Key Policies and Programs Supporting India’s Informal Workers

India’s economy runs on its informal workforce. Domestic helpers, street vendors, construction labourers, farm hands, rickshaw pullers and home-based workers together make up close to 90% of the country’s employed population, yet most of them work without written contracts, paid leave, provident fund or any guaranteed pension. For decades this huge group stayed outside the protective net that formal employees enjoy. Over the years, a layered system of laws, welfare schemes and food programmes has been built to reach them. This post walks through the most important policies and programmes that support informal workers, why each one exists, and how they fit together.

Why informal workers need a dedicated safety net 🔗

The core problem is insecurity. A worker in the organised sector has an employer who deducts EPF, offers ESIC health cover and follows labour laws. An informal worker usually has none of this. A single illness, accident or slow season can push the family into debt. Because there is no employer to enforce, the responsibility falls largely on the state to design schemes that workers can join on their own, often with very low contributions or none at all. The Unorganised Workers’ Social Security Act, 2008 formally recognised this duty, defining unorganised workers as home-based workers, self-employed persons and wage workers not covered by existing labour laws.

Government interventions for informal workers 🔗

Government support for informal workers moves along three broad tracks: helping tiny enterprises grow, giving the workforce a legal identity, and building a registry through which benefits can be delivered. Each track tackles a different gap.

MSME support and access to credit 🔗

A large share of informal workers are self-employed or run micro units, so policy for Micro, Small and Medium Enterprises (MSMEs) directly affects them. The biggest barrier these units face is finance. Banks hesitate to lend to a vegetable seller or a small workshop with no collateral. Schemes like the Pradhan Mantri Mudra Yojana provide collateral-free loans to non-corporate, non-farm micro enterprises, while credit guarantee funds reduce the risk for lenders.

For street vendors specifically, the Pradhan Mantri Street Vendor’s AtmaNirbhar Nidhi (PM SVANidhi) scheme was launched in June 2020 to help vendors restart businesses hit by the pandemic. It offers working-capital loans starting at a small amount, with larger tranches on timely repayment, digital cashback to encourage UPI use, and a RuPay credit card for reliable borrowers. The restructured version of the scheme extended its lending period and widened coverage to reach over a crore street vendors. Beyond the money, it gives vendors something they rarely had before: formal recognition as economic contributors.

The legal backbone: from the 2008 Act to the Code on Social Security 🔗

The Unorganised Workers’ Social Security Act, 2008 was a milestone because it created a legal framework rather than a one-off scheme. It set up a National Social Security Board to recommend welfare schemes covering life and disability, health and maternity, and old-age protection. Its weakness was that it left funding and actual implementation loosely defined, so coverage on the ground stayed patchy. The Act has since been subsumed into the Code on Social Security, 2020, one of the four labour codes that consolidate India’s labour laws and extend social security provisions, including to gig and platform workers. Understanding the 2008 Act still matters, because the principles it established continue to shape today’s schemes.

e-Shram: one database to link them all 🔗

A long-standing problem was that nobody had a reliable list of informal workers, so benefits were hard to target. The e-Shram portal, launched in August 2021, addresses this by building a National Database of Unorganised Workers. Each registrant gets a 12-digit Universal Account Number linked to Aadhaar. Any unorganised worker who is not a member of EPFO or ESIC and not an income-tax payer can register, free of cost, online or at a Common Service Centre. By early 2025 more than 30 crore workers had registered. The portal acts as a single gateway, connecting workers to pension, insurance, health and job schemes through one identity.

Food security schemes 🔗

For families living on uncertain daily wages, affordable food is the first line of social protection. India runs some of the largest food programmes in the world, and informal workers are among their main beneficiaries.

The Public Distribution System and the National Food Security Act 🔗

The Targeted Public Distribution System (TPDS) delivers subsidised foodgrains through a network of Fair Price Shops, with the Food Corporation of India handling procurement and storage. The National Food Security Act, 2013 turned this from a welfare programme into a legal right. It entitles up to 75% of the rural population and 50% of the urban population to subsidised grains. Priority households receive 5 kg of foodgrains per person per month. The One Nation One Ration Card system now lets migrant workers draw their entitlement from any Fair Price Shop in the country, which matters enormously for labourers who move across states for work.

Antyodaya Anna Yojana 🔗

Within the food security framework, the Antyodaya Anna Yojana (AAY) targets the poorest of the poor. Launched in December 2000 and later absorbed into the NFSA, it covers households such as landless labourers, destitute families, widow-headed households and those with no assured income, many of whom work in the informal sector. AAY families receive 35 kg of foodgrains per household per month at deeply subsidised rates, identified through a distinctive ration card. This higher, household-based entitlement recognises that the most vulnerable need more than the per-person priority allotment.

PM POSHAN, the mid-day meal scheme 🔗

The mid-day meal scheme supports informal workers indirectly but powerfully. Renamed Pradhan Mantri Poshan Shakti Nirman (PM POSHAN) in 2021, it provides one hot cooked meal on school days to children from pre-primary to Class VIII in government and aided schools. For a daily-wage family, this guarantees their child at least one nutritious meal and keeps children in school rather than at work. The scheme also follows set nutrition norms for calories and protein. Notably, it employs lakhs of cook-cum-helpers, many of them women from low-income households, making it a source of informal livelihood in its own right.

Social insurance and pensions 🔗

The third pillar is protection against life’s shocks: death, disability, illness and old age. Because informal workers cannot rely on an employer, these schemes are built around small voluntary contributions, government co-funding, or full government subsidy.

Life cover: from Janashree Bima to Aam Aadmi Bima Yojana 🔗

The Janashree Bima Yojana once offered life insurance to people in identified occupational groups. To cut duplication and improve administration, it was merged with the Aam Aadmi Bima Yojana (AABY), which now runs as a single scheme through the Life Insurance Corporation. AABY targets rural landless households and members of vulnerable occupational groups aged 18 to 59, providing life and disability cover with the premium largely shared by central and state governments. It also carries an add-on scholarship benefit for the children of covered members, easing the education burden on poor families.

Health cover: RSBY and its successor 🔗

The Rashtriya Swasthya Bima Yojana (RSBY), introduced in 2008 under the Ministry of Labour and Employment, gave Below Poverty Line families cashless hospitalisation cover through a smart-card system, with only a token annual registration fee. It was a pioneering attempt at digital, cashless public health insurance. Since 2018, RSBY has largely been subsumed under Ayushman Bharat – Pradhan Mantri Jan Arogya Yojana (PM-JAY), which offers far higher coverage of ₹5 lakh per family per year for secondary and tertiary hospitalisation. Many informal workers and their families now access health protection through PM-JAY, with e-Shram registration helping route eligible workers towards it.

Pensions and accident cover for old age 🔗

Old age is a particular worry for informal workers, who rarely have savings or a pension. The Pradhan Mantri Shram Yogi Maan-dhan (PM-SYM), launched in 2019, addresses this directly. It is a voluntary, contributory pension scheme for unorganised workers earning up to ₹15,000 a month. Workers contribute a small monthly amount, the government matches it on a one-to-one basis, and at age 60 the worker receives a minimum assured pension of ₹3,000 per month. The scheme is administered with LIC as fund manager and is integrated with e-Shram for easy enrolment.

Two low-cost insurance schemes round out the package. As detailed in government briefings on worker welfare, the Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY) offers life cover of ₹2 lakh for a modest annual premium, while the Pradhan Mantri Suraksha Bima Yojana (PMSBY) provides accidental death and disability cover for just a few rupees a year. For a worker whose income could vanish after a single accident, these affordable products fill a critical gap.

How the pieces fit together 🔗

Read individually, each scheme covers one need. Read together, they form a structure: credit and recognition for those who run micro enterprises, a legal identity and registry through the 2008 Act and e-Shram, food security through TPDS, AAY and PM POSHAN, and insurance and pensions for health, life and old age. The persistent challenge is not the design but the delivery, awareness, enrolment, accurate identification of beneficiaries, and ensuring the money or benefit actually reaches the worker. This is exactly why a unified database like e-Shram, linked to direct benefit transfer, has become the centrepiece of recent policy.

What do you think? If you had to fix one weak link in this system, would you focus on raising the value of benefits or on improving how reliably they reach informal workers? And do you think voluntary, contribution-based pension schemes can ever achieve wide coverage among workers whose incomes are irregular and unpredictable?

References

1. https://www.indiacode.nic.in/handle/123456789/2100?sam_handle=123456789/1362
2. https://www.pib.gov.in/PressNoteDetails.aspx?NoteId=156604&ModuleId=3&reg=3&lang=1
3. https://www.pib.gov.in/Pressreleaseshare.aspx?PRID=1909995&reg=3&lang=2
4. https://www.impriindia.com/insights/policy-update/national-food-security-actnfsa-2013/
5. https://en.wikipedia.org/wiki/Antyodaya_Anna_Yojana
6. https://news.careers360.com/mid-day-meal-scheme-renamed-pm-poshan-cover-pre-primary-students/amp
7. https://pib.gov.in/newsite/PrintRelease.aspx?relid=91087
8. https://www.pib.gov.in/PressReleasePage.aspx?PRID=2108082&reg=3&lang=2
9. https://www.pib.gov.in/PressReleasePage.aspx?PRID=2035275&reg=3&lang=2