RESHAPING SOCIAL PROTECTION IN INDIA

Print

THE CONTEXT: India’s traditional social protection is not in line with one of the fastest growing economies in the world. India’s social protection needs to be reshaped to address increased poverty vulnerability and increased uneven playing field.

ISSUES:

• Outdated social protections system: India’s social protection system was founded in the 1970s, when half of the population was chronically poor. The country suffered from aggregate food deficit, minimal rural infrastructure penetration, rudimentary technologies for programme administration, and only around a fifth of the population lived in urban areas. The country has undergone vast changes in the last three decades, becoming the fastest urbanising country in the world, and the fastest growing major economy in the world. However, social protection system became outdated to tackle the needs of a highly mobile population, and a large group of people that is likely to continue to grow as economic growth and urbanisation accelerate.
• Not addressing urban poverty: Although India has reduced poverty, new sources of poverty and vulnerability have emerged. The share of rural poor has reduced, but the share of urban poor has increased. Urban poverty is a rising concern due to the combination of a fast pace of urbanisation and slower rates of urban poverty decline. The urban poor work in the unorganised sector in cities, without social protection, and face a greater risk of falling into poverty. Unfortunately, the current social protection priorities remain heavily focused on reducing poverty in the rural areas and ignores the urban areas.
• Unavailability of insurance: Insurance-based interventions remain in their infancy in terms of coverage in the unorganised sector. Despite attempts to introduce new programmes for unorganised sector workers, insurance against life’s major shocks such as health, old age, disability, and death has not been available to the vast majority of the population.
• Low return on spending: While India spends significant resources close to 4 per cent of GDP on its core safety net programmes, the return on spending in terms of poverty reduction has been low.
• Lack of coordination: Lack of coordination and overlap in delivery of programmes both within and across levels of government adds to reduced impact of social programmes on poverty.
• Lack of resources: Lack of financial and human resource capacity at the Block and Gram Panchayat levels worsens the challenge of service delivery.
  

THE WAY FORWARD:

• Match the pace of change: The social protection system needs to be reshaped to match the fast pace of change and the expectations of people. India needs second-generation social protection instruments to deal with economic modernisation and the new risks and vulnerabilities it brings.
• Address urban poverty: There is a need to address the urban poverty. It can be achieved by three-pronged approach:

a) enhancement of productive employment and income for the poor

b) improvement in general health and welfare services

c) improvement in infrastructure and the built environment for urban poor neighbourhoods.

• Shift from traditional to modern: There is a need to move from the traditional system, based on growth vs equity trade-offs, into a modern system that both promotes growth and reduces poverty. It is time to reflect on where it is headed in the coming decade and reform it so that it can cope better with the new and emerging trends in poverty, inequality, and vulnerability in India.
• Deepen ongoing policy orientation: There is a need to deepen the ongoing policy reorientation of the social protection system to meet the changing and increasingly diverse needs of its population. It can be done by increasing the emphasis on preventive programmes and social insurance instrument and shift away from loan waivers and administratively driven subsidised credit better suited to the labour market conditions.
• India needs a new social contract: Modernising social protection can help make social assistance more adaptable and resilient. India’s economic growth and the pandemic have changed the needs of its social protection system and risk groups. Social protection systems can help protect the most vulnerable from economic shocks. Social safety nets and social insurance schemes can reduce inequality and poverty by providing income support and consumption smoothing.
• Rationalisation of social protection: The number of social protection programmes need to be reduced, as India has too many of these schemes there are nearly 440 schemes under direct benefit transfer at present. There is a need to devise strategy on how these different schemes can be consolidated in a way that preserves fiscal balance is urgently needed.
• Public private partnerships (PPP): India is a rapidly developing middle-income country now, and there is a huge potential for using public private partnerships (PPP) to maximise finance for social safety nets. ‘Build and operate’ is increasingly common in social infrastructure programmes. Healthcare facilities, prisons, and public housing can be constructed under PPPs. The PPP model can also stretch into the operation of the facilities, which enables the private sector in charge not just to construct social infrastructure but also to operate the services afterwards, encouraging operational innovation.

THE CONCLUSION:

The goals of social protection and social policies are guarantee that the poor have a minimally acceptable standard of living and to prepare them for a constructive role in economic, social, and political life. If the social protection system is modernised, the benefits for the poor could be substantial, creating more jobs and making growth significantly more inclusive. India’s social protection system needs to modernise to serve the risks and needs emerging from the Covid-19 pandemic, rapid urbanisation, structural transformations in the labour market, and climate change.

UPSC PREVIOUS YEAR QUESTIONS

Q.1 Does the Rights of Persons with Disabilities Act, 2016 ensure effective mechanism for empowerment and inclusion of the intended beneficiaries in the society? Discuss. (2017)

Q.2 In countries like India, social security in its modern form has been a response to many issues arising out of the development process. Discuss. (2019)

MAINS PRACTICE QUESTION

Q.1 India needs to move on from the traditional system, based on growth vs equity trade-offs, into a modern system that both promotes growth and reduces poverty. Critically analyse the statement.

SOURCE: https://www.deccanherald.com/opinion/reshaping-social-protection-in-india-2935604