Lok Sabha Question No. 215 (STARRED), answered on 2019-07-08
Subject: ESI Scheme
Ministry: LABOUR AND EMPLOYMENT
Asked by: Ganesan Selvam, Sougata Ray

## GOVERNMENT OF INDIA

## MINISTRY OF LABOUR AND EMPLOYMENT

## LOK SABHA

## STARRED QUESTION NO. 215

## TO BE ANSWERED ON 08.07.2019

## ESI SCHEME

*215. SHRI SELVAM. G.: PROF. SAUGATA RAY:

Will the Minister of LABOUR AND EMPLOYMENT be pleased to state:

- (a)whether  the  Government  proposes  to  reduce  employees'  as  well  as employers' contribution to Employees' State Insurance (ESI) scheme by amending the ESI Act, 1948;
- (b)if  so,  the  details  thereof  and  the  reasons  therefor  along  with  the objectives  behind  the  move  including  the  proposed  reduction  in  this regard;
- (c)whether the representatives of employees unions have strongly opposed the  said  proposal,  if  so,  the  details  thereof  and  the  response  of  the Government thereto along with the other steps taken by the Government to bring more people under the ESI scheme;
- (d)whether  the  said  reduction  is  likely  to  decrease  the  amount  to  be received  by  the  employees  and  if  so,  the  details  thereof  particularly  in Maharashtra; and
- (e)whether the employees are likely to get any benefit therefrom and if so, the details thereof?

## ANSWER

MINISTER OF STATE (IC) FOR LABOUR AND EMPLOYMENT (SHRI SANTOSH KUMAR GANGWAR)

- (a) to (e): A statement is laid on the Table of the House.

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STATEMENT RERERRED TO IN REPLY TO PARTS (a) to (e) OF LOK SABHA STARRED  QUESTION  NO.215  FOR  08.07.2019  BY  SHRI  SELVAM.  G.  AND PROF. SAUGATA RAY REGARDING ESI SCHEME

- (a) & (b): Yes, Sir. The rate of ESI contribution has been reduced from 6.5 per  cent  (employers'  contribution  @  4.75  per  cent  of  wages  payable  to employee  and  employees'  contribution  @  1.75  per  cent)  to  4  per  cent (employers' contribution @ 3.25 per cent and employees' contribution @ 0.75 per cent) with effect from 01.07.2019 to reduce the burden on employees and employers, improve the coverage as well as compliance of ESI Scheme and also contribute towards ease of doing business.
- (c): Proposal for rationalisation of ESI contribution rates was placed before the ESI Corporation in its 173 rd  Meeting held on 16.02.2018 where it was decided  to  constitute  a  Sub-Committee  consisting  of  Employers'  and Employees' representatives to examine the issue. The Committee recommended reduction in rate of ESI contribution to 5 per cent (Employers' contribution @ 4 per cent and Employees' contribution @ 1 per cent).  The report of the Sub-Committee was placed before the Corporation in its 175 th Meeting held on 18.09.2018. The Corporation also authorised the Chairman, ESIC to consider various suggestions received and take a final decision in this regard.  Thereafter, keeping in view the overall financial position of the Corporation, the Chairman, ESIC Corporation /Minister, Labour and Employment decided to further reduce the rate of contribution to 4 per cent (Employers' contribution @ 3.25 per cent and Employees' contribution @ 0.75 per cent) and accordingly notification has been issued by the Government. The reduced rate is effective from 01.07.2019.
- (d): There will be no change/ loss of benefit to Insured Persons and their family members including those in the State of Maharashtra. Insured Persons  and  their  family  members  will  continue  to  get  all  the  benefits prevailing as on date.
- (e): Because of this reduction in rate of contribution, the employee covered under the ESI Act, will have to pay 0.75 per cent amount of his / her total wages instead of 1.75 per cent being paid earlier leading to enhanced disposable income in the hands of the employee.

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