- It is being said that India is no longer a poor country but it is now more unequal and vulnerable with pockets of deep poverty and its prosperity will depend to a large extent on how its social protection system evolves and catches up with its diversity and demography.
- India’s social protection system needs to evolve and catch up with the needs of its diversity and demography.
|Social protection system overview
● Social protection comprises those measures which aim at preventing, reducing and eliminating economic and social vulnerabilities to poverty and deprivation. There are two approaches conceptual approach and concrete set of policies, which has become a central part of policy discussion.
○ As a conceptual approach, social protection offers a way of thinking the requirements of groups and individuals to live a fulfilling life, the role of the state in facilitating this, and the vulnerabilities of particular groups or individuals.
○ As a set of policies, social protection consists of interventions which address vulnerabilities and factors which hinder a group or individual’s capacity to enjoy a fulfilling life.
The social protection floor should comprise at least the following four basic social security guarantees:
- Access to a nationally defined set of goods and services, constituting essential health care, including maternity care that meets the criteria of availability-accessibility acceptability and quality.
- Basic income security for children, at least at a nationally defined minimum level, providing access to nutrition, education, care, and any other necessary goods and services.
- Basic income security, at least at a nationally defined minimum level, for persons in active age who are unable to earn sufficient income, in particular in cases of sickness, unemployment, maternity, and disability.
- Basic income security, at least at a nationally defined minimum level, for older persons.
Overview of India’s Social Protective System
- India’s spending on social protection schemes constitutes approximately 1.6 percent of the GDP, which is relatively high for a low-income country. The schemes can be broadly categorized as promotional, protective or preventive, depending on the type of intervention.
- Promotional instruments:
- Aims to improve incomes both in the short and long run often by encouraging a particular practice or behavior. For instance, programmed such as Mid-day meals promote school attendance and proper nutrition which in turns improves livelihood prospects.
- Similarly, conditional cash transfers support investments in human capital, and programmes such as the newly formulated NRLM-Ajeevika facilitate the development of sustainable livelihood.
- Preventive instruments:
- Seek to stave off poverty or other hardships before they hit, by protecting household’s ex-ante against shocks, and supporting them through failed risks, typically through social insurance programmes MGNREGS, for example, by guaranteeing employment and providing an assured income, prevents families from falling into poverty.
- Protective instruments:
- To provide relief ex-post for the chronically poor or for those who fall into poverty as a result of shocks. By providing food, social pensions, and assets such as housing, protective measures mitigate the need for households to run through their savings, sell off assets or take children out of school to deal with sharply reduced income.
- Protective measures such as the public distribution system (PDS) for food, ‘protect’ family’s nutritional security during times of needs, but unlike promotional measures are not trying to incentives certain behaviors in doing so
Why the social protection schemes which were created in India after Independence was inadequate?
- The country was reeling from famine, de-industrialization and multiple deprivations.
- Half the population was chronically poor, the country had an aggregate food deficit.
- Lack of financial inclusion, financial and banking networks were underdeveloped, growth rates were weak.
- The technology available for program administration was rudimentary.
- Therefore, India’s policymakers focused almost exclusively on anti-poverty, protective instruments.
Facts to be considered to guide the evolution in social protection system:
- Despite the dramatic fall in households below the poverty line to 22%, the challenge of chronic poverty remains.
- A significant 15% of households that were poor in 2005 remained poor in 2012
- The rise in inequality across locations and demographic groups has increased. Seven low-income states — Chhattisgarh, MP, UP, Odisha, Jharkhand, Rajasthan, and Bihar account for 45% of India’s population but nearly 62% of it’s poor — continue to need strong safety nets programs.
- The majority of India is no longer poor. Instead, half of India is vulnerable. These are households that have recently escaped poverty with consumption levels that are precariously close to the poverty line and remain vulnerable to slipping back.
- Poverty and vulnerability remain highest amongst Adivasis. Women are largely missing from the workforce, and face serious risks to their mobility and well-being.
Challenges in Moving Towards a Social Protection System
- First of these is the fiscal challenges. Although there are a number of ways in additional fiscal resources can be mobilized, the main effort has to be to increase the tax/GDP ratio to, and beyond its previous peak. These measures can provide the fiscal space needed to institute a Social Protection Scheme.
- Another challenge is related to designing of social protection schemes to target the maximum number of beneficiaries. Due to lack of correct data pertaining to vulnerability, targeted schemes have failed to achieve its objective.
- Challenge in effective implementation which also involves improved accountability of all those implementers and proactive measures to reach the most vulnerable segments of the population
Road Map for the Social Protection System:
- The government should not only attempt to provide aid to relieve deprivations but It’s critical that programs help those vulnerable to poverty to anticipate and manage risks and shocks better.
- Three types of portable tools are needed to prevent the newly vulnerable class from falling back into poverty and debt traps
- Health insurance:
- Micro surveys and administrative data highlight major gaps in pension and health insurance coverage.
- At present, only 4% of households in India use government social insurance programs and the penetration of private sources of insurance is higher, particularly for wealthy households.
- IHDS 2012 data show that 27% of households report members using/benefitting from private insurance.
- The bottom 20% report very low uptake of private options for market-based insurance.
- Most Indian households — poor and non-poor — rely on personal savings to deal with health, accidents, or climate shocks.
- If insurance coverage is adequate and expands, many families would not need to rely on safety net transfers in the face of old age or health crises which would otherwise push households into long-term poverty and debt traps.
- Social Protection:
- In states where many poor and vulnerable households are still not able to save enough to insure themselves against crises or times of high prices, social assistance will remain a core intervention.
- In low-income states, anti-poverty programs such as PDS or MGNREGS, if implemented well, can serve twin goals of protection and prevention by ensuring India’s vulnerable don’t become poor, and that the poor live with dignity during times of drought or food price inflation.
- Pension Plan:
- India is experiencing a demographic transition leading to lower fertility, increased life expectancy, and a consequent increase in the proportion of the elderly
- A mere 7.4 percent of the total Indian population is covered under any form of pension plans, which is an alarming figure in itself. India spends 1.45 percent of its GDP on social protection, among the lowest in Asia, far lower than China, Sri Lanka, Thailand, and even Nepal.
- For the poor and vulnerable, two types of pension could be provided. The first is a public or social pension, where the state raises revenue and redistributes to citizens when they reach a stipulated age in order to guarantee them a dignified life.
- The second is micro-pension, a personal retirement savings plan. People save a small part of their income individually during their working life that is invested collectively to generate periodical returns.
- Government schemes like the Pradhan Mantri Vaya Vandana Yojana and the New Pension Scheme (NPS) of 2003 are steps in the right direction.
- Recent policies have taken steps in the right direction. The boost in crop insurance, new pension plans for the elderly, the rise in contributory pensions for those who have the wherewithal to save, and larger coverage of health insurance programs will help India re-balance its social protection architecture to match the needs of the rising numbers of its vulnerable people.