The finance ministry is expected to announce a life insurance package for below poverty line workers in the unorganised sector in the forthcoming Union Budget.

According to official sources, a sum of Rs 1,000 crore (Rs 10 billion) is expected to be allocated to this head for fiscal 2007-08.

This is projected to go up to Rs 5,000 crore (Rs 50 billion) in 2011-12. Above poverty line workers in the unorganised sector are also likely to be covered by this plan.

"The parameters of the scheme will be spelt out by the Centre soon. State governments will be free to select the insuring agency on the basis of competitive bidding," they added.

In the first year, the central government intends to cover 2.9 crore workers in 250 backward districts (including the 200 districts covered under the National Rural Employment Guarantee Act).

The government is working out the premium, pegged at Rs 200 per head, which will translate into a total spend of Rs 580 crore (RS 5.8 billion). BPL workers in other districts will be covered gradually over the next four years starting 2008-09.

Above poverty line workers will be covered in the fourth and fifth years of the 11th Five Year Plan.