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CMA Intermediate · Business Laws and Ethics · Employees State Insurance Act, 1948

Under the Code on Social Security, 2020, the Employees' State Insurance Fund may be expended only for stated purposes. Which of the following is NOT among those stated purposes?

Granting loans to employers for wage bills is not a stated purpose. The Code lists uses such as audit costs, Employees' Insurance Court costs, and fees and allowances to members of the Corporation and committees. Loans to employers appear nowhere in that list.

  1. ADefraying the cost of auditing the accounts of the Corporation
  2. BDefraying the cost of the Employees' Insurance Courts set up under the Chapter
  3. CPayment of fees and allowances to members of the Corporation and its Committees
  4. DGranting loans to employers to meet their wage bills during a business downturnCorrect

Explanation

Section 26 of the Code lists permitted purposes, including audit costs, costs of Employees' Insurance Courts, and fees and allowances to members of the Corporation, Standing Committee and other committees. Lending to employers for wages is not listed, so it is not a permitted use unless authorised by the Corporation with the previous approval of the Central Government under the residual clause.

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