For decades, India’s social security covered organised-sector workers only. Nearly 90% of the workforce waited far longer for coverage of its own.
Must Know
What social security is
- What it isSocial security is a safety net that protects people when they cannot earn, like in old age, sickness or job loss.
- Why it mattersIt matters because nearly 90% of India’s workers are informal, so without it a sudden problem can push a family into poverty.
- How it worksWorkers or their employers put small amounts into funds, and the government helps pay benefits when a worker retires, gets ill, or dies.
- ExampleThink of it like car insurance: you pay a little each month, and the policy protects you when something goes wrong.
The two big funds for organised workers
- EPFOEPFO, set up by the Employees’ Provident Funds Act, 1952, is the retirement savings fund for organised-sector workers.
- ESICESIC, created by the Employees’ State Insurance Act, 1948, gives health insurance to organised workers.
- How they workBoth take a small cut of wages each month and use it to pay pensions, medical care or savings later.
- Why it mattersThey matter because for decades only organised workers had this cover, leaving most Indians without any.
- AnalogyImagine a workplace where every employee drops a coin in a box, and the box pays out when someone falls ill or retires.
Good to Know
Pension schemes for all
- APYThe Atal Pension Yojana gives a fixed monthly pension to people in the unorganised sector after they turn 60.
- NPSThe National Pension System lets workers save for retirement, with the market growing their money.
- PM-SYMPradhan Mantri Shram Yogi Maandhan gives a pension to small shop workers and labourers.
- How they workWorkers between certain ages pay small monthly amounts, and the government matches or tops up the pension later.
- Why it mattersThey matter because they extend pensions beyond salaried employees to street vendors, farmers and daily workers.
e-Shram: a database of informal workers
- What it ise-Shram is a national database that registers informal and unorganised workers, like domestic helpers and gig workers.
- Why it mattersIt matters because the government cannot help workers it cannot see, so registering creates a record of who needs support.
- How it worksA worker signs up once with basic details and an Aadhaar-linked identity, and gets a 12-digit card.
- ScaleOver 31 crore workers had registered on e-Shram by late 2025.
- AnalogyIt is like a school roll: the school cannot give books or meals unless it knows every student on the list.
Key schemes to remember
- What they arePM-SYM, APY and e-Shram are three schemes meant for informal workers.
- Why they matterThey matter because each one answers a different problem, like a pension, a retirement saving or a worker database.
- How they workPM-SYM and APY collect small payments now for a pension later, while e-Shram just registers the worker first.
- ExampleA street vendor can join APY to get a monthly pension after 60, and register on e-Shram so the state knows who they are.
✅ Test Yourself
Work through a 5-question chain on Social Security Schemes of India, then keep practising with a random Indian Economy question.
Great to Know
Why the unorganised sector matters
- What it isThe unorganised sector is workers without formal contracts, like farm labourers, street vendors and domestic staff.
- Why it mattersIt matters because nearly 90% of India’s workforce is informal, so most people rely on schemes meant for them.
- How it worksSchemes like APY, PM-SYM and e-Shram are designed to reach these workers where EPFO and ESIC do not.
- AnalogyIt is like two schools: one for a few well-funded students, and another that must teach the whole town with limited resources.
- So whatSo expanding cover to the informal sector is the real challenge of India’s social security.
PYQ / Exam Angle
UPSC 2024: PM-SYM statements
- UPSC 2024UPSC and other competitive exams test the exact rules of PM-SYM. View this question
- What it testsIt tests the entry age, minimum pension and who gets family pension.
- TrapA common wrong answer is the entry age; PM-SYM is for ages 18 to 40, and the minimum pension is Rs 3,000 after 60.
- How to recallRemember: PM-SYM entry 18-40, pension Rs 3,000, and family pension goes only to the spouse.
Current Affairs / So What
e-Shram completes 5 years (Aug 2026)
- What it isThe e-Shram portal marks five years of registering India’s informal workers. (Source: PIB)
- ScaleIt has registered 31.89 crore unorganised workers, building a national digital database. (Source: PIB)
- Why it mattersIt matters because a registered worker can be reached for benefits, pensions and welfare schemes. (Source: PIB)
- How it worksWorkers sign up once and the portal links them to social security schemes, so help reaches the right person. (Source: PIB)
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