensive ones), and are being implemented through nationalised and commercial insurance companies. This is because, Government on its part, seeks economies of scale for such programmes to be launched and since communities and organisations servicing them are not on a common platform they are not able to provide a united stand that can be considered by the Government (though SEWA and to some extent YESHASWINI have been able to attract Government attention)
The point of view of these organizations should be represented at the policy and planning levels for influencing the designs and including the monitoring requirements of social security services- the tools, skills and resources to facilitate the linkages between government programmes and community based organizations.
To be sustainable and to turn bad habits into preventive behaviours, social security processes have to be simple, open, participative and transparent. The wide understanding of risk pooling leads to inclusive enrolment (better spreading of risks), making them cheaper and safer influencing positively behaviours towards better health or prevention and not just an insurance product consumption. Instead of polarizing population by providing further privileges to BPL card holder versus APL, participative processes will serve communities by sharing the risks through more equitable solutions.
These initiatives require technical expertise in operations and risk management accountable to these communities. This includes also various concrete procedures for managing moral hazard, monitoring tools, MIS, reporting tools for keeping everyone informed, public-private partnerships and other tools which are existing but spread among organizations. It also favours the State in its effort to build long term relationship with the population and gain political points in the whole process. The task requires organizing synergies of multiple stakeholders. The Communities Led Association for Social Security is proposed in this objective.