India has a semblance of social security legislative framework governing social security, encompassing multiple labour laws and regulations. These laws govern various aspects of social security, particularly focusing on the welfare of the workforce. The primary objective of these measures is to foster sound industrial relations, cultivate a high-quality work environment, ensure legislative compliance, and mitigate risks such as accidents and health concerns. Moreover, social security initiatives aim to safeguard against social risks such as retirement, maternity, healthcare and unemployment while tax-funded social assistance aims to reduce inequalities and poverty. The Directive Principles of State Policy, enshrined in Part IV of the Indian Constitution reflects that India is a welfare state. Article 41 of the Indian Constitution, which is one of the Directive Principles of State Policy states that, The State shall, within the limits of its economic capacity and development, make effective provision for securing the right to work, to education and to public assistance in cases of unemployment, old age, sickness and disablement, and in other cases of undeserved want. Food security to all Indians are guaranteed under the National Food Security Act, 2013 where the government provides highly subsidised food grains or a food security allowance to economically vulnerable people. The system has since been universalised with the passing of The Code on Social Security, 2020. These cover most of the Indian population with social protection in various situations in their lives.
Overview The Government's social security and welfare expenditures are a substantial portion of the official budget and as well as the budgets of social security bodies, and state and local governments play roles in developing and implementing social security policies. Additional welfare measure systems are also uniquely operated by various state governments. Aadhaar is utilised to distribute welfare measures in India. The comprehensive social protection system of India can be categorised as the follows: social assistance (in the form of welfare payments in cash or kind funded through taxations) and mandatory social security contributory schemes mostly related to employment. The Code on Social Security, 2020 is part of the Indian labour code that deals with employees' social security and have provisions on retirement pension and provident fund, healthcare insurance and medical benefits, sick pay and leaves, unemployment benefits and paid parental leaves. The largest social security programs backed by The Code on Social Security are:
The Employees' Provident Fund Organisation as a mandatory defined contribution retirement plan for private sector employees. It also provides for basic life and disability insurance. A maternity leave benefit of 6 months alongside a one time medical bonus of Rs 3000. A further crèche allowance is to be provided by the company until the 1st year of the child. The Employees' State Insurance for healthcare and unemployment benefits along with sick pays and maternity benefits. The Unified Pension Scheme as the mandatory Pay-as-you-go pension plan for civil servants. The National Pension System which is increasingly gaining popularity as a voluntary option. These are funded through social insurance contributions on the payroll. The National Food Security Act, 2013, that assures food security to all Indians, is funded through the general taxation.
Budget As per the Economic Survey of the Government of India of 2022–23, the general government (federal, states and local bodies combined) expenditure on social protection (direct cash transfers, financial inclusion, social benefits, health and other insurances, subsidies, free school meals, rural employment guarantee and housing grants for the low income), was approximately ₹2,130,000 crore (US$220 billion), which was 8.3% of gross domestic product (GDP). These are not part of the employment related social security which are managed separately by individual bodies. If the funds spent by the EPFO, ESI and the various other provident fund bodies are taken into account, the total spending by the general government of India (centre, states and cities all together) is 12.8% of the GDP or ₹3,320,000 crore (US$340 billion).
National level social security bodies and programs This section covers some of the social programs and welfare measures in place in India at the federal level. These can be categorized into two: 1) Social security, which mostly run through mandatory or voluntary contributions on the payroll and 2) Social assistance, which is funded through taxes. These programs' funding can be categorised as: non-contributory and tax-payer-funded, employer-funded and lastly, joint-funded (contributed by both the employer and the employee and partially contributed by the government).
Social Security These are retirement, healthcare, disability, childcare, gratuity and provident fund and insurance programs mostly governed by The Code on Social Security, 2020, most of which are mandatory for all Indian and foreign employees' working in India.
Unified Pension System for Civil Servants The unified pension system is a pension system for civil servants in India, that replaces the defined-benefit, unfunded, Old Pension Scheme. In the unified pension system, a civil servant contributes 10% of their salary while the government contributes 18% each month on their behalf. After retirement, the civil servant receives 50% of their basic pay of the average of the last 12 months preceding retirement. The pension is indexed to inflation and increases every years.
Public Provident Fund
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