Health Services through Employees’ State Insurance Corporation (ESIC) – 1952

Health Services through Employees’ State Insurance Corporation (ESIC) - 1952

Policy Update
Srishti Sinha

Introduction

The promulgation of the Employees’ State Insurance Act, 1948 (ESI Act), by the Parliament, was the first major legislation on social Security for workers in independent India. It was a time when the industry was still in its early stages, and the country was heavily reliant on a variety of imported goods from developed or rapidly developing countries.

The deployment of manpower in manufacturing processes was limited to a few select industries, such as jute, textiles, and chemicals. The legislation on the creation and development of a full-proof multi-dimensional Social Security system, when the country’s economy was very fledgling, was a remarkable gesture towards the socio-economic amelioration of a workforce, though limited in number and geographic distribution. India, notwithstanding, thus, took the lead in providing organized social protection to the working class through statutory provisions.

Background

The ESI Act 1948 encompasses certain health-related eventualities that workers are generally exposed to, such as sickness, maternity, temporary or permanent disablement, Occupational disease, or death due to employment injury, resulting in loss of wages or earning capacity-total or partial. Social security provisions made in the Act to counterbalance or negate the resulting physical or financial distress in such contingencies are thus aimed at upholding human dignity in times of crises through protection from deprivation, destitution, and social degradation while enabling the continuity of a socially useful and productive manpower. 

The ESIC scheme was inaugurated in Kanpur on 24th February 1952 (ESIC Day) by then Prime Minister Pandit Jawaharlal Nehru. The scheme was simultaneously launched in Delhi and Uttar Pradesh as well, and the initial coverage for both centers was 1,20,000 employees. Our first Prime Minister was the first honorary insured person of the Scheme, and the declaration form bearing his signature is a prized possession of the Corporation. 

Functioning

  • The comprehensive and multi-pronged social security programme is administered by an apex corporate body called the Employees’ State Insurance Corporation. It comprises members representing vital interest groups, including employees, employers, the Central and State Governments, representatives of Parliament, and medical profession.
  • The Corporation is headed by the Union Minister of Labour, as its Chairman, whereas the Director General, appointed by the Central Government, functions as its Chief Executive Officer.
  • ESIC delivers full medical benefits to insured workers and their families from the very start of their insurable employment. Services include consultations, hospitalization, diagnostics, drugs, surgery, specialist care, and more. There is no cap on medical expenses.
  • For retired or permanently disabled insured individuals (and their spouses), medical benefits can continue for a token annual premium of ₹120.
  • Sickness Benefit: 70% of wages for up to 91 days per year (eligibility: minimum 78 days of contribution in preceding 6 months). Extended support (up to 2 years) is available for certain long-term illnesses at 80%. Sterilization procedures may attract full wage compensation.
  • Maternity Benefit: 100% of wages for up to 26 weeks, extendable by 1 month on medical advice. Coverage includes miscarriage (6 weeks) and adoption (12 weeks).
  • ESIC operates a wide-ranging healthcare network, including:
    • Over 145 hospitals and 42 annexes, totaling nearly 19,400 beds.
    • 1,418 dispensaries and partnerships with registered medical practitioners nationwide.
  • These facilities typically house functional elements such as clinical labs, imaging, emergency services, surgical theaters, inpatient care, and support services (food, housekeeping, etc.).
  • Certain ESIC hospitals have been integrated to serve PMJAY beneficiaries, expanding healthcare access to broader populations. For instance, the ESIC facility in KK Nagar, Chennai, now treats families under PMJAY, offering cashless hospitalization.

Performance

image 9

This graph represents the number of different types of benefit claims settled under the Employees’ State Insurance Corporation (ESIC) for two specific months: November 2024 and June 2025. The data is sourced from the ESIC Performance Dashboard, which provides real-time statistics on claims settlement, coverage, and services.

Sickness Benefit

  • Nov 2024: 194,121 claims
  • Jun 2025: 178,300 claims
  • Change: ↓ 15,821 (approx. –8.15%)

Maternity Benefit

  • Nov 2024: 63,246 claims
  • Jun 2025: 13,833 claims
  • Change: ↓ 49,413 (approx. -78.13%)

Permanent Disablement Benefit

  • Nov 2024: 104,635 claims
  • Jun 2025: 104,501 claims
  • Change: ↓ 134 (-0.13%)

Dependent Benefit

  • Change: ↓ 226 (approx. -89.68%)
  • Nov 2024: 252 claims
  • Jun 2025: 26 claims

The biggest variation is seen in Maternity Benefit, where claims fell drastically by nearly 80%, indicating strong seasonal or procedural cycles. Sickness Benefits show a moderate decline, consistent with seasonal changes. Permanent Disablement remains stable, which is expected because these are long-term benefits, not seasonal, and Dependent Benefits are too low in absolute terms to draw major policy conclusions.

The ESIC has launched SPREE 2025 (Scheme for Promotion of Registration of Employers and Employees), approved during its 196th Corporation Meeting held in Shimla under the chairmanship of Dr. Mansukh Mandaviya, Union Minister for Labour & Employment and Youth Affairs & Sports. SPREE 2025 is a special initiative aimed at expanding social security coverage under the Employees’ State Insurance (ESI) Act. The scheme is active from 1st July to 31st December 2025, offering a one-time opportunity for unregistered employers and employees, including contractual and temporary workers, to enroll in the ESI system without facing inspections or demands for past dues.

Impact

The ESIC scheme plays a critical role in India’s social security framework, reducing financial vulnerability, improving healthcare access, and enhancing productivity among low- to middle-income formal workers. There are over 1,500 dispensaries and 165 hospitals under the ESIC. ESIC provides comprehensive medical care to insured persons and their families, covering over 4 crore workers and their dependents, approximately 13 crore beneficiaries as of 2024.

This ensures income security during illness, maternity, disability, or death, reducing vulnerability and improving household stability.

Emerging issues and Way Forward

The program has been successful since its inception; however, critical gaps persist in the policy, as evidenced by the issues highlighted. ESIC hospitals have faces major challenges, including chronic underfunding, fragmented administrative control, and poor infrastructure. Plans to upgrade hospitals to AIIMS standards were stalled due to lack of funds, leaving facilities understaffed and ill-equipped. Dual control between states and ESIC further creates coordination and accountability issues, impacting patient care. Cases like Faridabad, where inadequate resources and staff shortages have led to critical lapses, underline the urgency for reform.

The way forward includes assigning clear operational control, ensuring sustainable funding through dedicated budgets, and prioritising infrastructure and staffing improvements. ESIC can directly manage new hospitals for consistency and consider public-private partnerships to fill gaps. 

References

About the Contributor

Srishti Sinha is a student of sociology at Miranda House, University of Delhi, with a keen interest in gender, cultural representation, development, public policy, and research.

Acknowledgement: The author expresses her sincere gratitude to the IMPRI team and Ms. Aasthaba Jadeja for their invaluable guidance throughout the process.  

Disclaimer: All views expressed in the article belong solely to the author and not necessarily to the organisation.

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