conceptual distinctions
We start with some basic conceptual distinctions that are important to understand programme effectiveness in the Indian context.
a. Social assistance versus social insurance A distinction is generally made between
programmes that address persistent deficiencies or deprivations versus those that address
contingencies. The former, also called promotional
The ‘ration, pension, NREGA’ trinity is a
cornerstone of India’s social assistance policy.
6. India’s social protection architecture
but do not earn enough to guarantee a minimum level of consumption. Examples include subsidised food (such as the Public Distribution System or PDS), food for work or other types of employment programmes (such as the Mahatma Gandhi
National Rural Employment Guarantee Programme or MGNREGA), as well as various types of pension programmes (such as the National Social Assistance Programme or NSAP). This ‘ration, pension,
NREGA’ trinity is a cornerstone of India’s social assistance policy. It has historically had the widest reach for the informal sector or for Below Poverty Line and vulnerable households, at least in the rural areas. Its coverage expanded greatly between 2004 and 2011 (see Table 1 in Drèze and Khera (2017)).
Programmes intended to provide a safety net in case of accidents or contingencies are called protective programmes or social insurance. These provide a safety net in case of foreseen as well as unforeseen contingencies such as retirement, motherhood, unemployment, accidental injury and death, as well as other health-related contingencies.
With the development of the post-World War Two welfare state, especially in the advanced industrialised countries, governments have acted to ensure that such social protection is available via employment contracts.
Of course, there are grey areas between social assistance and social insurance programmes. For example, MGNREGA can be seen as doing a bit of both - supplementing incomes for those who do not earn enough as a matter of course (assistance) as well as offering a fallback for those who lose work, such as happened during the Covid crisis (insurance).
b. Work status versus citizenship or domicile A second important distinction is between social programmes where eligibility is based on citizenship as opposed to work status. The former include programmes like the PDS, MGNREGA, the Integrated Child Development Scheme (ICDS), and various forms of cash transfers. Such programmes have eligibility criteria rooted in domicile, rather than a particular type of employer or employment arrangement. The latter have employment status as eligibility criterion and may include programmes and schemes that address adversity (ill health, accidents/death and old age) as well as deficiency (access to credit/finance especially for the self-employed, loans for upgrading skills, loans for housing, children’s education and so on.
Unfortunately, as we saw in Chapter Two, stable and unique employer-employee relationships exist for less than 10 per cent of the Indian workforce.
But this does not mean that developing countries cannot afford decent social protection systems.
The report on social security by the National Commission for Enterprises in the Unorganised Sector (NCEUS 2006) notes that social security evolved in the now developed countries alongside stable employment relations (and not after them), as a result of strong labour movements as well as
older patrimonial and community beliefs regarding the duty of the State or the collective to take care of those who could not take care of themselves. Further, developing countries have made impressive gains since decolonisation, demonstrating the feasibility of both promotional and protective social security arrangements despite low levels of income and a large informal sector.
In India, in recent years, several policies have been enacted that bypass the employer and instead set up an insurance fund to which the State and the worker contribute. Some examples are the Atal Pension Yojana and the PM Shram Yogi Man Dhan Yojana.
In recent years, several policies have been enacted that bypass the employer and instead set up an insurance fund to which
the State and the worker contribute.
c. Legislative versus executive action Another key distinction that has implications for effectiveness and responsiveness to public concerns, especially when it comes to transparency and grievance redressal, is that between social protection as a legal right versus programmes passed by executive order as ‘schemes’ which the government of the day may launch, modify, or withdraw as it deems appropriate. Social protection schemes passed by executive order have a long history in India (Kumar 2020). Recently, several landmark rights-based legislations have been passed, such as the Right to Work, Right to Food, Right to Education (RTE), and Right to Information (RTI). But the scheme-based approach
remains popular.
At least for important basic protections, legal entitlements are crucial because they allow citizens to hold the State accountable. There are ample examples of this from active public campaigns around MGNREGA, National Food Security Act (NFSA), RTE, and RTI. There are also examples of work-related social security for unorganised workers ensured via legislation such as the
Maharashtra Mathadi Workers (1969) Act (discussed later in more detail). However, it should be
emphasised that while legal rights are necessary to guarantee entitlements, they are far from sufficient.
Active civil society movements, labour unions, and citizens’ rights groups are needed to ensure that rights turn into realised entitlements.
d. Targeting and mode of delivery
With respect to delivery, once again, there are two distinctions that should be highlighted. First, targeted versus self-targeted or universal measures, and second, cash versus in-kind benefits. Both are associated with an extensive scholarly, policy, and campaign literature. It is outside the scope of the
India’s data poverty makes effective targeting of benefits difficult. For example, absence of national data on consumption since 2011 has made updation of the national poverty lines challenging and has left millions out of the NFSA net, with tragic consequences during the Covid crisis. Even when consumption data are available, Drèze and Khera (2017) note that Below-Poverty-Line (BPL) targeting has caused exclusion errors and has been abandoned in due course in many instances.
In the case of PDS, targeting varies from state to state, depending in part on whether recent socio- economic data are available at the state level. Due to exclusion errors with targeting, a strong demand for at least temporary universalisation of PDS emerged during the Covid crisis.2 The MGNREGA and the mid-day meals programmes work on a more practical self-selection principle since those willing to do manual labour for a subsistence wage belong to poor households and because children attending government schools also tend to come from poor households. Going forward, efforts at generating higher frequency data to allow better targeting, as well as self-targeting where possible should be policy goals.
The debate on cash or in-kind transfers has also given rise to a vast literature.3 Some insights on the preference for cash or in-kind transfers come from a random survey of PDS functioning among 1,200 rural households across nine Indian states conducted in 2011 (Khera 2014).
Overall, the proportion of respondents who expressed a preference for cash over rations (PDS) was only 18 per cent. Where the PDS functioned well, people preferred food. They also mistrusted cash due to fears of inflation driving down the real value of the entitlement. That this fear is real is shown clearly by the case of NSAP pensions
6. India’s social protection architecture
Bihar) where the programme suffered from large leakage or quality problems, people were more open to substituting it with cash (54 per cent).
The study concluded that the unpopularity of cash transfers (where PDS works well) can only be offset by making the transfers much larger than the implicit value of food subsidies. However, this may not lead to net savings for the government.
Narayanan (2011) notes that unconditional cash transfers work well where no specific goal is intended, but instead a general safety net is to be provided - for example, old age pensions. On the other hand, if the intention is to promote a particular developmental goal such as better nutrition, greater school attendance and so forth, then either conditional transfers, vouchers or direct provisioning of the good or service work better.
Of these three which is to be preferred usually depends on the quantity and quality of the relevant infrastructure (physical or digital), digital or formal literacy, as well as more subtle factors such as familiarity with existing systems or unfamiliarity with new ones.
All five aspects of social protection system discussed above - nature of the goal (insurance or assistance), eligibility (domicile or work relationship), legal rights or lack thereof, type of targeting and type of entitlements - have strong implications for inclusion or exclusion from programmes, timeliness of delivery, and extent as well as type of corruption or leakages. For example, cash transfers suffer from smaller leakages but have proved to be far less inclusive than the PDS due to lack of banking infrastructure. On the other hand, PDS has proved to be more inclusive during the crisis, but generally suffers from more leakage problems than direct cash transfers, in some cases exceeding 50 per cent (Gulati and Saini 2015).