Draft Shram Shakti Niti, 2025: Ambition Meets Ground Realities
On October 9, 2025, the Ministry of Labour & Employment unveiled the Draft Shram Shakti Niti, 2025, aiming to achieve universal social security, 35% female workforce participation, and seamless integration between workers, employers, and skill providers. Lofty benchmarks indeed, but for a country where 91% of workers remain stuck in informal employment (Periodic Labour Force Survey, 2022–23), skepticism about actual delivery is inevitable. The draft policy is now open to public feedback, marking the first comprehensive labour reform effort since the four Labour Codes were legislated. This moment is significant, yet fraught with challenges of political will, institutional capacity, and digital readiness.
Breaking from Piecemeal Strategies
For decades, India's labour policy architecture has been hamstrung by fragmentation—disjointed welfare boards, a patchwork of insurance schemes, and negligible coordination among state and central authorities. What distinguishes Shram Shakti Niti from its predecessors is its explicit ambition to establish a Universal Social Security Account (USSA), where EPFO, ESIC, PM-JAY, and the e-SHRAM portal converge into a single, portable framework. This shift toward portability is groundbreaking in principle, promising social safety nets that transcend geographical and occupational boundaries.
Additionally, the policy envisions a "digital-first" labour ecosystem through National Career Service–Digital Public Infrastructure (NCS-DPI). Workers from across MSME clusters, small towns, and agricultural hinterlands will ostensibly find better job-matching opportunities—if rolled out effectively. The establishment of three-tier implementation bodies at national, state, and district levels could prevent the inter-agency turf wars that plagued earlier schemes like the Unorganised Workers Social Security Act, 2008.
Yet, even with these innovations, questions remain about India's ability to transition its labour practices to this scale of integration. The irony is that despite the ambitious framing, decentralised institutional capacity and uneven state-level implementation could unravel the policy’s effectiveness.
The Machinery of Reform: Legal and Administrative Design
Much of the draft policy’s success hinges on whether its phased roadmap—from institutional setup (Phase I, 2025–27) to nationwide rollout (Phase II, 2027–30)—remains realistic. The Unified Social Security Framework, for example, aims to integrate EPFO, ESIC, and state welfare boards under a sweeping regulatory body. Legally, this would require amendments not just to the Labour Codes but also specific sections like Section 53 of the Code on Social Security, 2020, which governs contributions and centralised payments.
To operationalise digital compliance and transparency, the draft proposes real-time dashboards and a new Labour & Employment Policy Evaluation Index (LPEI) to benchmark state performance annually. But such mechanisms have historically struggled with bureaucratic delays. The proposed district-level Labour Resource Centres (DLRCs) sound promising, yet they bear the inherent challenge of functioning as single-window hubs in states with vast disparities in governance standards.
The administrative complexity is daunting. For instance, similar integration attempts under GST implementation showed that harmonising systems across state lines is time-consuming, costly, and politically contentious.
What the Data Tells Us
The government projects bold outcomes: universal worker registration, 35% female labour force participation by 2030, and millions of green jobs. However, the feasibility of these targets warrants closer scrutiny. Female labour force participation—which currently stands at an abysmal 24% (PLFS 2022–23)—requires systemic solutions like subsidised childcare, workplace safety for women, and flexible work arrangements. These are conspicuously absent from the draft policy’s provisions.
Meanwhile, the push for "green and decent jobs" is laudable but overly abstract. India will need to create roughly 8 million non-farm jobs annually to absorb its growing labour force. Yet, job growth since 2017 has stagnated in the face of automation and macroeconomic headwinds, while informal job numbers are only ticking higher.
Even the assertion of "near-zero workplace fatalities through AI-driven safety systems" raises eyebrows. A 2019 analysis by CAG highlighted glaring oversight gaps within ESIC and factory inspection processes. AI integration cannot solve compliance failures fundamentally rooted in weak monitoring and enforcement.
The Unasked Questions
The most uncomfortable reality remains India’s institutional capacity to implement the ambitious promises of Shram Shakti Niti. District-level Labour Resource Centres (DLRCs) sound transformative on paper, but their success depends entirely on funding flows to already-overburdened local bodies. As of 2023, India spent just 0.6% of GDP on social security schemes, well below OECD averages, including countries like South Korea (4.3% of GDP).
Similarly, the heavy reliance on digital infrastructure risks alienating informal-sector workers with low technological literacy. Rural internet penetration stands at 51% (TRAI, 2023), creating obvious implementation barriers for AI-driven compliance mechanisms and digital job portals. Without concrete plans to bridge such divides, the promise of a "One Nation Integrated Workforce" risks remaining aspirational rhetoric.
Gig and platform workers, a rapidly growing segment, find themselves cornered by policy ambiguities concerning dispute resolution, social security contributions, and employment contracts. The policy’s silence on regulating this space undercuts its claim to equity and inclusivity. Will India continue leaving one of its fastest-growing workforces in the regulatory gray zone?
Lessons from South Korea
South Korea’s experience in reforming its own social security framework during 2018 offers a compelling comparison. Facing similar challenges of informal employment and a digital transition, Seoul created portable insurance schemes tied to unique worker IDs, irrespective of employment sector. Unlike India's reliance on centralised digital dashboards, South Korea used local governments as primary implementers, ensuring accountability through municipal audit systems.
India's policy design, in contrast, centralises monitoring mechanisms heavily under national bodies like the National Labour and Employment Policy Implementation Council. While this is administratively efficient, bypassing state and district-level engagement risks disjointed policy execution—a pattern India has struggled with during the rollout of PM-JAY and GST alike.
- Q1: Under the Draft Shram Shakti Niti, 2025, which mechanism aims to benchmark state performance annually?
A: Labour Compliance Evaluation Network
B: Labour & Employment Policy Evaluation Index
C: National Universal Employment Dashboard
D: Employment Quality Monitoring System
Correct Answer: B - Q2: What is the female labour force participation rate targeted under the Draft Shram Shakti Niti, 2025 by 2030?
A: 30%
B: 45%
C: 35%
D: 25%
Correct Answer: C
Practice Questions for UPSC
Prelims Practice Questions
- It proposes a single portable framework by converging EPFO, ESIC, PM-JAY and the e-SHRAM portal into a Universal Social Security Account (USSA).
- It seeks to reduce fragmentation by relying mainly on multiple separate welfare boards operating independently at the state level.
- It envisions a digital-first labour ecosystem through National Career Service–Digital Public Infrastructure (NCS-DPI) for job matching across regions.
Which of the above statements is/are correct?
- Real-time dashboards and a Labour & Employment Policy Evaluation Index (LPEI) are proposed to benchmark state performance annually.
- The article suggests that AI-driven safety systems alone can overcome compliance failures rooted in weak monitoring and enforcement.
- District-level Labour Resource Centres (DLRCs) are envisioned as single-window hubs, but their effectiveness is linked to funding and uneven governance capacity across states.
Which of the above statements is/are correct?
Frequently Asked Questions
What is the core institutional innovation proposed in the Draft Shram Shakti Niti, 2025 for social security portability?
The draft proposes a Universal Social Security Account (USSA) to converge EPFO, ESIC, PM-JAY and the e-SHRAM portal into a single portable framework. The intent is to make social security benefits travel with the worker across geography and occupations, reducing fragmentation seen in earlier schemes.
How does the draft policy attempt to fix coordination failures seen in earlier labour welfare arrangements?
It proposes three-tier implementation bodies at national, state and district levels to reduce inter-agency turf wars and improve coordination. This is presented as a response to earlier fragmented arrangements such as disjointed welfare boards and patchwork insurance schemes that suffered from weak Centre–State coordination.
What phased implementation roadmap is proposed, and why is its realism questioned in the article?
The draft outlines Phase I (2025–27) for institutional setup and Phase II (2027–30) for nationwide rollout. The article questions feasibility given bureaucratic delays and the difficulty of harmonising systems across states, drawing a parallel with the time-consuming and contentious nature of GST integration.
What legal and regulatory changes does the draft imply for a unified social security framework?
Integrating EPFO, ESIC and state welfare boards under a unified framework would require amendments beyond the Labour Codes. The article specifically flags the need to amend provisions such as Section 53 of the Code on Social Security, 2020, which governs contributions and centralised payments.
Why does the article consider some projected outcomes (female participation, green jobs, near-zero fatalities) as under-specified or overstated?
Female labour force participation is targeted at 35% by 2030 while the current level is 24% (PLFS 2022–23), yet the draft is said to omit systemic enablers like subsidised childcare, workplace safety for women and flexible work. Similarly, ‘green and decent jobs’ is described as abstract, and ‘near-zero workplace fatalities’ via AI is doubted because compliance failures stem from weak monitoring, reinforced by a 2019 CAG analysis noting oversight gaps in ESIC and factory inspection processes.
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