India's gig economy has created a new employment landscape. Food delivery executives, ride-hailing drivers, e-commerce delivery personnel and thousands of other platform workers now form an essential part of the country's urban economy. Yet, for many of them, the flexibility of earning through digital platforms comes with a significant trade-off: limited access to the social security protections traditionally associated with employment.
A proposed government initiative could begin addressing this gap. The Centre is considering a 2% transaction-based contribution from digital aggregators to finance social security benefits for more than 12 million gig and platform workers. The proposal, reported by The Economic Times on November 4, 2026, could mark an important development in India's attempt to extend welfare protection to a workforce that has grown alongside its digital economy.
The proposal is particularly significant because it seeks to make the platforms that facilitate this economic activity contribute towards the welfare of the people who deliver the services.
A growing workforce with an uncertain safety net
The scale of India's gig economy makes the issue increasingly difficult to ignore.
According to the Economic Survey 2025-26, India's gig workforce increased from 7.7 million in FY2021 to 12 million in FY2025, registering growth of 55%. Gig workers now account for more than 2% of the country's workforce. The non-agricultural gig workforce is projected to reach 6.7% of the workforce by 2029-30, contributing an estimated ₹2.35 lakh crore to GDP.
Behind these numbers lies a workforce with widely differing economic circumstances. Some people use platform work to supplement their regular income, while others depend on it as their principal source of livelihood.
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| India's growing gig economy depends on millions of workers whose access to employment-linked social security remains limited |
For many, however, income remains uncertain. The Economic Survey estimates that around 40% of gig workers earn less than ₹15,000 a month. It also highlights income volatility, limited access to credit and concerns arising from algorithm-driven work allocation, performance monitoring and wage determination.
Unlike conventional salaried employment, platform-based work does not automatically provide a comprehensive package of health insurance, paid leave, retirement savings and other employment-linked benefits.
An accident, prolonged illness or loss of earning capacity can therefore have serious financial consequences for a worker and the family dependent on that income.
The proposed social security initiative seeks to address at least some of these vulnerabilities.
Why the government is reconsidering the funding formula
The proposed 2% contribution is not entirely new in principle. The Code on Social Security, 2020 already provides a statutory framework for extending social security to gig and platform workers.
Section 114 provides for aggregator contributions at a rate between 1% and 2% of annual turnover, subject to a ceiling of 5% of the amount paid or payable to gig and platform workers.
The legislation also permits schemes to be funded wholly through aggregator contributions or through a combination of contributions from different sources.
What the government is now reportedly considering is a change in the way the contribution is calculated.
Under the reported proposal, the contribution would be linked to transactions rather than the aggregator's overall turnover.
The distinction matters because digital platforms operate through different commercial models.
Consider two hypothetical businesses handling transactions worth ₹100 each. A commission-based platform might record only ₹20 as its revenue, while an inventory-led business might record the entire ₹100 as revenue. Although both facilitate comparable transaction values, their reported turnover could differ substantially.
A contribution calculated purely on accounting turnover could therefore produce different liabilities for businesses handling similar economic activity.
The government's reported preference for a transaction-linked approach is intended to address this disparity and ensure that one category of aggregator does not end up subsidising another.
There is, however, an important detail still requiring clarification: what exactly constitutes the chargeable transaction? Whether the calculation is based on the gross transaction value, the platform's attributable revenue or another measure will have a significant bearing on the final financial liability.
What workers could gain
According to the Economic Times report, the proposed scheme is expected to provide life and disability insurance, accident insurance, health benefits and maternity benefits.
These are important areas of protection for a workforce exposed to occupational risks and uncertain incomes.
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| The proposed mechanism envisages contributions from digital aggregators being channelled into a social security framework to provide eligible gig and platform workers with insurance and other welfare benefits |
For a delivery worker, for instance, accident insurance could provide financial support following an injury that prevents the person from working. Health coverage could reduce the financial burden of medical treatment, while maternity benefits could provide support to women workers who might otherwise have limited access to such protection.
The reported funding arrangement envisages aggregators financing the scheme through the Social Security Fund, without direct contributions from the Centre or the workers.
However, pension, provident fund and other old-age benefits may be introduced at a later stage. The government is reportedly considering the nature of workers' long-term association with platforms before extending such benefits.
This sequencing raises an important question. If the objective is to provide comprehensive social security, how will the system eventually address retirement savings and financial security in old age?
Insurance can protect workers against specific risks, but it cannot substitute for a long-term income and retirement protection framework.
The platforms have their own concerns
The proposed change also reflects the growing tension between worker welfare and the economics of digital platforms.
Aggregators have argued that calculating contributions on turnover can produce distortions because different companies recognise revenue differently. Their representations have helped bring the transaction-based approach into consideration.
For businesses operating on relatively thin margins, an additional statutory contribution could also affect operating costs.
The financial impact will depend on the final definition of a transaction, the applicable rate, the categories of businesses covered and the treatment of different revenue streams.
There is also the question of who ultimately bears the cost.
Although the reported proposal places the funding responsibility on aggregators, companies could potentially respond by adjusting delivery charges, platform fees, commissions, promotional incentives or other components of their business models.
Some of these costs could eventually reach consumers. Others could affect the earnings opportunities available to workers.
These are possibilities rather than established outcomes. The extent of any cost transfer will depend on competition, pricing power, operating margins and the final regulatory framework.
The challenge for policymakers is to ensure that the contribution improves worker protection without creating unintended consequences that undermine the very livelihoods it is intended to support.
From registration to meaningful protection
Another critical consideration is the practical administration of the proposed scheme.
The National Social Security Board for Unorganised Workers and Gig and Platform Workers was officially notified by the Ministry of Labour and Employment on 30 October 2026. The Board is expected to recommend, oversee and monitor welfare schemes, with representation from government, aggregators, workers and other stakeholders.
According to the Economic Times, the Board is expected to finalise the scheme's contours in November, with a possible introduction in 2027.
The report also indicates that workers will need to satisfy minimum work requirements to qualify for benefits. The reported criteria include 90 days of work with a single aggregator during a financial year, or 120 days cumulatively when working across multiple platforms.
This is particularly relevant because gig work is not always a continuous engagement with one company. Workers frequently move between platforms depending on demand, incentives and earning opportunities.
A social security framework must therefore recognise the realities of multi-platform employment.
Registration, eligibility verification, contribution tracking and claims settlement will need to work across different aggregators. Workers should not lose access to protection simply because they change platforms or move between cities.
Equally important will be transparency in the collection and utilisation of funds, accessible grievance redressal and straightforward insurance claim procedures.
A welfare framework must go beyond the levy
India's proposed initiative comes at a time when governments across the world are reassessing the relationship between digital platforms and the people who work through them.
The Economic Survey 2025-26 points to international developments involving employment classification, algorithmic transparency and worker protection. These discussions underline that social security is only one part of the larger debate surrounding the future of platform employment.
India's immediate priority is to establish a workable funding mechanism and extend meaningful protection to a rapidly expanding workforce.
But the success of the proposed initiative cannot be measured simply by the amount collected from aggregators or the number of workers registered.
It must be measured by whether a delivery executive injured during work can access timely financial assistance, whether a driver can obtain affordable healthcare, whether a woman platform worker receives meaningful maternity protection and whether workers can retain their benefits when their working arrangements change.
The proposed 2% contribution could provide the financial foundation for such protection. Its real significance, however, will depend on how effectively the government translates the proposal into accessible, dependable and portable benefits.
For India's gig workers, the promise of flexibility should not have to mean living without a safety net.
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