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Unorganized sector, the most providing yet the most tormented sector of India is a less broached subject in our legal lobbies. Comprising 395 million of the total 458 million strong workforce of India, the unorganized sector contributes to about 50% of the Indian GDP. This section, comprising farmers working in small farms to workers from local shops and small household industries, was deprived of the any form of legal binding when it came to fundamental necessities i.e. security of food, health, income and employment even 60 years after the independence. Although this state changed after passing of “The Unorganized Sector Workers' Social Security Bill” through Indian parliament in 2007, a lot of requirements regarding legal aid remain unfulfilled.

This article compares the state of legal aid provided to this crucial segment of Indian human resource in the period before, and after the passing of the bill. The provisions, implementations and effectiveness of the laws in this regard are also critically analyzed to establish the heading required to provide it the much needed legal protection.

The Unorganized Sector in India can be defined as the workgroup which is not formalized by bringing the owner and the employer strictly under the ambit of tax enforcement, labor laws and governing rules. Its characteristic also includes lack of legal protection for the workers in context of social, health, employment guarantee etc.

National Commission for Enterprises in the Unorganized Sector, however, provides a unanimously accepted definition of the unorganized sector as:

"The unorganized sector consists of all unincorporated private enterprises owned by individuals or households engaged in the sale and production of goods and services operated on a proprietary or partnership basis and with less than ten total workers".

As per a survey carried out by the National Sample Survey Organisation (NSSO) in 2011-12, the total employment in the country was of 47.41 crore comprising around 17. 3% in the organized and the remaining 82. 7% (39.14 crore) workers in the unorganized sector. Out of these workers in the unorganized sector, there are 24.6 crore workers employed in agricultural sector, about 4.4 crore in construction work and remaining in the manufacturing and service.

The definition provided by NCEUS is also accompanied by the report depicting their downtrodden, unheeded and unaided status in the country. The sector suffers from cycles of excessive seasonality of employment with a majority of the unorganized workers not having stable durable avenues of employment. In addition to this, the workers also face highly stratified caste and community considerations in rural areas, indebtedness and bondage with their meager incomes to support themselves, primitive production technologies and feudal production relations and a little to no attention from the Trade Unions. To top it all, the sector also ails due to inadequate and ineffective labour laws and standards in regards to their employment.

The majority of the aforementioned problems are a result of the non-existent or ill-drafted laws to protect the vital segment of human resource. The following study discusses all the laws and provisions that exist in the system and analyses them critically.


The problems that ails the unorganized sector are not entirely overlooked by the government and following legal protection, minimal as it may be, has been provided in the system.

1. Constitution of India:

The aspects relating to social security were included in List III in VII Schedule of the Constitution and it was made as the concurrent responsibility of the Central and State Governments. A number of Directive Principles of State Policy i.e. Article 39, 39A, 41, 42, 43 relating to aspects of social security.

2. National Rural Employment Guarantee Act (NREGA), 2005:

Mahatma Gandhi National Rural Employment Guarantee Act, 2005, though enacted to fight unemployment, is seen to have indirect benefit on wages of all the employees across the country as it sets a minimum standard of wages through its initiative, removing the monopoly of employers in the unorganized sector. It has also called for a comprehensive coverage of the unorganized sector workers under the social security schemes and rationalization and simplification of Labour Regulations and broadening the ambit of Labour Reforms.

3. Unorganized Sectors’ Social Security Act (2008):

· The Unorganized Sector Workers' Social Security Bill, 2007 provides for an enabling framework for welfare schemes targeting the unorganized sector workers.

· Under this act, the Central Government may formulate welfare schemes for different sections of the unorganized sector workers regarding life and disability cover, health and maternity benefits, old age protection, and any other benefit decided by the Government.

· The State Government may also formulate welfare schemes related to the provident fund, employment injury benefits, housing, educational schemes for children, skill upgradation of workers, funeral assistance, and old age homes.

· This Bill establishes boards at the Central and State levels to advise and help in formulating, implementing and monitoring social welfare schemes for the unorganized sector workers.

· Every unorganized sector worker shall be registered by the district administration and issued a portable smart card carrying a unique identification number.

Certain schemes by the Government under this act are:

1. Indira Gandhi National Old Age Pension Scheme:

All individuals above the age of 60, who live below the poverty line, are eligible to apply for IGNOAPS. All IGNOAPS beneficiaries aged 60–79 receive a monthly pension of Rs.300 (Rs.200 by the Central Government and Rs.100 by the State Government). Those who are of 80 years and above receive a monthly pension of Rs.500.

Number of Beneficiaries- 2, 08, 33,673

2. National Family Benefit Scheme:

In the event of death of a breadwinner in a household, the bereaved family will receive a lump sum assistance of Rs.20, 000. The breadwinner should have been between 18–59 years of age. The assistance would be provided in every case of death of a breadwinner in a household.

Number of Beneficiaries- 1,75,592

3. Janani Suraksha Yojana:

It aims to decrease the neo-natal and maternal deaths happening in the Country by promoting institutional delivery of babies.

Number of Beneficiaries- 1,04,16,164

4. Handloom Weavers’ Comprehensive Welfare Scheme (Mahatma Gandhi Bunkar Bima Yojana):

The Health Insurance Scheme aims at financially enabling the weaver community to access the best of healthcare facilities in the Country. The scheme is to cover not only the weaver but also his wife and two children, to cover all pre-existing diseases as well as new diseases and keeping substantial provision for OPD. The ancillary Handlooms workers like those engaged in warping, winding, dyeing, printing, finishing, sizing, Jhala making, Jacquard cutting etc. are also eligible to be covered.

Number of Beneficiaries- 69,475

5. National Scheme for Welfare of Fishermen and Training and Extension:

The Centrally Sponsored ‘National Scheme for Welfare of Fishermen’ envisaging to provide financial assistance to fishers for construction of house, community hall for recreation and common working place and installation of tube-wells for drinking water and assistance during the lean period through saving cum relief component was in operation till the terminal year of the 9th Plan. This welfare scheme has been continued during the 10th Plan. The Plan Outlay approved for the scheme for the entire period of the 10th Plan is Rs.120 crore.

Number of Beneficiaries- 52,34,799

6. Aam Admi Bima Yojana:

Under this scheme the head of the family or one earning member in the family of such a household is covered. The premium of Rs.200/- per person per annum is shared equally by the Central Government and the State Government, so the insured person has to pay no premium. The member to be covered should be aged between 18 and 59 years.

Number of Beneficiaries- 4,51,07,984

7. Rashtriya Swasthya Bima Yojana:

Literally, "National Health Insurance Programme" is a government-run health insurance programme for the Indian poor. The scheme aims to provide health insurance coverage to the unrecognized sector workers belonging to the BPL category and their family members shall be beneficiaries under this scheme.

Number of Beneficiaries- 3,59,28,048

8. Atal Pension Yojana:

It is a government-backed pension scheme in India targeted at the unorganized sector. It was mentioned in the 2015 Budget speech by the Finance Minister Arun Jaitley. It was launched by the Prime Minister Narendra Modi on 9 May in Kolkata. As of May 2015, only 20% of India's population has any kind of pension scheme, this scheme aims to increase the number.

Number of Beneficiaries- 30,46,055


· Unorganized Sectors’ Social Security Act (2008):

Ø The primary flaw in the existing system is this ill drafted law for the protection of unorganized workers. Unorganized Sectors’ Social Security Act (2008) asks the Government to enact the schemes to provide social, health and employment security, but is mute at the provision of legal binding for the same.

Ø The bill is also ambiguous about the definition of an unorganized worker in case of home-based and wage worker.

Ø The time limit for the registration of the unorganized sector worker is also making Government’s responsibility non-time-bound.

· The Payment of Gratuity Act (1972), the Building and Construction Workers Act (1996) etc. reveal the attention given to the organized workers to attain different kinds of social security and welfare benefits. Though it has been argued that the above Acts are directly and indirectly applicable to the workers in the unorganized sector also, their contribution is very negligible to the unorganized workers.

· The initiatives in the form of Acts such as the Workmen’s Compensation Act (1923), the Industrial Disputes Act (1947), the Employees State Insurance Act (1948), the Minimum Wages Act (1948), the Coal Mines Provident Funds and Miscellaneous Provisions Act (1948), The Employees Provident Fund and Miscellaneous Provisions Act (1952), the Maternity Benefit Act (1961), the Seamen’s Provident Fund Act (1966), the Contract Labour Act (1970),

· Inspite of the fact that not much has been done in providing the social security cover to the rural poor and the unorganized labour force, the country has made some beginning in that direction. Both the central and state governments have formulated certain specific schemes to support unorganized workers which fail in meeting with the real needs and requirements of the unorganized sector labour force.

· In fact a comprehensive Act, catering to the security needs of the unorganized sector such as Food, Nutrition, Health, Housing, Employment, Income, Life and accident, and old age remains a dream in India. Still the cries of the unorganized sector goes unattended with the governments laying red carpets for the corporates and so called investors at the expense and sacrifice of the working class.


· To completely organize the entire unorganized sector in India. If done, not only will the country’s tax to GDP ratio increase, but the betterment of human resource would help bring in innovation and intellectual capital.

· Setting up trade union for different sectors which would help keep the record of the workers, and their socio- economic state.

· These trade union can also be set up on area based criteria including workers from a particular area

· There should be an act which should be binding in nature. Enforcing the respective government to secure the basic needs of workers of unorganized sector, like food, health, insurance etc.

· Government, in the absence of existing strong legal aid, could provide the workers with cheap loans temporarily, while the rest of legal aid improves.

· To spread awareness regarding the schemes which are out there for the benefits of the workers of unorganized sector since most of this segment lack awareness about already existing schemes.

Author: Navin Kumar Jaggi

Co-Author: Vipul Sharma



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