Ministry Of Labor & Employment (2025): Labor Welfare Schemes In India – IMPRI Impact And Policy Research Institute

Policy Update
Alisha Mehra

Introduction 

The Labor welfare schemes in India were introduced as a means to provide protection and support to workers, especially in the unorganised sector. The Schemes, implemented and monitored by the Ministry of Labor and Employment through the Directorate General of Labor Welfare (DGLW) and its labor welfare organizations (LWOs), are in place to ensure worker safety, provide social security benefits, improve working conditions, and enhance the overall well-being of the workforce. 

The LWS scheme by the central government is specifically targeted towards beedi manufacturing, cinema industry, mining (particularly non-coal mines), and construction workers [specified as Beedi/Cine/LSDM/IOMC/Mica mines workers] and their dependents who do not benefit from the social security schemes run by other bodies such as the Employees Provident Fund organisation and the Employees State Insurance Corporation (ESIC). These total more than 50 lakh workers and their families. Labor welfare boards, which work under the state labor departments, manage state-run welfare funds funded by employer/employee contributions (Labor Welfare Fund Acts), supplementing central efforts. 

Historically, labor welfare in India was funded by Industry-specific cess acts such as the Beedi Workers Welfare Fund Act (1976), Cine Workers Welfare Fund Act (1981), etc. These acts financed housing, health, and education schemes for the workers; however, since 2018-2019, all cess acts have been repealed, and now all funding comes from government grants. Central budgets are now responsible for allocating money directly for welfare. There has also been an introduction of four new Labor Codes consolidating 29 existing labor laws into a unified framework. Currently, labor welfare operates under India’s concurrent list structure, where both the central and state governments have jurisdiction to legislate on labor matters.

While the centre is involved in policy formulation, major legislation, and coordination, and the state government is responsible for implementation, rule-making, and local adaptation of schemes, they both jointly administer the welfare funds and benefits. The central labor welfare scheme targets the beneficiaries as mentioned earlier. The present structure involves 18 Regional Labor Welfare organisations (one per region), each led by a Welfare Commissioner operating under the DGLW, ensuring decentralized implementation across the country. 

Objectives and Needs 

The objective of the labor welfare scheme is to provide social security to informal-sector workers who lack formal protections. The main components of the scheme are as follows – 

1. Health Scheme: There are 10 regional hospitals and 279 dispensaries which provide outpatient care for beedi, cine, and mine workers and their families. Reimbursements also cover critical illnesses (cancer, heart/kidney disease, TB, major surgeries), and mobile medical units deliver doorstep care in remote areas. 
2. Education Assistance: Annual Scholarships (Rs 1,000-25,000) are provided for workers’ children (from 1st grade through university). Applications are processed via the government’s National Scholarship Portal (NSP) and are disbursed through Direct Benefit Transfer (DBT). Every year, roughly 1-1.5 lakh students apply. 
3. Housing Scheme: Earlier, the Revised Integrated Housing Scheme (RIHS) offered a ₹1.50 lakh subsidy for constructing a pucca house per family. However, this has now been merged into the PMAY or the Pradhan Mantri Awas Yojana, with pending installments being disbursed by March 2024. 

In addition to these, the labor ministry publicises various social security schemes and accepts registrations from informal workers. These include schemes run by other ministries, such as 

Table 1: Schemes under various Ministries

The Ministry of Labor plays a key role in publicity and the last-mile outreach for the above-mentioned schemes for the informal workers. Some other initiatives facilitated by the Labor Ministry include the E-Shram Portal, which operates as the workers’ e-registry for the unorganised sector. The purpose of the same is to enable a unified database for access/enrollment for the above schemes. Additionally, the DGLW also conducts registration camps and Information-Education (IEC) drives to help workers enroll for e-Shram and above schemes. 

Functioning & Coverage 

The central labor welfare scheme is funded by the Union budget grants. In Budget 2025–26, the labor Welfare Scheme (for beedi/cine/mines) is allocated ₹50.68 crore. Administrative costs of the DGLW (salaries, offices) are additional (₹158–161 crore in 2025–26). By contrast, larger labor/social security schemes see much bigger allocations (e.g., PM-SYM ₹244 crore in FY25-26, Employees’ Pension Scheme ₹11,250 crore). The overall labor, Employment and Skill Development sector in the 2025–26 budget was ~₹28,718 crore (though that covers many programs beyond welfare). At the state level, budgets vary: many states levy labor Welfare Cess (typically ₹10–30 per worker per month) and contribute matching funds to welfare boards. However, centralized data on state budgets is sparse.

Annual beneficiary targets are set by the Labor Welfare Scheme and performance is monitored through the LWO network. In practice, over 18.2 lakh (1.82 million) beedi, cine, and mine workers were reported as benefiting in FY2023-24. In that year, the Centre disbursed ₹8.50 crore under the scheme and ₹30.68 crore for education assistance.  Routine functioning includes processing scholarship applications via NSP, operating medical facilities, and sanctioning housing subsidies. The DGLW coordinates with State/UT labor departments to ensure migrant and local workers have access to these benefits. All states/UTs are directed to extend health, insurance, and disability coverage to unorganised workers under these schemes. 

Performance, Impact & Emerging Issues

There has been moderate progress in terms of reach and positive impacts by the scheme. Educational scholarships have been said to have aided 96,051 worker-children in FY2023-24, sometimes even helping keep families in school. Health reimbursements ranging from (₹30k–7.5L) have saved lives for critical illnesses, often supplementing state health services. Over 1.8 million beedi and cine workers, along with non-coal mine workers, are said to benefit from this LWS scheme.

However, the reach remains limited relative to the size of the informal workforce. For instance, the 49.8 lakh registered beedi workers represent only a part of all informal workers in tobacco production. Many eligible workers in remote areas may remain unenrolled or unaware of benefits. Although the performance review highlights achievements, it also suggests improvements. The Parliamentary Standing Committee on labor recommended increasing the scholarship income threshold (currently ₹10,000/month, set in 2003) to expand coverage. 

Key challenges include financial constraints and administrative complexity, among others. Few are listed below – 

1. Financial –
   1. With the abolition of cess funds, central schemes must rely on limited annual grants, which have remained flat (₹50.68cr/year) despite rising costs. 
   2. This budget is small relative to needs, leading to low per-worker support. 

2. Operations –
   1. Outdated processes persist: for example, manual dispensing at dispensaries and paper-based scholarship claims (though now via NSP). 
   2. Ensuring timely payments and expanding mobile units to new areas remain issues.
3. Administrative/coordination –
   1. These arise from overlapping jurisdictions: many schemes overlap between the central and state levels. 
   2. Effective synergy between LWOs and state Boards (for construction workers, plantation workers, etc.) is not always achieved. 
   3. The labor Secretary has noted the need for “close coordination” with states to build a “robust and efficient social security system”.
4. Inclusion gaps –
   1. Only specific industries (beedi, non-coal mines, cine) are covered by LWS. 
   2. Other large informal sectors (construction, domestic workers, transport, garment, etc.) depend on different schemes or state provisions.
   3. Some policy targets (e.g., full enrolment in e-Shram, all eligible workers on insurance rolls) are yet to be met.

The Way Forward 

Labor welfare can be strengthened by restoring and raising contributions via a nominal cess or tax that could secure funding proportional to workforce size. Technologically, the full rollout of e-Shram linking with all welfare schemes can ensure that no eligible worker is left out. The DGLW’s outreach (health camps, scholarship drives) could expand via digital tools to remote areas. Administratively, updating scheme parameters (raising income ceilings, increasing treatment ceilings) would enlarge coverage; for instance, the long-unchanged scholarship income limit has been flagged for review by Parliamentary committees.

Inter-governmental cooperation is also crucial here. The Centre has already directed states to extend existing insurance and health schemes (like Ayushman Bharat) to unorganized workers. States, in turn, could harmonize their welfare funds with central efforts. Some states (e.g., Kerala, Punjab) have proactive welfare boards that might serve as models for data collection or disbursement. Pilot convergence projects – where a worker’s e-Shram registration automatically flags eligibility for all central and state benefits – could reduce leakage and boost efficiency.

India’s labor welfare schemes continue to leave a lasting positive on-ground impact by improving living standards, reducing child labor, and enhancing long-term social security. Although the schemes face a number of financial, operational, executive, administrative, and stakeholder-specific issues, some other developments, such as the labor code consolidation, emerging digital infrastructure, and universal coverage, have allowed several informal workers to benefit from the schemes. By strengthening the existing programs and increasing funding, India can make its labor welfare architecture more comprehensive and impactful and ensure dignified work for all. 

References

1. Ministry of labor & Employment. (n.d.). Brief about labor Welfare Organisation (LWO) and its schemes. Government of India. https://labor.gov.in/sites/default/files/brief_about_lwo_and_its_scheme.pdf
2. Ministry of labor & Employment. (2024). Annual Report 2024–25 (English). Government of India. https://labor.gov.in/sites/default/files/arenglish2024-25_compressed.pdf
3. Ministry of labor & Employment. (n.d.). Ministry of labor & Employment organizes various registration camps across the country, including for e-Shram, PMJJBY, PMSBY and PM-SYM. Government of India. https://labor.gov.in/sites/default/files/pib2111758.pdf
4. Press Information Bureau. (2024, March 21). Although the Revised Integrated Housing Scheme has been merged with PMAY, instalments for eligible beneficiaries are being disbursed. Government of India. https://www.pib.gov.in/PressReleasePage.aspx?PRID=2136882
5. Press Information Bureau. (2023, August 3). labor Secretary urges states to ensure welfare coverage for unorganised workers through central schemes. Government of India. https://www.pib.gov.in/PressReleasePage.aspx?PRID=2086193
6. ABP News Bureau. (2024, March 21). labor Ministry’s welfare schemes bring relief to over 50 lakh beedi, cine, and mine workers. ABP Live. https://news.abplive.com/business/labor-ministry-s-welfare-schemes-bring-relief-to-over-50-lakh-beedi-cine-and-mine-workers-1780671
7. Economic Times. (2024, May 6). Over 1.8 million beedi, cine and non-coal mine workers benefited from labor Welfare Scheme. The Economic Times. https://economictimes.indiatimes.com/news/india/over-1-8-million-beedi-cine-and-non-coal-mine-workers-benefited-from-labor-welfare-scheme/articleshow/111367956.cms
8. Mint Bureau. (2024, May 7). labor welfare schemes extend support to over 50 lakh unorganised workers across India. Mint. https://www.livemint.com/companies/company-results/labor-welfare-schemes-extend-support-to-over-50-lakh-unorganised-workers-across-india-11750151939888.html
9. Ministry of Finance. (2024). Demand No. 64: Ministry of labor and Employment – Expenditure Budget 2024–25. Government of India. https://www.indiabudget.gov.in/doc/eb/sbe64.pdf

Acknowledgement: The author sincerely thanks Aasthaba Jadeja and IMPRI fellows for their valuable contribution.

About the Contributor: Alisha Mehra is a Research Intern at IMPRI. She is currently pursuing an Integrated BA-MA in Development Studies from IITM.

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

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