By Evangeline D Manohar
One year after the Chandranna Bima Yojana, an insurance scheme for labourers in the unorganised sector in Andhra Pradesh, was launched, it has successfully cleared claims of nearly 50,000 out of the 2 crore such labourers it was supposed to cover. The main objective of the scheme was to provide relief to the distressed families of unorganised workers in the case of death or disability of the worker. As per the official figures released by the government, 20,562,705 families have been covered under the scheme.
The state government bore a premium of INR 132 crore on behalf of the workers, and the workers paid only INR 15 towards the service charge. The government introduced an online registration system for the same. The registered workers were also enrolled as members of the State Accident Death and Disability Scheme and the Aam Admi Bima Yojana (AABY) and were covered under the Pradhan Mantri Suraksha Bima Yojana (PMSBY).
Under the Chandranna Bima scheme, the family members of the deceased got an insurance amount of INR 5 lakh for accidental death or complete disability, if the deceased was aged between 18 and 59, and INR 4.65 lakh in case the deceased was between the ages of 60 and 70. In the case of partial disability, INR 3.62 lakh was given; up to INR 2.25 lakh from the State Accident Death and Disability Scheme, INR 1 lakh from the PMSBY, and INR 37,500 from the AABY. INR 30,000 was given in the case of normal death, under the Aam Admi Bima Yojana (AABY). There is also a provision of providing a scholarship of INR 1200 per annum to the children of labourers who are studying in 9th to 12th standards.
A doubtful beginning
Looking at the scheme, many policymakers deemed it would fail; it was regarded as too small and too palliative. Many questioned whether this social security policy could provide the intended support to the people insured. This concern is quite pragmatic if one considers the economic cost-benefit analysis (ECBA), which is explained below.
The tangible and intangible indicators of this scheme, which follow the beneficiary approach, estimated that the amount spent by the government was neither sufficient nor sustainable. The global percentage of fatal accidents per annum stands at 0.097 per cent. The non-fatal claim is set at 1.39 per cent. Calculating out of the two crore people, over 19,400 people are estimated to meet with a fatal accident. This means that if every claim of a fatal accident was to be paid by the government, at the rate of 5 lakhs, the cost per annum would come to INR 970 crores. The non-fatal claims would come from 278,000 people which would cost another INR 10063.6 crores. The total would come to a whopping INR 11036.6 crores, which the premium of 132 crores cannot fill.
It is probable that the mortality rates in the unorganised sector are higher than the above-mentioned figures. Also, the ECBA does not include the administrative cost required for the implementation of the policy or the scholarship provisions under this policy. Based on this, it was assumed that the amount allotted for the policy, in all probability, would benefit less than 50,000 people, which did not justify the estimated policy scope. In addition to not filling the need of that particular sector, the policys benefit for an individual victim would be limited, as the allotted amount of either 3.62 lakh or 5 lakh was not in line with the cost of living, health/medical expenditure, inflation rate, etc.
Ergo, from an economic standpoint, the benefit of this policy for the government, the unorganised sector and the affected individuals would be negligible.
The brighter side
Things start looking more positive when one considers the social cost-benefit analysis. The tangible benefits include the immediate increase in the quality of living of the beneficiaries, although the change is neither permanent nor sustainable. But the direct cash transfer benefit, especially in times of crises and emergencies, is well documented.
The intangible benefits include the synchronisation between various insurance schemes such as State Accident Death and Disability Scheme and the Aam Admi Bima Yojana (AABY) as well as the Pradhan Mantri Suraksha Bima Yojana (PMSBY). It holds the potential for a one-stop place for people in need.
The one-year report card
After one year, as per the estimated figures, 6256 people have claimed the policy for fatal accidents, which brings the cost sanctioned to INR 31.2 crores. 45723 normal deaths have also been claimed, which amounts to a payout of 137.1 crores. These two claims alone exceed the state governments premium amount by 35 odd crores and cover only 50,000 of the affected population. This further does not include the claims for partial disability or the scholarships for the school going children of that sector.
In conclusion, the policy lacks the funds to fulfil its promise of acting as a stabiliser during turbulent times in the lives of the affected families. Moreover, the medical needs of this sector remain unaccounted for. Although combining the various insurance schemes has reduced the paperwork for beneficiaries, the cost need ratio is 17 per cent, which is abysmally low. The above analysis also points out the need for evidence-based policy making. Hence, the cost incurred by the government and paid by the taxpayer is limited in the face of policy impact.
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