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Resource centre on India's rural distress
 
 

Social Safety nets require more public funding
The nation can be proud of running some of the world's largest programmes on social safety nets, says the latest report by World Bank. However, public spending on safety nets is still low in comparison to neighbouring countries Bangladesh and Pakistan.

India tops the list of 136 countries for running the world's largest school feeding programme i.e. the Mid Day Meal Scheme (MDMS), and also the biggest public works programme i.e. the Mahatma Gandhi National Rural Employment Guarantee scheme
(MGNREGS), in terms of scale.

Under the MGNREGS, a population of 182 million is covered annually, which is roughly 15 percent of the country’s population. Under the MDMS, 105 million school going kids are covered every year.

Entitled The State of Social Safety Nets 2015, the World Bank report states that with the coverage of almost 78 million people annually, the Janani Suraksha Yojana is the largest conditional cash transfer (CCT) programme globally.

The Indira Gandhi National Old Age Pension Scheme (IGNOAPS) annually covers 21 million Indian population, the second largest in terms of scale by any Unconditional Cash Transfers (UCT) programme running in the world.  

Commenting on social safety nets policy and strategy, the report says that the country has a strong legal framework, including the National Food Security Act (NFSA) and MGNREGA, along with the Directive Principles of State Policy. However, a coherent social protection policy framework is still missing.

On the administration of social safety nets programmes, the report says that initiatives like the Unique Identification (UID) can improve coverage, implementation, and coordination across programmes.

The use of information technology and innovations in administrations at state-level can improve performance of social protection programmes, says the report.

Funding & performance of social safety nets

In 2014, the Government of India spent 0.72 percent of GDP on different social safety net programmes altogether i.e. 0.09 percent on UCT, 0.11 percent on school feeding, 0.29 percent on public works, and 0.23 percent on fee waivers. In contrast, in the neighbouring countries of Bangladesh and Pakistan, the central governments there spent 1.09 percent and 1.89 percent of GDP on total social safety nets respectively.  

The public distribution system (PDS) account for 0.6 percent of GDP in comparison to 0.72 percent (of GDP) spent on safety nets.

In 2009, all social safety net programmes running in the country covered 20.8 percent of the poorest 20 percent in terms of consumption expenditure distribution, and 17.2 percent of the entire population. It is basically the MGNREGS that reached out to 20.8 percent of poorest households during 2009.
 
The World Social Protection Report 2014/15 by ILO says that India is among a handful of nations which have introduced or extended non-contributory maternity benefits to women workers in the informal economy or poor women in general.

The same ILO report, however, has found that the country performs worse in comparison to others in terms of providing social protection. For example, in India, more than 80 percent of the population have no legal health coverage.

During 2010, 65.2 percent and 84.7 percent of the total health expenditure in China and Bhutan respectively were not financed by out-of-pocket payments, whereas in India the figure stood at 40.6 percent.

During 2010, the gross public social protection expenditure (by guarantee) as a percentage of GDP in India stood at 2.56 percent, whereas for China the figure was 6.83 percent and for Bhutan it was 4.77 percent.

The share of total public social protection expenditure plus health expenditure in GDP has increased from 1.73 percent in 1990 to 2.39 percent in 2012.

While close to three-quarter of the old-age population of China came under the old-age pension coverage in 2011, only a quarter of old Indian citizens were covered under the same. The proportion of active contributors to a pension scheme in the working-age population 15–64 years is 7.4 percent for India and 46.4 percent for China.

About social safety nets

Social safety nets, which are also known as safety nets, social assistance, or social transfers, are a component of larger social protection systems. According to the World Bank report, they are actually non-contributory measures in cash or in kind designed to provide regular and predictable support to poor and vulnerable people. Please check the chart below to understand how social safety nets fall within social protection and labour systems.
 
Chart: Understanding social safety nets and social protection
Chart social safety nets
Source: The State of Social Safety Nets 2015, World Bank

The World Bank report has explained various types of safety nets i.e. CCTs, UCTs, School feeding programmes, Unconditional in-kind transfers, Public works programmes and Fee waivers.

According to the report, CCTs are periodic monetary benefits to poor households that require beneficiaries to comply with specific behavioural requirements to encourage investments in human capital (such as school attendance, immunizations, and health check-ups).

UCTs provide cash without particular co-responsibilities for beneficiaries; they may spend the cash as they wish.

Like CCTs, school feeding requires forms of compliance, such as ensuring a certain level of monthly school attendance. However, the form of transfer is in kind.   

Unconditional in-kind transfers allow the distribution of food or other in-kind transfers without any form of conditionality or co-responsibility.

Public works programs (PWs) engage participants in manual, labour-oriented activities such as building or rehabilitating community assets and public infrastructure.

Fee waivers assist households in meeting the cost for a defined class of services, particularly related to education, health, and housing. Waivers can apply to either partial or discounted fees, as well as to other charges or expenditures.

References

The State of Social Safety Nets 2015, World Bank, published in July 2015

World Social Protection Report 2014/15: Building economic recovery, inclusive development and social justice, International Labour Organization, published in 2014

World Bank’s report highlighting MNREGA as world's largest public works scheme, RSTV, 9 July, 2015

Six charts that explain India’s social protection challenge -Roshan Kishore and Dipti Jain, Livemint.com, 14 May, 2015

Basic income paid to the poor can transform lives -Guy Standing, The Guardian, 18 December, 2014