Social Protection in India: Experience, Lessons and Barriers

Social Protection in India: Issues and Concerns Addressing Chronic Poverty and Shocks

Prof. S. Mahendra Dev Director (vice Chancellor), IGIDR, Mumbai, India Contents of the Paper Concept of social protection Risks and vulnerabilities of households Social protection policies, programmes Social Pensions Summary of Issues and Concerns including barriers for extension Risks and Vulnerabilities

Poor suffer from many individual and co-variate risks. The poor at individual or household level have higher exposure to a variety of risks. Sometimes the distinction between idiosyncratic and covariant risks are blurred Health shocks: illness, injury, accidents, disability Labour market risk: In South Asia many work in informal sector and have high risk of unemployment and underemployment. Harvest risks, Life cycle risks, social risk, special risks for vulnerable groups. Frequency of shocks (an example from AP, India)

Frequent Illness 0.67 Chronic Illness 0.2 Sudden Illness 0.19

Drought 0.16 Death of Family members 0.13 Surgery 0.11 Loss of Employment 0.1 Pest attack for crops 0.1 Livestock Death 0.08 Livestock Disease 0.06 Accident 0.04 Rain/Flood 0.02 Damage to dwelling 0.02

Damage to cattle/Sheep 0.01 Cyclone 0.01

0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 Type of risk Risks and Coping mechanisms A village level study in three states (Orissa, Karnataka and Madhya Pradesh) shows that drought was the dominant risk followed by sudden health problems, cyclone/floods, and pest attack. As for health risk, the proportion reporting is substantially for the bottom two quartiles compared with the two top two quartiles. Surveys on risks in unorganized sector: old age, unemployment, death, sickness, empl. Injusry etc. Most of the coping mechanisms followed by households are: borrowing, sale of assets, spending from savings, expanded labour supply, child labour, bonded labour, reducing consumption, migration etc. Social Protection Social protection deals with both absolute capability deprivation (food insecurity, inadequate employment, low earnings, low health, educational status and contingency type risk and vulnerabilities such old age, health, accident, death Social security, social assistance, social insurance Promotional and protection measures Presence of social protection can maintain social cohesion and can prevent irreversible losses of human capital. Chronic poverty is high in India. 37.2% in 2004-05 with 417 million. NCEUS indicated 77% poor and vulne. Even if we address chronic poverty, there are always shocks. For example, food, fuel, financial crises. Social Protection in India In the financial crisis, supply side management is not enough. There is a need to increase the demand. Social protection programs can also increase demand. India has relied more on social assistance in terms of promotional measures. Protection or Contingent type of social security measures are mostly available for the organized workers (8% of total workers). 92% have very limited coverage of contingent socal security. India has social protection programmes at three levels: (a) Universal Capability enhancing programmes (Sarva Siksha Abhiyan and rural health mission) Social Protection Programmes in India: Protection and Promotional 2. Targeted programmes for the poor and vulnerable: provide socio-economic security. Major programmes are: Food and Nutrition Programs (PDS, ICDS, Mid-day meals) Self Employed Programmes (SGSY, Self Help Groups) Wage Employed Programmes (NREGA) Protection for socially disadvantaged sections (SCs and STs) and other vulnerable groups Cash and kind transfers: Housing program (Indira Awas Yojana), National Old Age Pension (NOAP), widow/disabled pension, rural educational scholarship, free text books, free hostels, free uniforms) Programmes specifically for urban poor. 3. Social protection for the Unorganized/informal workers: old age, accident and death Targeted PDS It is a price instrument to help consumers and achieve food security at household level PDS supplies commodities at below market prices. It was universal till 1997. In 1997 targeted PDS started (population were divided into BPL and APL). BPL, APL, Antyodaya (destitutes) Total Number of families as per Planning Commission (BPL+APL+AAY) 180 milliom) Total number of ration cards (238 million) 35 kgs. per month per family Central Issue Price (PDS price) has not been changed since 2002. Out of total subsidy for TPDS, 18% for APL, 46% for BPL and 36% for Antodaya Table : Offtake of Rice and Wheat under Targeted PDS and Welfare Programmes (million tons)

Years Rice Rice Rice Total Rice Total and and and unde and Rice Wheat Wheat Wheat r wheat and BPL APL under TPD under Wheat Antyod S welfare (TPDS aya schemes +welfa re) 2003-4 15.8 4.2 4.2 24.2 13.5 37.7 2004-5 17.5 6.7 5.5 29.7 10.6 40.3 2005-6 15.6 8.3 7.4 31.4 9.7 41.2 2006-7 14.2 8.7 8.7 31.6 5.1 36.7 2007-8 15.1 9.0 9.4 33.5 3.9 37.4 Targeted PDS There are four major problems: -- High inclusion and exclusion errors -- Non-vaibility of fair price shops -- Not fulfilling price stabilization objectives -- leakages (38% of rice and wheat) Some advocate reverting back to universal 11th Plan provides suggestions for improvement Are Food stamps alternative to PDS? ICDS and Mid-day meal schemes Child malnutrition levels are very high in India. There are two major programs in the country to address the malnutrition problem. The performance of ICDS has not been upto expectations Notwithstanding some of the shortcomings, MDMS appears to have had a positive impact on school attendance and nutritional status of children through removal of classroom hunger. Mid-day meal scheme worked well in Tamil Nadu. 11th Plan says ‘universalization with quality’ should be the approach for ICDS and mid-day meal Right to Food Act Govt. indicated that it would enact National Food Security law. According to this proposed law, every family below the poverty line in rural as well as urban areas will be entitled by law, to 25 kilograms of rice or wheat per month at Rs. 3 per kilogram. There are several policy and operational level issues. What proportion of households should get Below Poverty Line (BPL) cards and how to identify? Planning commission 6.52 crore families; States BPL list comes to 10.68 crores. Saxena 50%. Which one to use? Right to food campaign argues for Comprehensive Food entitlement Act To protect everyone from hunger and to promote sustainable and equitable food production, the campaign demands Right to Food --- A Universal PDS: providing 35 kgs. of grain per family) -- consolidation of all entitlements created by recent Supreme Court Orders (e.g. cooked mid-day meals in primary schools and universalization of ICDS) --Support for effective breastfeeding (including maternity entitlements and creches) --safegurds against corporate interests in food policy -- elimination of all social discrimination in food matters General view is that at the very least right to food should cover universal PDS, nutrition schemes for children and social assistance for vulnerable groups (e.g. pensions and Antyodaya Anna Yojana) Right to food is thus much broader than giving Rs25 kgs of rice and wheat. Self Employment Programmes Earlier micro credit to individuals (IRDP). Now group approach. Government program: Swarnajayanti Gram Swarojgar Yojana SGSY (Village Self Employment Programme) Self Help Groups (SHGs)- bank linkage programe. The program has now emerged as the largest and fastest growing micro-finance initiative in the country There are 4 to 5 million SHGs in the country. Each group has 10-12 members One is Kerala model: Kudumbasree programme improved empowerment and reduced poverty

. Positive Impact of self help groups Andhra Pradesh : The government is implementing a statewide rural poverty eradication programme based on social mobilization and empowerment of rural poor women. This programme is popularly known as ‘Velugu’ or ‘Indira Kranti Pathakam’ Empowered women by enhancing their contribution to household income, increasing the value of their assets and generally by giving them better control over decisions that affect their lives. Reduced child mortality, improved maternal health Contributed to a reduced dependency on informal money lenders and other non-institutional sources. Wage Employment Programmes India has a long experience in Experimenting with labour intensive public works beginning with Rural man power programme in 1960 The Employment Guarantee Scheme of Maharashtra (EGS) 1972/73. But, the most important programme now is National Rural Employment Guarantee Act (NREGA) now called Mahatma Gandhi NREGA (MGNREGA). It completed four years. Objective: To enhance livelihood security in rural areas by providing at least 100 days of guaranteed wage employment to every household This is the largest ever public employment programme visualised in human history Wage Employment Programs In the current year (2009-10) Rs.39,100 were allocated. The performance is uneven. The problems and challenges where it is not working are the following -- Awareness problems among workers --Implementation and administrative problems (fudging of muster rolls, corruption, delays in wage payment) --M&E problems, --lack of professionals at panchayat level Some evaluations showed that it was relatively successful in states like Rajasthan, Andhra Pradesh, Madhya Pradesh and Chattisgarh Conclusion on NREGS Most evaluations-official and non-official show that implementation has been more effective than any of its predecessor schemes. In particular, the leakages have been reduced significantly in many places Significant rise in agricultural wage shows its success. The success of course is by no means uniform Much needed relief during financial crisis even for the urban poor returning to rural areas 11th Five Year Plan indicates that NREGS is going to be one of the important programs for poverty reduction in India NREGS can transform livelihoods of the poor but also will also lead to revolution in rural governance. Protection for SCs and STs India was among the first countries to include legislation aimed at affirmative actions in the form of reservations for SCs and STs. The constitution of India gurantees protection from social injustice and all forms of exploitation. There are have been several development programmes for both SCs and STs. Inspite of these programmes, the gap between socio- economic development between SCs and STs and other social groups is still very high and increasing in some indicators. There is a need for social protection of these groups Also other vulnerable groups like specially-abled persons, old persons, street children etc. Social Protection for Unorganized workers Dualism in Indian economy: Formal and informal India has about 456 million workers in 2004-05. Around 92% of those employed are informal workers. They suffer from two sets of problems: (a) capability deprivation; (b) the second one is adversity, no fallback mechanism to meet contingencies such as ill health, accident, death and old age. National Commission on Enterprises for Unorganized Sector (NCEUS) For decent employment, the Commission advocated three pronged strategy: (a) Minimum level of social security (b) Conditions of work (c) promotion of livelihood Minimum level of social security: old age, health insurance and maternity benefits Social Protection for Unorganized workers Conditions of work: among other things, a national minimum wage Skill formation for the informal workers Strengthen NREGS. Initiate similar program for urban areas Special program for marginal and small farmers Development of micro enterprises with a focus on credit, technology and development of cluseters and growth poles Social Pensions Social Pensions are part of social protection. But, we discussed at length because of its importance. Social pensions are cash transfers: can be universal or resource tested. Experience across countries show they reduced poverty among old age popul. In India, the share of old age population is likely to increase from 6.9% in 2001 to 12.4% in 2026 (from 71 million to 173 million during this period). National Old Age Pension scheme (NOAPS) introduced in 1995. Rs.75 per month was provided to persons 65 years and above among destitutes This amount has been enhanced to Rs.200 from 2006-07 and eligibility among BPL population. No.of beneficiaries increased from 6.7 million in 2002- 03 to 15.5 million in 2008-09 Social Pensions In Feb, 2009, it is renamed as Indira Gandhi NOAPS. Two more pensions schemes were introduced ‘Indira Gandhi National Widow Pension scheme and ‘Indira Gandhi National Disability Pension Scheme. The State Governments are urged to increase the pension from Rs.200 to Rs.400 per month. Social Pensions in the unorganized sector: There have been initiatives at three levels : Central, State and NGOs. These schemes cover less than 10% of unorganized workers including NOAPS Kerala has better coverage in old age pensions than other states. Welfare fund model. NCEUS for minimum social sec. including pensions for all BPL and provident fund for all APL popul. The present Act approved by Parliament is a diluted one. Summary of Issues and Concerns

1. Two views on Social Protection: (a) wastage and funds do not reach people (growth is important, invest in health and education). (b)Minimum floor of social protection for social cohesion and invest.

2. No matching between risks and programmes: For example, health risk is more important.

3. Self Employment Programmes: Group approach seems to be working well. Successful models are Andhra Pradesh and Kerala. Social empowerment has increased. Economic empowerment has to be improved. Credit, technology and skill improvement. Failed to increase productivity of small business. Need for rural livelihoods mission. Issues and Concerns 4. Wage Employment Programmes: Many lessons in the last four years. One view is that NREGA is reasonably working well. Other countries can learn from the experience of India. Most evaluations of NREGA show that implementation has been more effective than any of its predecessor schemes. This is because of many innovations in design and implementation of the scheme NREGA introduced a rights based framework Demand based availability of funds Decentralized system (panchayats for implementation). No contractors Transparency and accountability through social audits. Better M&E systems. Issues and Concerns Strengthening grass root processes of democracy infusing transparency and accountability in governance There are several problems: awareness, implementation problems (delay in payment of wages), problems in M&E, lack of professionals. Those who support the NREGA argue that these problems have to be solved and the scheme has to be strengthened. Some others argue that it should be extended to skill based workers and also to urban areas Farmers in India complain that NREGS is creating problems for agricultural operations and it should be stopped during peak seasons. It should increase agri.productivity It is also argued by some that distribution of cash through helicopters is better than NREGA! Issues and Concerns 5. Food Based Programmes: Apart from hhs, useful for children and women. Leakages are high particularly in PDS. Targeting errors are high. Delivery services have to be improved. Of course the performance varies across states. In South, performance of PDS is relatively better. One can learn from Tamil Nadu mid-day meal scheme. Some argue that TPDS should be replaced by universal PDS. Others argue for food stamps or cash transfers 6. Social Security for unorganized sector: India is one of the few developing countries which quantified the workers and their characteristics in this sector (NCEUS). Issues and Concerns NCEUS argues for a universal minimum social security coverage. There are different views on the proposals of NCEUS It should be citizen based; with low per capita income India can not afford; should be gradual; with poor public facilities, health insurance may not work; unpaid family work is not covered etc. 7. Social Pensions: Under present NOAPS, only population under BPL with 65 years or above.  It should be extended 60+. NCEUS argues that provident fund should be given for APL population with contributions.  Several state govts. have old age pensions but not effective. Issues and Concerns There is a view that unorganized workers’ social security act 2008 is a diluted one as compared to the one proposed by NCEUS or Parliamentary Standing Committee. 8. Social Protection for Migrant Workers 9. Universal vs. Targeting:  There is an increasing demand for universal social protection measures. Saith (2008) argues for universal social protection.  In a survey of several countries, World Bank study (Subbara0, 1997) indicates targeted programs worked better than universal systems. Issues and Concerns Costs of targeting: administrative, incentive (dead- weight), disutility and stigma, and political. Self targeting is better. Universalists argue that targeted programs exclude many poor. India has different types : PDS targeted, ICDS universal, NREGA self targeted. 10. Direct cash transfers and CCTs:  As in many other countries, India does not have cash transfers or CCTs in the form of social assist.  Kapur et al (2008) argue for introduction of cash transfers in place of social protection programs like PDS, rural housing, self empl. and fertilizer subs. Issues and Concerns Several arguments are given in favour of cash transfers (less administrative costs, less burden on administration, reduction in patronage and corruption.). They cite the examples of Latin America. Another view :The problem in India is that one has to strengthen the public health and education. If there are problems in the quantity and quality of hospitals and schools, CCTs would be less useful. There is a view that some type of CCTs are needed particularly for women and children to improve social protection . For example, there is a move to have cash transfers for maternity benefits. Issues and Concerns 11. Efficiency in Implementation and Inclusive Goveranance: Disconnect between policies and implementation  Decentralized governance plays an important role in better implementation of social protec. programs. People’s participation, civil society, social mobilization, right to information lead to better impl. Awareness and participation by the beneficiaries is also associated with social capital in the village Use of IT leads to better monitoring and implement. 12. Rights based approach 13. Strengthen universal capability enhancing prog. 14. Priorty for women and child issues Barriers to Extension Resources and Institutions Economic and social (caste etc.) Inequalities Legal barriers: Anti-poor laws Illiteracy Weak public sector administrative mechanism Gender bias Capacity Building at Panchayat level Less participation of NGOs and civil society Finally, some of the programs like NREGS has threatened the existing feudal systems at village level. Resistance from the local elite. To conclude on issues, social protection programs are important to reduce chronic poverty and reduce risk and vulnerability. They can increase growth, equity and social cohesion. THANK YOU