Between 1997 and 2017, India’s per capita national income increased more than four-fold. The pace of poverty reduction accelerated, with a three-to-four-fold increase after 2000. To progress further, India needs a large, productive, and healthy middle class. This requires sustained expansion of good jobs, human capital, and equal opportunities. While India faces an exceptional task due to its size and diversity, it doesn’t have to tackle challenges posed by pursuing fast-paced economic transformation in isolation.
International experience holds important insights, particularly on how strong social protection systems can support the growth process. Most G20 countries have increased expenditure on social protection as they grow. Why? Because while growth can lift people out of poverty, it cannot ensure escape from vulnerability to crises. Rich countries invest significantly in protecting their citizens from risks posed by hospitalisation, disasters or old age.
Moving forward, social protection in India is poised for a fundamental transformation from a set of fragmented schemes to an integrated system — a fundamental point missed in the simplistic discussion about Universal Basic Income (UBI) or quasi-UBI measures such as guaranteed income support.
Successive Indian state and central governments have invested in important building blocks of a social protection system. Budgets have been enhanced, a larger number of people are being covered, and a series of new programs have been launched with a focus on rights-based entitlements and technological innovations. The Socio-Economic Census (SEC) in 2011, which collected new data on asset and socio-demographic information, can make the beneficiary identification process more transparent. Government-to-person payments have received strong impetus through campaigns to open bank accounts and to transition to digital payments through the Direct Benefit Transfer initiative
The NITI Aayog and the Fourteenth Finance Commission have also enabled a framework for consolidation of schemes and for states to gain greater fiscal autonomy. New insurance schemes for health, life, crop failure and accidents have been announced and given priority. India has signed on to achieve the UN SDG calling for “nationally appropriate social protection floors and systems”.
But progress towards outcomes remains ad hoc, often restricted to specific schemes and states. And the jump towards UBI or guaranteed income may fall into a similar trap. Instead, the focus needs to be on transitioning the many innovations that currently operate in silos into a harmonised and scaled-up system of social protection. How should this be done?
At this stage of development, India needs an overarching social protection strategy to guide how various laws, innovations, schemes, staff and budgets will coordinate tactics to consolidate delivery costs, avoid administrative duplication, and respond to India’s diverse and changing risk profile.
A large share of social protection schemes operating in modern India are designed for the past. India, even of the recent past of 1977, was mired in chronic poverty, with a largely agrarian labour force, and barely networked. That India now only exists in pockets — most of the country has seen booming tele-digital and transport connectivity, sharp declines in income poverty, and new neglected sources of risks related to climate, urbanisation, and migration. This is important policy and cognitive shift requires national and state governments to establish a nodal policy vehicle through which strategic thinking and coordination across schemes and states can be achieved.
As India moves towards defining a social protection strategy for its future, international experience suggest three important lessons. Global experience highlights that universal and adequate insurance cannot be achieved by hundreds of state and central schemes operating in silos. Emerging economies have focussed on comprehensive coverage through program consolidation and convergence. Countries like Brazil have streamlined schemes and established integrated platforms which combine delivery of cash transfers to poor households with delivery of health, nutrition and education. China and Indonesia implement fewer than 10 national social assistance programs.
International experience also emphasises the need to move away from a one-size-fits-all model by allowing sub-national governments greater flexibility as political economy, labour markets, demographic attributes and risk profiles vary by location. The Chinese, Brazilian and Indonesian social protection architecture are heavily decentralised, enabling local governments to design, plan, and deliver a core basket of benefits within a nationally defined policy framework and budget.
Most importantly, global experience suggests that no strategy can create an effective social protection architecture without a capable state. Of late, there appears to be a growing political appetite to consider quasi-UBI schemes at the national and state level. However, these programs require a strong tech-enabled delivery chain which can target and administer benefits. Ensuring technology is leveraged effectively without triggering exclusion and privacy violations requires robust regulation. As more flexibility is given to states, their capacity to plan, learn and implement programs must also be strengthened, particularly at the sub-district level. Brazil and Mexico have invested heavily in local administration and social workers to manage dynamic social registries and public dealing.
India doesn’t need to mimic programs in Brazil or China. It must incorporate international lessons as it evolves and catches up with the changing needs of its people. It’s time to think beyond singular schemes. A broader social protection strategy for a more urban, middle-income, mobile, diverse and decentralised India is urgently required.
Junaid Ahmad is the Country Director for the World Bank in India.
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