Centre reduced rate of contribution under ESI Act

Centre has reduced the employer’s and employee’s contribution under the Employees’ State Insurance (ESI) Act. It will be effective from July 1. ESI Act gives insured workers medical benefits among other facilities. 

Aim:
The move aimed at benefiting 36 million insured persons and 1.3 million organizations.
It will also formalise the informal workforce in India. 
It will expand the social security coverage and facilitate further enrolment of workers under the ESI scheme.

Changes: 
The Ministry of Labour and Employment has reduced the total contribution towards ESI from 6.5% of an employee’s wages to 4%. For the employer’s it reduced from 4.7% to 3.25% and the employee’s contribution lowered to 0.75% of wages from 1.75%.
The Ministry said there has been a substantial rise in the number of people being brought under the ESI scheme and the number of people who opted for it.
The analysis said that:
In 2015, the number of people who were insured underthe scheme was 2.1 crore and it raised to 3.6 crore.
The contribution amount in 2015 was Rs.11,455 crore which increased to Rs.22,279 crore.
The number of people who opted for the ESI scheme increased to 12.85 lakh in 2018-19 from 7.83 lakh in 2015-16.

ESI Act:
Dr.B R Ambedkar was appointed by the Government of India to create a report on the health insurance scheme for industrial workers in March 1943. The report became the basis for the Employment State Insurance (ESI) Act of 1948. ESI is a self-financing social security and health insurance scheme for Indian workers.
Employees’ State Insurance Corporation (ESIC) manages the fund as per the rules and regulations stipulated in the ESI Act 1948. ESIC functions under Ministry of Labour and Employment, Government of India.
ESI corporation can raise loans and take measures for discharging such loans with the prior sanction of the central government. 
ESIC can acquire both movable and immovable property and all incomes from the property.
ESIC can set up hospitals independently or in collaboration with state government or other private entities.

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