Karnataka labour dept eyes Rs 2.1k crore welfare fund through fuel cess

Bengaluru: The labour department has estimated a requirement of Rs 2,120 crore to provide social security benefits to unorganised-sector workers and proposed a fuel cess of Re 1 per litre to meet these expenses.

According to a document DH has accessed, this Rs 2,120 crore will be spent on four categories of social security. They are: Rs 1,772.02 crore for health benefits, Rs 195.65 crore for accident benefits, Rs 6.39 crore for educational assistance and Rs 146.78 crore for natural death compensation.

These categories are part of a pet project of Labour Minister Santosh Lad and will come under the aegis of the Karnataka State Unorganised Workers’ Social Security Board.

As per estimates, the government is expected to collect Rs 2,164.48 crore through the Re 1/litre cess on petroleum products. The labour department has sent the proposal to the chief minister’s office for approval.

A social security cess of Rs 2 per litre is being levied in Kerala.

The Ministry of Labour and Employment, Government of India (GoI), estimates that there are 1.89 crore unorganised-sector workers in Karnataka. This includes 60 lakh construction workers and motor transport and related workers. The remaining 1.3 crore workers (62.02 lakh families) are supposed to be in other unorganised sectors.

Health security

Though health benefits include additional reimbursement up to Rs 10 lakh, 50% of the beneficiaries are estimated to be covered under the Ayushman Bharat Scheme, which has a limit of Rs 5 lakh. Hence, the effective expenditure is expected to be Rs 1,500 crore, which increases to Rs 1,772.02 crore for 2025-26 if a 10-15% increase in costs is considered. 

Accident relief

The department has estimated 3,250 accident compensation claims per year across three age groups (1,625 accidents in the 18-40 age group, 845 accidents in the 40-50 age group and 780 accidents in the 50-60 age group).

These estimates will cost Rs 195.65 crore. As per the scheme, the department intends to provide educational assistance to a maximum of 2 children each of unorganised workers who are dead or permanently disabled. The assistance ranges from Rs 1,800 to Rs 6,0000, and covers education from class 1 up to higher studies. Assuming approximately 6,000 applications per year, this is expected to cost Rs 6.39 crore annually.

In 2023, 1.61 lakh unorganised-sector workers were estimated to have died in Karnataka. Of this, 15,000 were due to accidents, which come under the health insurance category.