Eyeing better returns on its investment, the government, on Sunday, gave its go ahead to the Employees State Insurance Corporation to invest up to 15% of its surplus funds into equity through exchange traded funds.
A decision was taken at the 189th meeting of Employees’ State Insurance Corporation under the labour minister Bhupender Yadav who is the chairman of ESIC.
ESIC has a surplus of nearly Rs 65,000 crore which increases by over Rs 8000-9000 crore every year and could be higher than this in coming years as ESIC plans to substantially expand coverage by bringing even the gig workers in its fold.
“Due to the relatively low returns on debt instruments coupled with the need to diversify, the ESI Corporation accorded its approval for investments of surplus funds in equity, restricted to exchanged traded funds,” the labour ministry said after a two-day meeting which concluded on Sunday.
Initially, ESIC will invest 5% of its surplus and gradually raise it up to 15% after review of two quarters. The investment will be confined to Nifty50 and Sensex ETFs and will be managed by fund managers of AMCs.
The equity investment will be monitored by existing custodian, external concurrent auditor and consultant looking after the debt investments in addition to the management of the ETF for equity.
The labour ministry, had in 2015, allowed the Employees Provident Fund Organisation to invest up to 15% of its surplus in equity for better returns as the retirement fund body pays annual interest to its 5.5 crore subscribers on its investments.
Employees’ State Insurance Corporation is one of the two main statutory social security bodies under the labour ministry, the other being the EPFO.
All employees earning Rs 21,000 or less per month as wages are covered under the ESIC Act.As per the Act, the employer contributes 3.25% while the employee contributes 0.75% which is used to provide medical and cash benefits to its subscribers and their family.
The employees registered under the scheme are entitled to medical treatment for themselves and their dependents, unemployment cash benefit in certain contingencies and maternity benefit in case of women employees.
Other decisions
ESIC also approved the proposals for setting up a new 100 bedded ESIC Hospital at Shyamlibazar, Agartala, Tripura and 100 bedded ESIC Hospital at Idukki, Kerala. Besides, the Corporation approved the proposal of increasing the number of seats under wards of Insured Persons (IPs) category in two of its ESIC nursing colleges at Gulbarga and Bengaluru while starting Ph.D.,MDS, nursing and paramedical courses in its medical institutions spread across the country.
Further, the ESI Corporation accorded in-principal approval for execution of annual repair maintenance & operational work (ARMO) and special repair (SR) and execution of the capital works in ESIC through central and state public sector enterprises along with CPWD. “A fresh empanelment of such central or state PSUs will be invited by the ESIC for empanelment in due course,” it added.
The Corporation also approved its annual accounts for the year 2021-22 together with the report of CAG and Annual Report of ESI Corporation for the year 2021-22 along with its analysis. It will now be laid in the Parliament after approval by the labour ministry.
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