Why in news?
The Employees’ State Insurance Corporation (ESIC) marked its 75th foundation day in February 2026. At a celebratory event in New Delhi, government leaders praised ESIC’s contribution to India’s social security system and highlighted plans to extend benefits to gig workers and workers in the unorganised sector.
Background
ESIC is a statutory body created under the Employees’ State Insurance Act, 1948. The Act introduced a social insurance scheme to protect workers against medical costs, loss of wages due to sickness or maternity, and disablement. The scheme began on 24 February 1952 when Prime Minister Jawaharlal Nehru inaugurated the first ESI hospital at Kanpur. It initially covered factory workers earning below a prescribed wage limit; today its coverage includes millions of employees across various sectors.
How ESIC works
- Funding: Employers contribute 3.25 % of wages and employees contribute 0.75 %. These contributions finance medical care, cash benefits during illness or maternity, and compensation for employment injuries.
- Benefits: Insured workers receive free medical treatment for themselves and their dependants, cash compensation during periods of sickness, maternity benefit for women, disablement benefit for work‑related injuries and pensions for dependants of deceased workers.
- Administration: ESIC is chaired by the Union Minister of Labour and Employment and includes representatives from central and state governments, employers, employees, medical professionals and Parliament. It operates through a network of hospitals, dispensaries and insurance branch offices.
- Expansion: Over the decades ESIC has modernised its services by adopting digital record‑keeping, online claim settlement and e‑cards. The Social Security Code 2020 aims to integrate gig workers and platform workers into social insurance, expanding ESIC’s reach.
Genesis of the scheme
The idea of social insurance for Indian workers arose during the 1940s. In 1946 economist B.P. Adarkar submitted a report recommending a state‑run health insurance scheme for industrial workers. The government enacted the ESI Act in 1948, and ESIC was formed to administer it. The corporation has since evolved into one of Asia’s largest social security organisations, providing comprehensive medical and financial support to workers and their families.
Conclusion
For 75 years ESIC has been a pillar of social protection for India’s workforce. Its success lies in joint contributions from employers and employees, proactive expansion of healthcare infrastructure and continuous reforms. The push to include gig workers reflects changing patterns of employment. As India’s economy evolves, ESIC will need to balance fiscal sustainability with its mandate of universal social security.
Source: PIB