Policy Update
Suranjana Mitra
In the Union Budget of 2025-26, a landmark initiative has extended social security benefits to the gig workers who are growing rapidly. According to the Niti Aayog report on India’s booming gig and platform economy, by 2030, gig workers will constitute approximately 4.1% of India’s total workforce, or around 23.5 crore people. Gig workers will now be eligible for the Ayushman Bharat Pradhan Mantri Jan Arogya Yojana (AB-PMJAY), which is the world’s largest health insurance scheme. Under the AB-PMJAY, the gig workers will be entitled to receive healthcare coverage which is not provided by their employer.
Recognizing the contribution of the gig workers in India’s new-age economy, the Government of India will provide them with identity cards, e-Shram registration, and healthcare security under PM Jan Arogya Yojana. Nearly 1 crore gig workers will benefit from the scheme. The Union Minister for Labour and Employment and Youth Affairs and Sports, Dr Mansukh Mandaviya, also mentioned that the Government of India is committed to extend social security benefits to workers in other unorganised sectors as well, ensuring dignity, security and prosperity to every worker in the country.
Background
Gig workers are individuals engaged in short-term, flexible jobs, such as driving cabs, online delivery services, or freelance work. As per the World Economic Forum, the gig economy is defined by its focus on workforce participation and income generation via “gigs”, single projects or tasks for which a worker is hired. Gig work mostly consists of income-earning activities where the employer is under no obligation to provide the employees with healthcare coverage, a pension plan or Gratuity-like benefits, which form a part of long-term standard employer-employee relationships. The gig economy uses digital platforms to connect freelancers with customers to provide short-term services or asset-sharing. The gig workers are often referred to as “Partners” and not “employees” as a part of their marketing strategy that positions them as collaborators and not employees which downplays the traditional employer-employee relationship and the responsibilities which are a part of it.
In 2019, the Code on Wages was adopted by the Government of India in order to regulate wages and fix a “minimum wage” payment in all employment areas where any industry, trade, business, or manufacture is carried out. This code also includes gig work but the actual minimum wage is decided by the respective States depending on the skill set. Later on, the Code on Social Security 2020, recognised “Gig Workers” as a separate category for the first time and ensured extension of social security benefits to them. The National Health Authority had recommended expanding the coverage of health insurance for those who are deprived of one. This recommendation was applied by bringing the gig workers under the purview of AB-PMJAY.
Functioning
The government will provide the gig workers with ID cards and facilitate their registration on the e-Shram portal. The E-Shram portal, which was launched in August 2021, was created to register and support the workers of the unorganised sector by providing them with a Universal Account Number (UAN) and create a comprehensive National Database of Unorganised Workers (NDUW). As of 27th January, 2025, 30.58 crore unorganised workers have already registered on the E-Shram portal. E-Shram now integrates 12 schemes of different central ministries or departments.
An “aggregator module” allows digital platforms to register themselves and their employees on the E-Shram portal, so that it becomes easier for the gig workers to apply for social security schemes. In the first phase of this initiative, four aggregators have successfully completed their registration, namely, Urban Company, Zomato, Blinkit and Uncle Delivery.
Impact
After the announcement by Finance Minister Nirmala Sitharaman in the budget, the labour ministry is working on a mechanism to deduct social security contributions as a percentage by online platforms like Ola and others, on the income of the gig workers on every transaction. Further, on retirement of the employee, two choices will be provided to them. They can either opt to withdraw interest on the deposits as pension or can divide the accumulated funds into equal installments for a stipulated period.
Up to 1 crore gig workers will now be under the coverage of the AB-PMJAY or the Prime Minister’s People’s Health Scheme. PM-JAY provides free health insurance coverage to low-income earners and covers the cost of medical and hospital treatment up to Rs 5 Lakh per year for every eligible family.
Emerging Issues
This initiative can be beneficial to gig workers as they often face different challenges while executing their duties. The companies have different marketing strategies that can harm the workers, such as “the 10-minute delivery” strategy. Justice Dipankar Datta, while listening to a case on the implementation of the Social Security Code, addressed the counsel for Zomato, recalling seeing a Zomato rider riding dangerously on the street. “Please discontinue this practice of supplying 10-minute deliveries,” he said. “These poor people will die on the road.” A more pragmatic approach is required while devising new marketing strategies.
Workers face a continuous threat of job insecurity which results from a large pool of low-cost labourers who are medium-skilled or low-skilled. The demand for their labour can vary from time to time which can make it uncertain become a hindrance towards future planning. The workers are also not entitled to hazard pay which becomes dangerous for them as they have to fulfil duties that include staying outdoors during severe heat waves. Further, the platform workers cannot unionize in order to raise these issues they face as they are isolated and are often in a rush to fulfil targets in order to get decent pay in a day. In addition to these issues, a very concerning issue is the absence of ways to upskill and re-skill in these “gigs” as they mostly rely on very basic functions.
Way Forward
Social Security Scheme for Welfare of Online Platform Workers is a step forward in resolving a part of the issues these gig workers face. They still remain vulnerable and there is a lot of room for improvement.
- At present, about 47% of the gig work is in medium-skilled jobs, about 22% in high skilled, and about 31% in low-skilled jobs. There should be a Skill Enhancement arrangement for these workers through which they can Upskill themselves and widen their choices. Platforms can collaborate with the Ministry of Skill Development and Entrepreneurship and the National Skill Development Corporation (NSDC) to increase skilled workers and support micro-entrepreneurship.
- The platforms can develop a prompt grievance redressal mechanism which can help build a comfortable work environment for the gig workers.
- The formulation of industry-wide standards which the platforms have to follow when creating new business strategies etc.
- The platforms should ensure fair pay to all its employees and make their algorithmic calculations more transparent to the public as it is important in order to track the tasks assigned as well as the pay per task.
- Gender Sensitisation is very important to provide an equal and comfortable work environment to women. The platforms can organize accessibility awareness programmes for workers and their families to encourage PwDs to take up employment opportunities in the platform sector through the development of their skills.
- During the summer season extreme heat waves make it impossible for people to be outside. The platforms need to devise new strategies to help protect the gig workers from working in these harsh conditions. Such as providing breaks or making guidelines such as the one Zomato had in place urging its customers to avoid ordering food during peak afternoon unless “absolutely necessary” is a good step in this direction.
References
1. ETHRWorld & www.ETHRWorld.com. (2025, February 3). Budget proposes social security scheme for gig workers, help in e-Shram registration. ETHRWorld.com. https://hr.economictimes.indiatimes.com/news/industry/budget-proposes-social-security-scheme-for-gig-workers-help-in-e-shram-registration/117872573
2. Government announces long-awaited social security and health insurance measures for India’s gig workers. (2025, March 10). British Safety Council India. https://www.britsafe.in/safety-management-news/2025/government-announces-long-awaited-social-security-and-health-insurance-measures-for-india-s-gig-workers
3. India’s booming gig and platform economy (Niti Aayog report)
4. Kumar, R. (2025, February 1). Who are gig workers? Nirmala Sitharaman announces major benefit for them. www.ndtv.com. https://www.ndtv.com/business-news/union-budget-2025-who-are-gig-workers-nirmala-sitharaman-announces-major-benefit-for-them-7613276
5. Kumar, R. (2025, February 1). Who are gig workers? Nirmala Sitharaman announces major benefit for them. www.ndtv.com. https://www.ndtv.com/business-news/union-budget-2025-who-are-gig-workers-nirmala-sitharaman-announces-major-benefit-for-them-7613276
6. Pradeep Kumar Jena, & Pradeep Kumar Jena. (2025, February 6). Planning social security cover for gig workers. The New Indian Express. https://www.newindianexpress.com/opinions/2025/Feb/06/planning-social-security-cover-for-gig-workers
7. Pti. (2025, February 6). Labour Ministry to soon seek Union Cabinet nod for pension scheme for gig workers for online platforms. The Economic Times. https://economictimes.indiatimes.com/news/economy/policy/labour-ministry-to-soon-seek-union-cabinet-nod-for-pension-scheme-for-gig-workers-for-online-platforms/articleshow/117982978.cms?from=mdr
About the Contributor: Suranjana Mitra is a Research Intern at IMPRI and holds a postgraduate degree in Political Science. She has a strong interest in Public policy analysis and policy making.
Acknowledgement: The author extends sincere gratitude to the IMPRI team for reviewing the article and for providing the opportunity to write the article.
Disclaimer: All views expressed in the article belong solely to the author and not necessarily to the organisation.
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