Social Welfare ‘Schemes’ to an Economic Security ‘System’

Abstract

This chapter synthesizes our arguments with a discussion on how to re-organize the ideas and praxis of social welfare policy in India with a perspective into the future. We argue that fostering development resilience—as the scope of social welfare programs—requires a stronger citizen-state social contract, a pact which recognizes human deprivation not only as material poverty but also along multiple dimensions of well-being. Social welfare programs, therefore, must be thought of as multiple forms of support—with a focus on deprivations along the life-cycle—which together comprise a risk absorbing social welfare ‘system.’ The ability to foster a resilient development process in the future would require this system to be complemented with strong public systems—infrastructure and citizen empowerment—which enable citizens to attain their human capabilities once the risks are taken care of. Building such a welfare system would not only require greater fiscal space—through tax revenues, resources, and rationalization of subsidies—and strengthened state capacity to improve last-mile delivery, but also a prescient understanding of the newer risks and vulnerabilities in the context of rapid economic and social change.

We must make our political democracy a social democracy as well. Political democracy cannot last unless there lies at the base of it social democracy.

—BR Ambedkar, at the Constituent Assembly meeting on November 25, 1949

.. so long as there are tears and suffering, so long our work will not be over. And so we have to labour and to work, and work hard, to give reality to our dreams. Those dreams are for India, but they are also for the world.

—Tryst With Destiny, speech delivered by Jawaharlal Nehru to the Constituent Assembly of India in New Delhi on August 15, 1947

Introduction

Contradictions of India’s development trajectory are mystifying to its observers. The country’s survival as a democratic nation in the postcolonial era evokes great exultation, yet the embarrassment of being home to the largest number of world’s poor and malnourished warrants a scrutiny of the nature of this social democracy. While famines may be a thing of the past and hunger not as pervasive, livelihoods remain precarious keeping millions into deprivation and many others vulnerable to unforeseen economic events. Economic progress has significantly reduced infant mortality rates; mother and child nutrition issues remain an embarrassment to the growth process. Similarly, near-universal primary education in the country has not translated into improved learning outcomes for children, and much of the labor force is unskilled and works in the informal sector with no employment-based benefits into retirement. The employment of women in the labor force remains persistently low while gender and caste norms remain archaic, thereby impeding the growth process. Rising incidence of non-communicable diseases (NCDs) and prohibitively expensive health care means households are just one illness away from losing their accumulated savings. Governance structures also exhibit a bi-polar tendency. Despite a push toward digitization and citizen services, public systems and bureaucratic structure are apathetic to civic concerns and public action often thwarted by political powers. In a nutshell, India’s triumph as a political democracy hasn’t translated successfully into a social democracy despite equality and liberty being upheld as constitutional rights of the citizens. As a result, the imperatives of reducing economic hardship and suffering—which independent India’s first democratic leader Nehru alluded to in 1947 and Ambedkar, the father of India’s constitution, cautioned against its implications (see epigraph)—are as relevant now as it was 75 years ago.

Social protection programs are a central component of the citizen-state social contract wherein the government provides economic protection to the citizens against daily risks and vulnerabilities. In mature social democracies, such protections are fundamental constituents of the economic and political life which allows a level playing field between competing class interests of those who own capital and the ones which provide labor. A market-based economy where labor class is conferred a fair share vis-à-vis capital investments by the entrepreneur is considered a common ground where redistributive objectives of the state are supported by greater income growth leading to broad-based prosperity. In developing countries like India, however, the goals of social democracy are affected by the lack of financial resources, perverse political interests, and suppressed civil liberties. Economic growth and democratic deepening have however brought about a fundamental change in domestic anti-poverty policies with an increase in the importance of social welfare programs across most developing countries in the last two decades. Brazil, Mexico, India, and Indonesia have been leading this ‘silent revolution’ with some of the largest social welfare programs in the world. Yet, the poorest of the poor—the focus of these initiative—in these countries continue to be left behind contributing to greater inequality and inequality of opportunity, thereby suppressing human resilience. As a result, the social welfare architecture which has begun to take some shape in the last two decades has a long road for social democracy in the country.

In the concluding chapter of this book, we summarize our thoughts on re-imagining India’s social welfare policies as a key instrument of promoting a resilient development process (scope). We highlight the need for a more cohesive social policy ideas around the scope of the social welfare, along with identifying the population at risk (focus), and the most effective form of social assistance. Our arguments are based upon a framework where structural transformation of the domestic economy—and the ensuing socio-economic, technical, and political change—necessitates a more expansive and dynamic social policy which is cognizant not only of the causes and symptoms of existing human deprivation but also the drivers of future economic insecurity. We envisage social protection strategy as akin to creating an economic security system comprising of a menu of welfare transfers (forms)—social assistance, social insurance, and labor regulation—which is adaptable to the nature of structural transformation and prioritizes the welfare of the vulnerable population (focus) with the scope of promoting human resilience. The systems approach to social welfare programs, which we propose here, hinges upon steady improvements in last-mile delivery, political commitment to the cause of social welfare, and complementary investments in public systems which have been the bane of India’s development process. We further argue that reforms to the current social welfare programs ought to be in line with the systemic challenges of a developing country economy characterized by limited fiscal resources, underdeveloped public systems, sluggish structural transformation—decreasing farm size, informality of employment, and slow urbanization—and poor local governance.

Social Welfare Schemes to an Economic Security System

The cost of being poor has a metastasizing effect on long-term human welfare through the reduced ability to afford nutritious food, education, or health care.¹ The poor in developing countries are handicapped by market failures in key areas of human development—health, education, and infrastructure—to bootstrap their way out of deprivation. Government intervention, other hand, essential to support its citizens but developing countries lacks an effective and efficient social protection design. Fundamentally, the coverage and impact of social protection in developing countries are limited by a narrow understanding of the developmental challenge and the peculiarities of their path of structural transformation.

Advanced nations of today have a well-endowed tax-funded social protection system to safeguard the poorer citizens from a life of indignity. Developing countries with a greater need for social protection, on the other, have lower financial capability with a narrow tax base and high tax compliance. The efficacy of social protection is further eroded by poor governance structures depriving the poor of their benefits. Further, economic vulnerability in modern nation-states is principally characterized by unemployment and loss of income. During the working age, citizens contribute to the fiscal resources through taxes and avail benefits during spells of unemployment or upon retirement. In developing countries, however, an overwhelming majority is not employed in the formal sector—devoid of any employment-based security or tax contributions—and vulnerability emerges from a variety of economic deprivations spread over the lifetime, antiquated social norms, and underdeveloped market-based institutions. The traditional state response, as a result, to such a developmental challenge in poorer countries is to provide direct social assistance—consumption or income support—through various social safety nets. The array of these independent social assistance schemes—with distinct form, focus, and scope—while useful, has only provided an elementary edifice of social support and the development scope of promoting resilience remains a work in progress.²

The central thesis of this book is to argue that overcoming this unrealized potential requires a re-conceptualization of social welfare as a ‘system of state support’ which addresses multiple dimensions of economic insecurity as a departure from the band-aid solutions to developmental problems.³ We argue that the social protection policies must be restructured as a system of economic support against the various deprivations and risks across human life cycle. By safeguarding against the plausible risks—from in utero to old age—social welfare programs have the potential to arrest the decline in human capabilities, boost earning capacities, and make societies more resilient against unforeseen life events. Our arguments are rooted in the idea that the process of development is not about getting individuals over an artificially defined poverty line, but rather allowing human beings to enhance their capabilities, flourish, and make full use of their abilities to choose the means to their prosperity.⁴

Reconfiguring the social protection question as a ‘systems problem’ is meaningful for multiple reasons. First, social risks and vulnerabilities for which welfare policy is designed are dynamic and multi-scalar. It has been widely accepted that independent social safety nets might temporarily reduce the extent of household vulnerability, but their longer-term benefits could be potentially eroded by macro-level economic deficiencies such as poor governance, lack of markets, and inadequate public infrastructure.⁵ Moreover, resilience building social protection requires an egalitarian social order, cultural norms, and political structures where every individual especially women is empowered enough to partake in the development process. The systems approach accounts for these macro-factors which are beyond a household’s micro-environment. Second, the resilience enhancing ability of isolated social safety net programs is often restrained because of the narrow developmental scope (say, financial protection or nutritional deprivation) of a particular safety net while economic risks and vulnerabilities emanate from multitude of factors.⁶ Social protection system, as an array of interventions spread over a person’s life cycle (in various form and focus), creates an incremental layer of support creating resilience against existing and potential deprivations. Third, a successful social protection system not only empowers citizens in economic terms but also increases their engagement with the state and builds trust in government leading to democratic deepening.⁷ Democratic empowerment of the poor—which facilitates greater state accountability fostering a virtuous improvement in public services—in low income and poor state capacity contributes to a more deliberative political system which facilitates a more inclusive citizen-state social contract.

Social protection as a ‘systems’ challenge also appeals to the idea of development resilience which we present in Chapter 2 of this book. By envisaging resilience as the development scope of social welfare interventions, we broaden the scope of anti-poverty transfers from addressing current human deprivations to the future potential flow of people into poverty in the future as well.⁸ A strong social protection system, therefore, must provide a built-in shock absorber along with acting as a facilitator of human capability through relaxing not only economic but psycho-social constraints to poverty and abet capital accumulation for long-run progress.⁹

The social protection system for developing countries which we envisage here is similar in scope to the graduation programs—multi-faceted interventions (form) which include consumption support, credit access, skills/training program, etc., to build productive capacity—but differs in its conceptualization as well as implementation. While graduation programs are designed with a focus on the ultra-poor and implemented through NGOs, the system of social protection is an institutional arrangement of economic security as an assurance to promote development resilience (scope) encompassing both the poor and the vulnerable (focus). In this system, independent social welfare programs (with varying form and scope) collectively form the basic edifice for the welfare transfers. Macroeconomic growth, infrastructure development, and improved governance—central to improving human development, redistribution, and economic opportunities—further act as the institutional ‘enablers’ of this economic security system for sustained improvements in the standard of living and broad-based prosperity. Social protection system, therefore, becomes an integral part of broader development strategy—but not necessarily the only one—which greases the engine of growth and facilitates the structural transformation process.

Envisaging a Social Welfare System for India

A schema for India’s social welfare system—comprising of several social safety nets and institutional enablers of human development—is shown in Fig. 10.1. This conceptualization highlights how public action through social welfare programs can promote human resilience in India given the country’s stunted structural transformation. In Chapter 3, we highlighted the importance of various social safety nets and their form, focus, and scope in India. In this figure, we depict how these can work in unison as a system. Here, the ‘system’ works through the various individual schemes which provide social protection against the many risks and vulnerabilities over a person’s life cycle.¹⁰ While these independent schemes provide short-term support against the immediate developmental repercussions of risks, further resilience is enhanced through efficient public institutions and sustained economic growth. Household resilience is boosted when this system works in consonance—everyday risks are averted, and each form of vulnerability is deflected through a combination of state support and public systems which act as additional enablers of resilience building for transformative development outcomes. Early life nutritional assistance programs in the form of cash transfers for institutional delivery or child immunization can be most effective in improving welfare in the presence of adequate and quality health infrastructure. Similarly, direct welfare assistance such as cash transfers to farmers, public works program, housing subsidy, or food assistance contributes to livelihood security. An enabling infrastructure—credit markets or transport infrastructure—contributes to the potentially transformative impact of individual welfare schemes through allowing households not only to cope better against exogenous shocks thereby protecting their endowments, but also through ensuring that their productive capacity remains undiminished. The social welfare ‘system’ presented here not only takes a life-cycle approach—with a focus on early life interventions, livelihood challenges, and income support during old age—but also a multi-scalar approach to the challenges of poverty and vulnerability, wherein deprivation is understood as a symptom of poverty at birth, lack of employable skills, poor quality of infrastructure, market failures, and poor governance.¹¹

Fig. 10.1

A social welfare system for development resilience in India

Social Assistance: Central Plank of the Welfare System

Noncontributory social assistance would continue to be the focal point India’s social welfare system in the immediate future for two reasons. First, with employment-based social security historically the preserve of a miniscule share of the population, livelihood vulnerability intensifying with the changing employer-employee relationship, stagnant farm income, limited employment avenues for the unskilled workforce, citizens would increasingly look up to the state for social assistance. Second, persistently poor performance on some of the most important indicators of long-term development outcomes such as child undernutrition and gender inequity merits vigorous and continued state intervention. Without direct state support, the intergenerational developmental deficits and social barriers to female empowerment are unlikely to be ameliorated by economic growth alone.

In Chapters 4 and 5, we have argued that social protection to guard against the scope of supporting consumption and reducing income vulnerability—remunerative employment during the working age, sufficient funds for retirement, and financial protection against job loss, health shock, or disability—in a predominantly informal economy requires an array of programs. Subsidized staple food through the Public Distribution System (PDS) and public works employment through Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS) have proven to be of paramount importance to arrest the incidence of food insecurity and consumption support (scope) in rural India. Unconditional cash transfers to farmers under PM-Kisan is a new form of direct social assistance given stagnant farm income. While PM-Kisan is a relatively newer program, improvements in the performance of PDS and MGNREGS have only highlighted the transformative scope of direct social assistance for the country’s poor and would continue to be an important source of support during uncertain times. The reliance on PDS and MGNREGS during the COVID-19 recovery for the economically stricken workers offers a shining example of the importance of these two programs and its future potential to guard against the newer risks which any economic and biophysical changes might bring.

High levels of malnutrition among young children—one of the most glaring indicators of underdevelopment—pose a conundrum to India’s growth trajectory. Poverty reduction accompanied by India’s growth path since economic liberalization since the 1990s has had a negligible impact on child nutrition. Clearly, higher income is not the most important determinant of nutrition. Instead, direct state intervention—nutritional support to pregnant mothers, safe childbirth, and timely—alongside greater public investments in improved sanitation and hygiene infrastructure, and social change which improves the situation of women in terms of their economic and physical well-being are key for improving child nutritional outcomes. As discussed in Chapter 6 of this book, free vaccination drives and direct nutritional support for young mothers and children (focus) under the Integrated Child Development Scheme (ICDS) would continue to be a major form of social welfare in the country to address nutritional deficits (scope). Similarly, the provision of hot-cooked meals at public schools under the Mid-day Meal Scheme (MDMS) is likely to remain a key form of social assistance for children attending public schools. These direct social assistances are further supported through complementary government schemes which include behavioral nudges such as a small cash incentive to pregnant mothers for childbirth at a safe facility under the Pradhan Mantri Matru Vandana Yojana (PMMVY) along with institutional enablers such as the Total Sanitation Campaign (TSC) and Jal-Jeevan Mission (JJM) which are infrastructural investments to ensure universal access to toilet and clean water access, respectively.

Progressive Universalism

A key dilemma in social policy design is whether to focus on the poor or have universal welfare transfers. While universalization imposes higher fiscal burden and spreads the transfers thinly to everyone rather than greater benefits to the most vulnerable, pro-poor targeting involves monetary costs associated with identifying the poor and welfare losses because of targeting errors.¹² In a low-income country like India which has limited financial resources and sources of vulnerability multifarious, a progressively universal or a quasi-universal social protection system is more suitable to strike a balance between fiscal prudence and minimizing targeting errors. Further, progressively universal programs cover poor along various dimensions of deprivation as well as those vulnerable to exogenous shocks.

While there is a strong case for universalization of welfare assistance such as school meals, nutritional assistance to pregnant women and young children—child and maternal health programs such as ICDS and MDMS are universal—which have intergenerational benefits, means-tested pro-poor social transfers are more common in the case of food or income which potentially create a disincentive to reduce work effort by the beneficiaries. Besides its costs, targeting creates a fundamental—moral as well as operational—challenge of defining who ought to be classified as a poor and who isn’t. Targeted social welfare programs, therefore, have not proved to be effective in the Indian case. For example, targeting errors have traditionally characterized the failures of the PDS till the 2000s and its expansion since then has led to improved performance. Similarly, the success of MGNREGS owes much to its universal eligibility. Variation in the success of social safety nets in the country—over time and across subnational regions—is a further proof of that.¹³

Preoccupation with the poverty line—an artificial boundary to classify the poor and non-poor through above poverty line (APL) and below poverty line (BPL) cards—has hampered the effectiveness of social welfare policies because of the administrative burden it imposes.¹⁴ Despite a rich scholarship on challenges with the poverty metric, targeting errors, and the associated welfare loss, social welfare programs such as old age pensions, housing subsidy, and public health insurance continue to be focused on the poor. For the longest time, India’s poverty debates remained mired in a minimum consumption requirement for a healthy diet—a historical legacy of famines and hunger incidence—despite newer sources of non-food-related insecurities, such as low wages and non-remunerative livelihoods, and costs of medical care, becoming significant as a source of economic vulnerability. The APL-BPL distinction, however, is increasingly losing relevance with more progressive population focus of the social welfare schemes. The National Food Security Act (NFSA) 2013 covers ‘priority’ households—67 percent of the households, significantly larger than the poverty figures—while the public health insurance program PM-JAY which initially focused on the BPL households is being expanded to a larger share of the population, many of whom would not classify as poor based upon the traditional asset-based metric. Some of the state governments never moved to a targeted PDS while some others have already made public health insurance universal. Old age pensions, another of the targeted programs, too are being made near universal in some parts of India. Unconditional cash transfer to farmers under PM-Kisan is another form of social assistance which is near universal.

Progressive universalism, as an important tenet of the social protection system, allows for a combination of social assistance and insurance to the poor and the vulnerable.¹⁵ Though some element of beneficiary selection is easily possible and deemed necessary for distributional reasons, near-universal social welfare programs create a broader coalition of potential beneficiaries. It further helps in improving welfare delivery and public accountability but also reduces targeting costs through an emphasis on easily observable indicators—taxpayers, expensive asset holders, employment, social identity, etc.—for excluding the non-beneficiaries. Addressing the various sources of vulnerability, across the life cycle with near-universal coverage—as we proclaim as the foundational basis for a social protection system—would allow social policy to beyond a narrow focus on the poor, and poverty reduction as the scope of social welfare system to a more encompassing understanding of human vulnerability and resilience building.

Social Assistance to Social Insurance, Rural to Urban

The form and focus of various social programs are likely to evolve with their own success—by addressing the developmental scope for which they were designed—and the associated changes in resilience enabling factors such as public investment in essential infrastructure, economic growth, and improved governance systems. As a result, while direct social assistance would continue to be the guardrail of social welfare policy, especially for the poorest, social insurance is likely to attain a more important role of building human resilience in the future market-based economy. The structural transformation process would also lead to a reduction in rural population, migration to urban areas, and a reduced dependence on weather vagaries but a greater risk of job and wage insecurity. With India’s ‘stunted’ structural transformation—characterized by deindustrialization and services sector-led economy—resulting in a largely informal labor market, social protection system would exhibit greater focus on urban vulnerability. This transition, albeit a slower one, yet provides an opportunity to introduce newer forms (such as cash transfers instead of food assistance) of welfare support.

Work-related social security has been a blind spot in India’s social welfare policy thereby contributing to frequent slide into poverty for the millions of citizens every year. While PDS and MGNREGS have been successful in providing consumption or income support to the poor, health shocks have been a particular important source of descent into poverty or further into poverty trap for the poor as well as non-poor. It is only in the recent times, publicly subsidized health insurance for those in the lower income strata has emerged as a potentially important form of social assistance—from the Rashtriya Swastha Bima Yojana (RSBY) currently known as the Prime Minister Jan Arogya Yojana (PM-JAY)—only in the recent times and continues to lack sufficient population and treatment coverage. In Chapter 7, we argue that PM-JAY, a publicly funded social insurance, is however, expected to become more important form of social assistance in a largely informal economy, albeit its effectiveness as a tool of financial protection remains a question. Similarly, the miniscule monthly old age pensions—again focused on those below the poverty line—as earmarked under the National Social Assistance Program (NSAP) is being revised upwards in some states. It is likely that other states would also follow suit—going by the trend in other welfare programs after 2004—making it another key component of social assistance.

Social welfare system with a transformational scope—development resilience—must have a broader focus and adaptable form.¹⁶ Social welfare system, as described above, must adapt to the changing nature of poverty in cognizance of the nature of economic transformation and associated demographic, technological, and biophysical changes—urbanization, migration, informality of labor force, non-communicable diseases, aging population, climate change, globalization, etc.—which are likely to characterize future vulnerability. Social protection systems, therefore, must be adaptable to a shift from the current focus on rural areas with paternalistic forms of social welfare—toward multi-dimensional understanding of deprivation and market-based forms of policy intervention—engender development resilience as the overarching scope of the social protection. For example, greater urbanization and rising informality of employment might require a shift in focus from rural poverty to livelihood support programs encompassing the rural-urban binary. Similarly, rising share of old age population might necessitate more investments in old age pensions or newer initiatives such as contributory pension funds.

Necessary Institutional Enablers for Greater Economic Opportunities

While social protection programs can facilitate human resilience through guarding against deprivations across a citizen’s life cycle, improvements in the quality of governance, public infrastructure, and progressive institutions have the potential to accelerate this transformative process through economic opportunities which were hitherto unavailable to them or were diminished because of their lower capabilities. Behavioral changes and infrastructural investments through promotion of safe childbirth (Pradhan Mantri Matru Vandana Yojana, PMMVY), immunization drives (under ICDS), free primary schooling and the provision of hot-cooked meals (Mid-day Meal Scheme, MDMS), access to toilets (Total Sanitation Campaign, TSC), tap water (Jal-Jeevan Mission, JJM), rural road infrastructure (Pradhan Mantri Gramin Sadak Yojana, PMGSY), universal electrification and cooking gas connections, along with rural livelihood missions (Deen Dayal Antyodaya Yojana, DAY), and income support to the poor for housing (Prime Minister Awas Yojana, PMAY) are some of the key enablers of this development process which are likely to promote economic opportunities and unlock the developmental capabilities of people. These institutional enablers further act as bulwark against the newer risks which unanticipated global economic and biophysical changes are likely to bring.

In a well-oiled social protection system in India, children born to poor parents can attain far greater human capabilities. Adequate nutrition during pregnancy, institutional childbirth, timely vaccination, and good nutritional support arrest nutritional decline. Access to free primary schooling, livelihood support to parents (assured wage, food, income), and cooked meals at school imply that they neither drop out of school—because of the need to support family during bad times—nor their cognitive abilities diminish because of scarcity. Such developmental possibilities are further enhanced if the same children grow up in household with no gender discrimination, treated running water, toilet facility, and 24-hour electricity access at home. Improved quality of schooling and road connectivity add further ballast to their human potential. Robust livelihood support, social insurance against potential income loss, and the provision of retirement funds or pensions can further ensure that their future generation is neither born in poverty nor relies upon direct state assistance for sustenance. A strong social protection system is designed to be a conduit of its own declining importance in people’s life with a lower share of citizens requiring that ‘safety net’ for survival. Higher quality of enabling mechanisms such as a physical infrastructure, economic growth, and institutional changes hastens the pace of this weaning off from social assistance. In the long run, enhancements in welfare outcomes are likely to outweigh the cost of these programs through improvements in human capital, consumption growth, and taxable income. It is therefore critical to think of these as a key component of the social protection system which act as enablers of development resilience (see Fig. 10.1).

Despite a plethora of these social welfare initiatives, India continues to be a poor country with developmental challenges of monumental proportions. While opportunities to build upon the existing social protection architecture to spur a resilient development process through furthering an ‘inclusive’ structural transformation of the economy are abundant, the challenges are also manifold. In Chapter 8, we delineate the glaring implementational deficits, faulty designs, and rampant corruption which characterize welfare delivery and highlight the institutional constraints—infrastructure and governance—which restrain human flourishing. Social welfare has long been relegated to secondary importance over perverse private interests and political gains. This has led to calls for bundling the multiple forms of welfare transfers into cash transfers which is easy to administer and cost-effective. Critics have called these proposals are premature given the country’s sticky social norms, inefficient institutions, limited fiscal resources, and flailing state capacity. Any assessment of the pace of the expected socio-economic change—and the gradual evolution of the form, focus, and scope of social protection system—is however rife with speculation and subject to one’s ideological predilection, as we argue in Chapter 9.¹⁷ To gamble upon how long it would take for India to get there is a hazardous exercise we refrain from. What is certain, however, that improvements in the quality of life, better livelihood opportunities, higher per-capita income, development of markets, and inclusive growth process are not only likely to reduce the dependence of citizens on social safety nets—especially on paternalistic social assistance—while providing long-run overall benefits. However, without these welfare programs, economic growth is unlikely to be inclusive in a country where the first-order manifestations of poverty and deprivation emanate right before birth and persist well into adulthood and spill over to the subsequent generation.

Resilience Through Livelihood Protection and Nutritional Enhancement

To promote development resilience, we highlight livelihood support and improved nutritional outcomes as the two overarching scope around which social protection system needs to be designed. Both challenges have multiple dimensions, and the future social protection system must address them considering India’s slow structural transformation, persistent malnutrition among children, heightened livelihood vulnerability despite declining poverty, and the various socio-economic factors which characterize its developmental deficits.

Strengthening the Capacity of ICDS to Deliver Improved Nutrition

Persistent undernutrition among children is perhaps the biggest risk to India’s growth potential. Despite state intervention in the form of supplementary nutrition to pregnant mothers and infant children, immunization, health check-up, and referral services, along with nutrition and health education to mothers, Indian children continue to be nutritionally deficient—almost 35 percent of Indian children under the age suffer from stunting (height/age)—and fare worse than children from even poorer countries. Despite the truly transformative ability of the 1.4 million Anganwadis (AWCs)—as ICDS centers are popularly known—through which nutritional supplementation is distributed, the program is beset with challenges of program design, staff motivation, and funding requiring reforms on multiple fronts.

AWCs need infrastructural modernization to be safe spaces for children to prosper as they are often their first centers of learning and improved health. Nearly a fourth of the AWCs lack toilet facilities while a tenth of them do not have drinking water facilities. Greater attention to the program through schemes like Saksham Anganwadi has been promised but needs to be sustained through financial allocation in subsequent budgets. Similarly, many of the initiatives proposed under the Prime Minister’s Overarching Scheme or Holistic Nourishment (POSHAN) initiative focused on nutritional awareness, education, and behavioral change along with creating synergies across the various schemes aimed at nutritional enhancement are a welcome step in that direction. Regular social audits and community meetings are key to ensure civic participation and public accountability around the functioning of AWCs. Such administrative routines, however, require adequate funding and political commitment to the cause of mother and child nutrition which has surely gained a key place in social policy with the 2013 right to food legislation. POSHAN should be used as the platform to take the next leap in commitment to better nutrition.

With AWCs becoming the arena for fight against nutrition, Anganwadi workers (AWW) are increasingly at the vanguard. AWWs are responsible not only for providing immunization services and nutrition information, distributing take-home rations, act as daycare for children, cooking and serving meals to the beneficiaries, but also for providing preschool facilities and sometime home visits for consultation. The nature of services to be provided at the Anganwadis has increase manifold in recent years. Most recently, under the new preschool curriculum, Early Childhood Care and Education (ECCE), AWCs have been earmarked to “promote early stimulation and play-based, experiential and child-friendly provision for early childhood education and all round development” leading up to their entry into formal schooling. AWWs, as preschool teachers, are required to undertake a range of activities to develop physical, motor, social-emotional, and cognitive skills of the children. While their expanded role could be the harbinger of improved nutritional outcomes, it must be supplemented with increasing the number of staff with the necessary training. Unfortunately, work provided by AWWs is still considered as a ‘community service’ and their salary falls below the minimum wages leading to disgruntlement and poor motivation. Delayed payments, ad hoc recruitment for 11 months, and corruption in the hierarchy further affect their dissatisfaction. Lack of professional training—scientific understanding of issues around health and nutrition—further limits their functional capabilities to be the agents of force against nutrition. Timely and improved wages, professional training, transparent hiring, recruitment, and staff retention are some of the key organizational issues for the AWCs to improve nutritional outcomes in the country.

There must also be a focus on enhancing the nutritive component of cooked meals at the AWCs—for children and expecting mothers—with greater share of protein and micronutrients. Inclusion of eggs in the meal has been a particular bone of contention. While some states include eggs in the meal, it’s a shame that social policy has not been able to overcome political hurdles to deliver the most basic and cheap form of nutrition to young children across the board. Like a hot-cooked meal for children, One Full Meal (OFM) scheme for pregnant and lactating mothers, which is being attempted in a few states, needs to be scaled up given the risks of take-home rations (THR) being shared with other family members. Given the spread of food fortification technology and cost-effectiveness, ICDS must also include micronutrient fortified meals given the high levels of micronutrient deficiencies.

Gender norms, sanitation and hygiene infrastructure, and behavioral changes associated with its use remain essential to nutritional improvements. Several noteworthy initiatives such as universal toilets and water and electricity access to every home are likely to improve nutritional outcomes. However, the success of such initiative lies in the quality of implementation and social change these schemes aim to herald. For example, toilet infrastructure without behavioral change toward sanitation practices or nutritional supplementation without associated nutritional counseling is likely to be futile. Similarly, water connection without regular services and water treatment could be rendered ineffective. Both social institutions and public systems which underpin the success of such programs are found to be sticky in India thereby slowing the process of change. It is crucial for nutrition-focused social welfare programs to focus on the social and behavioral aspects of nutrition.

Greater Focus on Learning Outcomes

Broad-based economic growth in a country is founded upon the available stock of human capital. ICDS and MDMS—with a focus on improving child nutrition and reducing classroom hunger—offer the initial window of opportunity for children who cannot afford better nutrition through private means. However, the scope of improved human capital must not stop only at better nutrition but also focus on improving learning outcomes among children at public school and AWCs. A resilient development process requires holistic growth where better nutrition combines with improved academic learning and skills to be employable. While free school meals under MDMS have succeeded in bringing children to school and addressing classroom hunger, their learning outcomes leave a lot to be desired. Annual Status of Education Reports (ASER) over subsequent years has highlighted poor learning outcomes among young Indian children. According to the ASER reports, less than a third of students in the third grade were able to pass tests designed for assessing reading and writing abilities for children in the second grade. Similarly, less than 30 percent of pupils in the fifth grade could solve math problems expected to be known by the second grade.

Poor learning outcomes are intensified in public schools which is characterized by poor governance—infrastructural constraints, teacher absenteeism, and low commitment remain. While right to education is a constitutional citizen right, and the quality of elementary public education system in India has improved in the last two decades, it continues to suffer from gross state neglect. Near-universal school enrollment and greater classroom attendance has not translated into improved academic performance. No wonder there is a shift in parents’ preference to enroll in private schools even among the poor despite the fact that private schools do not have the provision of free school means and are often equally mediocre in quality. Yet the perceived or illusory difference in public versus private school quality by parents highlights the need to invest in public schooling which otherwise would not only lead to nutritional losses but also learning gaps.¹⁸ Private schooling or remedial tuition classes also impinge upon the household budgets and improved quality in public schools must rectify that. The emphasis on improving the quality of public education is also important from the perspective of social justice. A large share of the students enrolled in public schools belong to the marginalized social groups who lag on most other social indicators and public schools are their only medium of education and social empowerment through education.

The remarkable transformation of public schools in Delhi offers a useful example.¹⁹ Along with greater financial allocation to the public schools which led to a facelift of the crumbling infrastructure and adoption of technology in classroom instruction, regular teaching training, and several other organizational reforms which encouraged teacher accountability and motivation, the Delhi government schools are now competing at par with expensive private schools in terms of academic achievements. The neighboring state of Haryana has also initiated a similar drive, Saksham Ghoshna, combining academic and administrative reforms to improve student learning in public schools. These reforms could motivate other states to embark upon improving the quality of public schools in the country with the scope of higher learning outcomes. It must, however, be ensured that school improvement programs need a spirited initiative where learning remains the central outcome of policy rather than program implementation. The failure of Madhya Pradesh Shaala Gunvatta (MP School Quality Assurance)—a combination of management ‘best practices’ which include school assessment, ratings, inspection, etc.—in improving learning outcomes should be held as a reminder that educational reforms must not end up as bureaucratic compliance checks.²⁰

Adequate Supply of Public Health Facilities

It is only natural to focus on health outcomes after emphasizing the importance of superior child nutrition and learning outcomes for resilient societies as the other key component of human capital. Investment in health is central to support productive capacities of citizens and facilitate inclusive development. While health infrastructure is not a direct component of the social protection system, quality health system is paramount for the success of many social welfare programs, most notably in the context of maternal transfers for childbirth and public health insurance. The structural weakness of India’s health system has been recognized for a long time which the COVID-19 only laid bare. Insufficient public health facilities—absence of trained care providers, infrastructure, medical supplies, funding, and staff motivation—have particularly diminished the effectiveness of maternal cash transfers for institutional delivery of childbirth such as the Janani Suraksha Yojana (JSY). A similar challenge exists with the Pradhan Mantri Matru Vandana Yojana (PMMVY), a conditional cash transfer to young mothers upon institutional childbirth, anti-natal care consultation, and vaccination of children. Poor administrative capacity of the health system has weakened the potential impact of PMMVY on better health-seeking behavior among pregnant women and new mothers.

Maternal cash transfers can only have a limited impact in the absence of quality maternal health facilities, access to health information, and emergency obstetric care. Building and maintaining public health system fall under the purview of the National Health Mission (NHM) which aims to achieve “universal access to equitable, affordable and quality health care services that are accountable and responsive to people's needs,” yet the required funding to it remains short and implementation unsatisfactory. India ranks lowest among nations in terms of public health expenditure as a share of GDP places—a little above 1 percent. Poor quality of services, rampant corruption, and lack of accountability reduce credibility of public health facilities among its targeted users. While health issues are gaining political traction, recent initiatives like Ayushman Bharat need to increase financial allocation to improve public health infrastructure, hire quality staff, along with better accountability mechanisms to bridge the current trust deficit patients have in the system. Put succinctly, the public health care infrastructure requires a fundamental overhaul with citizen’s health and well-being at the center of it.

Regularizing ‘Voluntary’ Community Workers as Health Care Staff

Community health workforce—all women—play a crucial role in improving of maternal and child nutrition. While Anganwadi staff (AWWs) remain central to the performance of ICDS, Accredited Social Health Activist Scheme (ASHA) workers and Auxiliary Nurse Midwife (ANM) play a key role in facilitating health care access to poor women. They act as the interface between the mothers and public health centers (PHCs) especially providing the benefits of PMMVY and JSY. They are responsible for registration of mothers under the schemes, ensure and record antenatal care (ANC) check-ups, and provide advisory services toward institutional delivery, breastfeeding practices, child immunization, and reproductive health among others. However, similar to AWWs, ASHA workers and ANMs suffer from poor pay and toil hard without much recognition apart from salutary awards to sustain the local health system.

While ASHA workers were singled out by the World Health organization (WHO) with the 2022 Global Health Leaders Award for their services especially in expanding the COVID-19 vaccination coverage, these community workers do not have a regular employment contract and paid below minimum wages. It is ironic that the work situation of 1 million ASHAs, 2.6 million AWCs, and 0.2 ANMs represents the exact precarity against which social security is principally organized—casualization and informalization of labor force devoid of employment-based protections mandated by labor laws. It is unfortunate that the key frontline members among the health care workers—responsible for delivering social assistance and health advisory—lack social security themselves. For an overwhelming majority of these women, being an ASHA, ANM, or AWW is their primary employment with the ‘community service’ taking a disproportionate time and effort.

Community health workers must be employed on formal pay rolls with employment-based benefits instead of their current treatment as ‘honorary volunteers.’ The ‘honorariums’ which they are currently paid is significantly lower than the minimum wage rates. To improve the performance of mother and child nutrition-related social welfare programs, greater accountability measures have been adopted to monitor the scheme and staff performance—such as phone-based data entry and other administrative work—which has only led to greater time commitments on the part of AWWs, ASHAs, and ANMs. Without adequate financial rewards, such policy changes have only bred employee resentment and great dissatisfaction among the frontline health workers. The AWWs and ASHAs have regularly staged protests demanding better pay and formalization of employment along with daily allowances to food and fuel. While financial incentives in the form of fixed bonuses and performance-based monetary incentives have been added in some states, attending to these fundamental worker demands—which also includes access to other employment-based welfare entitlements such as savings and retirement fund similar to the provisions for doctors, nurses, and other medical staff—is paramount to keep their motivation high and ensure they contribute to improving nutritional outcomes in the country. Such a provision would not only improve nutritional outcomes but also increase female employment—a major developmental challenge for India—by making them a part of mainstream workforce.

Restructuring Livelihood Assistance

Access to secure and remunerative livelihood is the other essential component of human capital promotion. India’s service-driven economy has not been able to create sufficient formal sector employment opportunities despite rising share of educational attainment among the youth.²¹ At the same time, economic growth has reduced income poverty but farm income remains stagnant, and social institutions still hinder greater participation of women in the labor force. Response to livelihood vulnerability in the country therefore must be framed in the context of its stunted structural transformation, characterized by deindustrialization, informality in service sector employment, and stagnant farm income along with urbanization and demographic changes.

Improved Governance of Rural Social Assistance Programs

Rural livelihoods are precarious by design. Declining farm sizes, lack of employable skills for service-driven economy, and vagaries of climatic variation portend uncertain and low-income stream for the rural workers. While improved infrastructure—roads, electricity, credit access, and connectivity to markets—has provided newer economic opportunities and a reduction in poverty, livelihood vulnerability remains grave in rural areas. Assured 100 days of work to rural works under MGNREGS has been truly transformative not only in protecting income but transforming rural economy through rise in wages, creation of local infrastructure, employment opportunities to women, and improving many of the other development outcomes. However, there is a large variation across Indian states in terms of the implementation and effectiveness of MGNREGS.

A distinct advantage of MGNREGS over an unconditional cash transfer is the opportunity to use the labor to create public infrastructure such as roads, bridges, schools, Anganwadis, and irrigation works which enhance the quality of life, protect against environmental degradations, and diversify rural livelihood options. The transformative potential for MGNREGS can be harnessed by improving its performance in the poorer states where the program continues to be best with issues of implementation and local corruption. Despite the expansion of the program, there is a significant unmet demand for work in the poorest regions of the country. Local administrative support and state capacity continue to deny work to minimum 100 days of work to citizens despite their legal entitlement to it.²² Lack of information about the program, limited citizen voice, and rent-seeking among the local bureaucracy inhibit the creation of effective state capacity to deliver work under MGNREGS which affects household resilience in the wake of a calamity.²³ Governance reforms which increase local state capacity, bridge information asymmetry between local state actors and workers, and those which increase bureaucratic accountability such as social audits need to be pursued in a more spirited manner.

While MGNREGS is an employer of the last resort, cash transfer via PM-Kisan has emerged as the other most important livelihood support in rural areas. While the entire rural population remains the focus of MGNREGS, PM-Kisan was introduced as a response to stagnant farm income and hence farmers are the beneficiaries under the scheme. A relatively newer scheme, PM-Kisan offers a great opportunity to test the implementation and effectiveness of a large-scale unconditional bank-based cash transfer programs in the country—social pension being the other, albeit on a smaller scale—and is likely to become an important component of the social protection system. Its implementation, however, requires better governance systems to identify and enroll beneficiaries, make timely payments, and revise the said amount with changes in inflation.

Protecting Against Vulnerability in the Old Age Through Assured Monthly Pensions

By 2050, every fifth Indian would be over the age of 60 years, a significant increase in the total sexagenarian population from current levels. With low-wage informal employment characterizing current livelihoods, an overwhelming majority of the workers would enter into old age without recourse to any retirement pensions and miniscule savings. A large majority of them may not even have the option to retire. Henceforth, social protection system of the future ought to lean heavily toward the provision of pensions for the elderly. In the absence of employment-based contributory pensions, state would be increasingly required to provide old age pensions.

Retirement age and pensions have raged an intense debate but in the more advanced countries—with formal employment—while developing countries like South Africa, Brazil, and China have initiated massive old age pension programs spending 1 percent of their GDP, close to what India spends on its most important social assistance program, PDS. Old age pensions under the current National Social Assistance Program (NSAP) provide an important, but tiny monthly sum to the most vulnerable section of the Indian population which does not affect their sustenance but influences their ability to afford health care and impinges upon the resource-constrained multi-generation households they are often a part of. The importance of old age pension is only expected to increase with greater population of sexagenarian. The current program, NSAP, needs to be upgraded with higher amount of transfer, better targeting of the program, and other administrative hurdles associated with implementation.

Future social protection policies must include the elderly as part of the system and increase the amount of noncontributory social benefits bestowed to them. The first policy challenge is however to recognize the problems of old age poverty, its implications for health, and household consumption. A 2013 Task Force on Restructuring NSAP had proposed reforms to the scheme with an expansion in coverage and pension amount as the most important ones. Yet, there was little action on that front. There are examples, however, from states like Rajasthan and Haryana which have revised the pension amount upwards. Indian government, on the other hand, has introduced contributory old age pension schemes—PM Mazdoor Samman Nidhi and Atal Pension Yojana—for the informal workers. We reckon that ‘contributory’ aspect of these schemes does not benefit the poorest section—lack of awareness, and certainty in income stream for regular contributions—of the population which it is aimed. An expansion in the amount and coverage of old age pensions under NSAP is path to improve resilience among the elderly population.

Addressing Urban Vulnerability

While the precarity of India’s rural livelihood structure has necessitated livelihood-oriented social assistance programs such as wage-support under MGNREGS and cash transfers through PM-Kisan, there has been little concern around what ought to be a ‘social minimum’ in urban areas. Greater recognition to urbanization of poverty, proliferation of slums, and informality associated with urban life has only recently sparked a debate around urban livelihood vulnerability. This discourse, primarily an academic one, is crucial from the perspective of India’s urbanization and social protection system for an urban labor force (Bhan 2023).

There are two school of thoughts on the potential form of urban social assistance. One of them proposes a cash-based social transfers envisaging this as a state support for the vulnerable income groups to protect consumption, acquire skills, and undertake entrepreneurial activities to build resilience. It assumes that cash transfers are easier to deliver in an urban setting where markets—banks and food—are easily accessible and literacy levels higher. A lump sum transfer of INR 500 (~7 USD) per month into the account of women account holders under the COVID-19 recovery package, Pradhan Mantri Garib Kalyan, is being a case in point. The other one has put forwarded the need for an MGNREGS-like public works program in urban India. Noted economist Jean Drèze, one of the architects of MGNREGS, has proposed a Decentralized Urban Employment and Training (DUET), under which tradable job stamps can be issued by the government which workers can use to work at an ‘approved’ institution at minimum wage rates. This would reduce unemployment among the low skilled workers and also allow for building urban infrastructure and provide basic amenities which Indian cities lack.²⁴ He further argues DUET can be restricted only to women to ensure self-selection by poorer section to reduce program costs while encouraging female labor force participation at the same time.

A scheme like DUET has several appealing features to create robust urban social protection system. First, skill and entrepreneurship programs historically designed to address urban poverty have been a failure and there is a need for program calibrated better to the urban realities. Schemes like the Pradhan Mantri Awas Yojana (PMAY) primarily focus on the provision of housing for the poor with negligible scope of addressing livelihood vulnerability. The urban livelihood program Deen Dayal Antyodaya Yojana-National Urban Livelihood Mission (DAY-NULM)—aimed at creating gainful self-employment and promoting skilled wage opportunities—has been unsuccessful in gaining sufficient political support and hence remains on the fringes of social policy. As a result, there is a pressing need for a social assistance program which is cognizant of current urban livelihood challenges. Second, cities are key to innovation, agglomeration economies, and attracting investment but Indian cities, especially the tier-II and tier-II cities—which are growing at a faster rate than the metropolitan towns—are characterized by grossly inadequate public infrastructure and civic amenities (especially urban commons) remain a neglected area of concern. Urban renewal schemes as implemented in the past and the current Smart Cities initiative are driven as projects with specific deliverables—increases in the number of buses, streetlights, etc.—without any adequate planning for their upkeep and its implication for the urban poor. DUET can provide the necessary impetus for improving the quality of life in urban cities by including them and their work as a key input of urban revival.²⁵ Third, urban poor are the most unorganized political group in the country. Residential neighborhoods are differentiated along various axes of class, occupation, and identity where associational activities are local and primarily structured around self-provisioning of services. To secure public services, the urban poor—often living in unauthorized colonies and slums—become a captive to political patronage by politicians or slumlords which limits their political power.²⁶ In contrast to the rural livelihood mission, where village council committees are organized political units to disseminate information on schemes and mobilize local support for implementation, urban poor are not organized along similar lines. Many of the fruit vendors, laborers, or even construction workers are itinerant workers who lack the associational ability and infrastructure to demand services from the state. DUET has the potential to foster an urban associational life around work and economic vulnerability which could facilitate deeper democratic engagements between the urban poor and state. It must also be noted that a program like DUET is not a solution to the employment problem in the country, rather it is the first step toward ensuring the provision of decent and dignified work at a minimum wage which can provide succor in times of non-availability of better employment opportunity.

The attractiveness of DUET, however, conceals operational challenges and normative questions around how to implement such a complex program and would it suffice as a social minimum for urban poor, respectively. Identification and enrollment of workers in urban areas is a cumbersome challenge, which MGNREGS despite its presence for more than a decade continues to face. Implementing DUET entails a value chain of bureaucratic procedures, hiring of contractors, commissioning of work, liasoning with local organizations which are beset with delays, corruption, and operational inefficiencies which have traditionally plagued social welfare programs of the yore. At a normative level, it is still unclear whether DUET would be able to raise average wages for the urban workers or create the required urban infrastructure. While MGNREGS has been able to raise rural wages, its impact on creating rural infrastructure remains an area of scrutiny. Lastly, a moribund urban local governance structure in the country can potentially stifle the implementation of DUET.

Despite these challenges, DUET is an idea worth considering for its potential impact in protecting vulnerable livelihoods, promoting female labor force participation, improving urban infrastructure, and creating an urban civic consciousness which is mindful of the most marginalized citizens. It allows welfare policy to articulate a hitherto missing urban social contract. Some state governments, however, have begun to pilot similar programs.²⁷ Kerala’s Ayyankali Urban Employment Guarantee Scheme was the first one which has been followed by Odisha (Urban Wage Employment Initiative, UWEI), Himachal Pradesh (Mukhyamantri Shahri Aajeevika Guarantee Yojana, MMSAGY), Jharkhand (Mukhyamantri Shramik Yojana, MSY), and Rajasthan (Indira Gandhi Shahari Rozgar Yojana, IGSRY). Learnings from the implementation and impact of these programs along with other ongoing pilot studies on cash transfers in urban areas would enlighten social policy on the right way to go. It is certain, however, that a stronger focus on urban vulnerability would be an increasingly critical component of the future social protection system.

Social Security for Gig or Platform Economy Workers

Gig work and platform economy is omnipresent in Indian cities with Flipkart, Swiggy, Zomato, BigBasket, etc., being a household name.²⁸ Helmeted service providers on these platforms are seen zipping past on their motor bikes with a heavy backpacks and multiple addresses to deliver the wares. Numerous Ola and Uber cab drivers ply day and night to provide commute services. The government planning body, NITI Aayog estimates that 7.7 million workers in India were engaged in the gig economy in 2020–2021 which is expected to increase 23.5 million by 2029–2030.²⁹ The growth of gig work and platform economy has surely increased employment opportunities and created economic buoyancy, but the services provided by workers through these platform workers as “independent partners” hardly qualify what International Labor Organization (ILO) would classify as “decent work.”³⁰ Regardless, we must accept—even reluctantly—gig or platform work to be the dominant source of employment in the future.

For certain, one cannot arrest the rise of e-commerce, technology, and artificial intelligence (AI) which is bound to disrupt traditional employment structures. Economic vulnerability associated with these newer employer-employee relationship, however, requires newer labor legislations and social protection frameworks which provide some form of social security benefits, retirement savings, bargaining rights, minimum wage protection, and skill development opportunities for the workers. Among the various initiatives to overhaul labor laws in the country, Social Security Code Bill 2020 for the first time has identified gig/platform workers as a distinct employment category. The bill identifies the need for every gig worker and platform worker to be part of a registry system through which social security benefits—life and disability coverage, accidental insurance, health and maternity benefits, gratuity, and creche facilities—can be conferred. However, there is no clarity on how these social security benefits would be funded and what kind of contributions would be invited from the employers and the service providers. More importantly, the code merely remains a gazette notification with no commitment on the part of government to implement it leaving millions of workers without social security. A robust social protection system requires the strong social security code to be implemented for it would protect livelihoods and reduced reliance on direct social assistance. It would also encourage greater formalization of the economy and facilitate the structural transformation process by adding to the resilience of gig or platform economy workers.

Migrants as Part of the Urban Social Protection System

Migrants are the most vulnerable of workers in urban areas who lack a fixed address, domicile, or proof of residence in the city. More than 100 million workers reside in cities as migrant laborers as part of the informal economy which characterizes urban economy and in slums or unrecognized housing colonies. Their humiliating fate—hundreds of kilometers walk back home to their villages abandoning their urban dwellings, many of them perishing on the way—in the wake of COVID-19 lockdown brought to public consciousness the precarity of migrant work, informal job contracts, poor quality of dwellings, and lack of social support leading to their status as secondary class urban citizens. A strong social protection system provides an opportunity to re-write the urban social contract with a specific focus on migrants which can improve their quality of life, reduce the barriers to migration, make cities inclusive, and spur the pace of structural transformation.³¹ Strengthening social protection of migrants is also important from the perspective of political exclusion and often violence faced by the poor inter-state migrants.

One nation one ration card (ONORC) under the PDS is the first initiative of its kind which allows for portability of welfare benefits outside of the state. Public health insurance program also incorporates migration decision of the beneficiaries using smartcards and biometric authentication. In 2021, Government of India launched a portal, eSHRAM, to create a national database of unorganized workers, which also includes migrant workers to track social assistance including portability of welfare support to the migrant workers. Given the spatial dimension of rural-urban migration, various state governments have also taken initiative to create a database of out-migrants and track their welfare benefits. However, there are serious gaps in the implementation. These initiatives rest upon awareness among the beneficiaries and service providers, logistical challenges of identification and verification in a technology reliant dynamic system, and adequate supplies with the PDS dealers. Any glitch in the system leads to a denial of benefits. Strengthening social protection for the migrants, therefore, requires greater effort in disseminating information around the portability of benefits and a string political commitment toward the political rights of migrants in the city.

Empowerment of Women Through Greater Employment Opportunities

The resilience scope of social protection includes greater focus on empowering of the most marginalized groups, especially women.³² While maternal and child nutrition programs are particularly geared toward women, gender inequalities must be addressed through facilitating greater economic opportunities to them which also facilitate greater intra-household bargaining power. MGNREGS has been particularly empowering for women workers as they have consistently surpassed men in terms of total employment numbers since the program’s inception. Female participation in the public works program has been made easier by specific provisions of a crèche facility and work within 5 kilometers of the village precinct. Despite higher domestic chores and care responsibilities in the wake of COVID-19-induced lockdown policies and the resultant reduced economic opportunities for women, MGNREGS emerged as the principal livelihood support for women.³³ Social protection system has been inclusive of women through their contributions as community workers in key health and nutrition programs as ICDS, ASHA, and ANMS workers. Regularizing their employment contracts would add as a further boost to female labor force participation in the country and encourage more women to work outside of their home. In many states, SHGs are designed to run the PDS shops which promote female entrepreneurship.

Group-based livelihood programs have been the other key form of social protection which promote skill development and employment opportunities for women. Deen Dayal Antyodaya Yojana (DAY) with urban and rural suffix, National Urban and Rural Livelihood Mission (NULM and NRLM), aims to mobilize at least one member of each poor households preferably women into self-help groups (SHGs), facilitate access to financial institutions for these groups, provide skills and training to the members, and connect them to other state-run anti-poverty programs. The livelihood program primarily relies on the economies of scope associated with one group-based platform, SHGs, for multiple interventions which also includes health and nutrition information. SHG membership, by increasing a women’s social capital, opens avenues for her empowerment, be it through her improved health status, access to work, or political participation. For a program which has long-term objectives through market-based means to prosperity, NRLM has been successful in improving nonfarm livelihood opportunities, greater household savings, and creating durable social capital for economic and political empowerment though its effectiveness varies across the states.³⁴ NRLM has also been useful example of convergence of welfare policies by encouraging participation of women in MGNREGS.³⁵ A singular focus on women as the transformative force behind the array of economic activities—farming, banking, entrepreneurship, etc.—in a patriarchal system however puts naively heavy burden on them which could undermine the program’s long-term potential. Social protection system of the future should be gender-sensitive attuned to the differentiated needs of women and girls and build systems which address the root causes of gender inequality.

Public Health Insurance to Promote Universal Health Coverage

As opposed to cash and in-kind social assistance, social insurance in the form of subsidized public health insurance programs has gained greater policy support. In privatized health care markets, cost of health care could be exorbitant and is identified as the principal cause of slide into poverty. In the Indian social policy, health insurance for the poor emerged as a support to the unorganized workers who lacked employment-based social security in 2008 as Rashtriya Swasthya Bima Yojana (RSBY) and its focus has expanded to cover a larger share of the population under Pradhan Mantri Jan Arogya Yojana (PM-JAY) since 2018. Publicly subsidized health insurance program has evidently emerged as an importance component of the social welfare agenda.

Demand for better health care system has emerged from a considerable decline in the quality of health care in public facilities which have not been able to meet the demand for high quality, specialized infrastructure. Private hospitals, therefore, have sprang up throughout all corners of the country, but are more expensive. While the Government of India has introduced relevant programs for health insurance, their performance leaves much to be desired. At the same time, social insurance targeted to the vulnerable—the elderly, widowed, and disabled—has been initiated; the political support for these programs remains low, as does the amount of transfers. In the future, with more market-based social protection, health insurance is expected to be the most important form of social insurance along with cash transfers and old age pensions as direct forms of social assistance.

There are two ways to think about the scope of public health insurance. Should it only be a source of financial protection? Whether it also ought to facilitate improved health outcomes? We contend it ought to be both. Currently, PM-JAY is designed as the source of financial protection against health shocks and improved health outcomes remain conditional on the health-seeking behavior of patients and the quality of care provided at the facilities. For PM-JAY to be a source of improved health outcomes, it is important first to increase enrollment in the program through greater awareness campaigns. Further, the current program with a focus on the poor misses a significant share of the middle-income people who are also at risk of catastrophic health shock. PM-JAY must also include a focus on the middle class even if it includes payment of a small premium. Such a move is likely to protect more households but also create a demand for private health insurance and a larger pool of insured would bring down the insurance premium.

PM-JAY only covers for hospitalization expenses while a greater share of medical expenditure in India is incurred by the households on medicines and diagnostic tests with the rise of non-communicable diseases (NCDs). Unless the program covers the cost of preventive medical care, it is expected to have little impact on either financial protection or improving long-term health outcomes. As India’s health care is increasingly getting privatized further encouraged by the public health market, adequate regulatory requirements are mandatory to check overtreatment and exploitation of patients. Perverse behavior of private health care providers is common to developing countries which often diminishes the developmental scope of the health insurance programs.³⁶ India is no exception to that as the health crisis during the pandemic COVID-19 laid bare to the public eye.

In order to leverage health insurance as a means to promote universal health coverage (UHC)—a global commitment—it is important to recognize the importance of right to health in the country. Access to health, as an inalienable citizenship right, would ensure that people seeking health care are not away by service providers, which is a common practice now. We have seen how legal guarantees to education, work, and food have been instrumental in providing the basic building blocks of a social protection systems in India thereby promoting livelihood, food, and nutritional security. Health as a citizenship right would further build household resilience.

Rethinking Poverty in the Social Policy Design

The complexity of urban livelihood vulnerability and greater importance of nonfarm wage-based employment in the rural areas should act as a starting point to rethink the conceptualization of poverty in the social policy design. Poverty, vulnerability, and deprivation in an urbanizing world would increasingly emerge from insufficient wages and income to maintain a basic standard of living. Greater economic opportunities—in rural as well as urban areas—are expected to progressively reduce unemployment but underemployment or disguised unemployment creating a greater share of those who are vulnerable to poverty even if not identified as poor by the various metrics. Latest numbers from the Economic Survey 2022–2023 show that real wages in rural India have remained stagnant in addition to the stagnant income among farmers for more than a decade. Similarly, the oft-cited 2008 report by the National Commission for Enterprises in the Unorganized Sector (NCEUS) estimates that about 79 percent of workers in the informal sector are poor or vulnerable to future poverty because they are paid subsistence wages without any social security. According to the report, even in the formal manufacturing sector, increase in profitability has not been passed on to the workers as the wage share of the firm output. Low wages in real terms and insecure job contracts imply heightened vulnerability among those who are employed but the income is insufficient to ensure food, housing, and shelter—the three basic essential items—to their families and much less being able to invest in their own health or human capital for their children.

Working and living in poverty-like conditions is attributed to lack of gainful income opportunities, insufficient skills, poor health conditions, or lower educational levels to partake in the employment. Consider the sector that has seen the highest increase in employment share in the country—construction. Labor employment in the construction sector requires little or no education, is low productivity, and often untied with any employer-based social insurance. The long and tragic walk of the migrant workers—leaving cities for their homes accompanied by their young children, and often covering more than a 1000 kms—in the wake of COVID-19 induced lockdown remains a reminder that vulnerability to unemployment, quality of life, and social citizenship are not captured in the income dimension of poverty. It is not only lack of income, but insufficient social support—through employment or state guarantees—security which leads to fragile lives and livelihoods. It is important here to note that welfare systems emerged in the West as a response to greater insecurities around wage-based employment and urbanization of labor force. India, therefore, ought to start thinking in the same direction.

Social protection system in an urbanizing context with a greater share of wage-based employment must be based upon the evolving nature and causes of deprivation which stems not only from informality of employment, but also of temporary place of residence (often unrecognized settlements) to claim welfare (Bhan 2023). Developmental resilience as the scope of social protection system necessitates a broader understanding of the vulnerable population (focus) and the most appropriate form of social support. While women and children would remain the key focus of welfare programs, demarcation of citizens as poor and non-poor for welfare benefits needs be obliterated with the recognition than social protection is required for the poor—often unobservable and along multiple dimensions as well as those vulnerable to poverty. The APL/BPL distinction and even the priority versus non-priority households under NFSA are costly exercises and have neither improved targeting nor enhanced welfare. Different set of markers for urban and rural poverty further seems obsolete with the blurring of rural–urban distinction.³⁷ A robust social protection system needs to be inclusive and progressive in focus.

Building a Capable State with Citizen-Centric Public Systems

A transformational social protection system is built upon progressive welfare ideas, strong political commitment, efficient program design, effective implementation, and an enabling public system. Much ink has been spilled on the absence of a strong political commitment to social welfare and public services which has led to the historical failure of Indian state in improving human development outcome.³⁸ There have been a policy shift, however, in the last two decades with an expansion in the focus, form, and scope of the social welfare programs, which we have documented in this book. Greater attention to social welfare has also coincided with large-scale investments on ‘hard’ physical infrastructure—roads, bridges, electricity, irrigation, etc.—as well as ‘soft’ infrastructure—universal financial access, cheap mobile data, digital payment platforms—which have eased communication, increased the quality of life, and provided greater economic opportunities to the poor. Similarly, spirited emphasis on sanitation and hygiene practice—through universal provision of toilets and water—is expected to improve well-being of the poorest. Rising contestations around public welfare has further animated a new electoral discourse around politics of the poor and programmatic improvements in social policy.³⁹ In a nutshell, the citizen-state social contract is arguably more favorable to the citizens now than it has ever been in the history of independent India.⁴⁰

Avoiding the Developmental State Impasse

While the importance of social safety nets in social policy is encouraging, we reckon rejoicing over these welfare initiatives as any giant stride toward building an inclusive social democracy would be premature. One must note that the Janus-faced transformation of Indian economy has created a veneer of success dominated by unbridled opportunities primarily restricted to a tiny minority—the upper caste, educated middle class—who have conveniently opted out of the public systems while the economically and socially marginalized groups—the vast majority—continue to rely upon the ignored, stressed, and poorly governed public systems which are as essential as social safety nets in expanding developmental possibilities.⁴¹ In Chapter 8, we have explain how despite the improvements, delivery of social welfare and public services remains lackadaisical and its ideational foundations ambiguous with little emphasis on redistribution, empowerment, and social change.

Consider India’s astounding achievements in building road and electricity network. Almost every village in the country is now on the electricity grids and is serviced by a motorable road yet evaluations of these last-mile infrastructure projects suggest that these infrastructural achievements have not translated into meaningful impact on economic impact.⁴² Researchers have attributed this to lack of complementary inputs such as other investments in public goods, improvements in human capital, and economic development. The situation of health is the most glaring one. Despite economic growth, and greater investment on social welfare programs, share of public investment of health care as a proportion of GDP remains constant at around 1 percent, much lower than in many of the poorer countries. We have already discussed the importance of local public health facilities for the success of maternal and child nutrition programs whose primary beneficiaries are the poorer section of the population. A laissez-faire attitude to health care represents continued disregards of pro-poor public systems which must be rectified. While it is known that India’s unregulated and fragmented health care system provides poor quality services overall—both in public and private sector—but the government’s recent focus is on super-specialty hospitals with cutting-edge medical technology. The emphasis on high-end medical care, accessed by a tiny minority, has taken precedence over investments in public health care, primarily used by the poor. Without adequate investment in primary health care infrastructure, the burden of disease and cost of illness will continue to expose the fragility of daily lives and potentially diminish the potential effects of improved hygiene and sanitation facilities.

Similar is the state of primary education. Near-universal primary school enrollment co-exists with a ‘learning crisis’ which has only exacerbated by the COVID-19 pandemic.⁴³ Deficiencies in the quality of education in public schools has increasingly led to a preference toward ‘low-fee’ private schools even among the poor even if improvements in academic learning outcomes remain incommensurate.⁴⁴ The education system, therefore, has become a ‘filtration’ process to sort and select the more fortunate students—many of them are exemplars of global Indian professionals across different fields—while the median ones, disproportionate majority, are left to suffer from teacher absenteeism, outdated pedagogy, and dilapidated schooling infrastructure.⁴⁵

The euphoria over construction of toilets and its potential impact in improving health and educational outcomes is tempered by persistence of social backwardness—archaic social norms and behavior around ritual purity, pollution, untouchability, and caste—which has not eradicated open defecation despite government sanctioned toilet construction under the Swachha Bharat Mission (SBM) throughout the country.⁴⁶ Pradhan Mantri Ujjwala Yojana (PMUY), a government initiative for cooking gas connections to the poor households to accelerate a movement away from polluting solid fuels and improve women—responsible for cooking at home—health, had little impact because people reckon cooking on solid fuel makes for a tastier meal.⁴⁷ Social norms often get prioritized over women’s health. Universal financial access program, Pradhan Mandtri Jan Dhan Yojana (PMJDY), which created zero-balance bank account with overdraft facility to 350 million Indians has not led to improvements in access to credit and credit-deposit ratios.⁴⁸ Savings balance in the PMJDY accounts remains low and a large share of the newly opened accounts soon became dormant.

Well-meaning developmental initiatives fail because the Indian state—and its many layered bureaucracy—considers these efforts as ‘projects’ with clear deliverables without much concern to the socio-political processes which produce these developmental deficits. As a result, while the Indian state has been successful in delivering on milestone projects such holding free and fair elections, eradicating polio, building roads and schools, or opening bank accounts, its ineptitude is exposed when it comes to delivering on continued service delivery such as quality education or health, and changing outdated social norms (Kapur 2020). The recent techno-centric developments around public welfare delivery have tried to overcome last-mile corruption, but public accountability continues to be plagued by bureaucratic compliance directed above in the hierarchy than a commitment to citizen interests.

The expansion of public goods and social welfare programs therefore must be combined with greater state capacity to deliver and maintain services with due considerations to citizen welfare and public accountability.⁴⁹ Certainly, these challenges are more obtrusive in some parts of India than in others which partly explains improved development outcomes in subnational regions where public systems are more citizen friendly. States, therefore, have much to learn from each other.

A Reasoned Articulation of the ‘Social Welfare’ Question

A weakened state capacity to implement social welfare programs in India primarily stems from a ‘disarticulation of the state’ where the ‘meanings and purposes’ of state intervention are obscured by the rhetoric of development and empowerment against the putative electoral appeal of distributing welfare (Naseemullah 2016). The ‘rights-based’ welfare agenda which emerged upon the ‘politics of the poor’ in the early 2000s has given way to ‘new welfarism’ under which the political parties are promising social transfers as a quid pro quo electoral bargain to the people sidelining investments in public systems (Aiyar 2019).⁵⁰ Electoral sloganeering has moved from better implementation of social welfare programs and improvements in the quality of public systems to ‘free’ provision of merit goods such as water, electricity, food, and even to private goods like TV sets, laptops, and cooking gas cylinders to attract voters. Political parties, even those who invoke a disdain for the ‘freebie culture’ (pejoratively referring to is as distribution of revdi, an Indian sweet), are also partaking in this competitive populism—outbidding each other in making the same electoral promises—which risks a race to the bottom leading to unsustainable debts, little welfare impact, and a threat to the fledgling social protection architecture.⁵¹ While investments in human capital through subsidizing education and health, or encouraging female labor participation through free transportation access for women and bicycle for young girls to school are ‘developmental’ in scope, new welfarism circumvents careful rationalization—via legislative debates and public deliberations—of welfare programs which often maligns the aims of a social welfare system and stigmatizes its beneficiaries.

A resilience promoting social protection system requires a clear articulation of its developmental scope and sustained public action to the cause of welfare, empowerment, inclusiveness, and social justice. It compels a political commitment toward ensuring a “social minimum” to the citizens which allows them to lead a decent life.⁵² The social minimum must be understood as more than a pecuniary consumption floor and include protection of basic citizenship rights and political engagements. The responsibility of the state, therefore, lies not only in providing social protection but also in facilitating a political system which promotes social change apart from delivering material progress. Setting up ‘collective goals’ and creating political mobilization around any issue leave alone welfare, however, inhibited by the diversity of India’s population, its fragmented polity, sticky social institutions, and high socio-economic inequality leading to short-termism in developmental policy and lower state capacity (Bardhan 2016). It is indeed a solemn problem which has handicapped India’s growth potential. The solution to it lies in greater power to the state governments to design and implement the focus, form, and scope of social welfare programs.

Greater Devolution of Power and Resources to the Subnational Governments

The collective action problem is more easily solvable at subnational levels. State governments have been a laboratory of welfare reforms since the 2000s silently embarking upon initiating programs or improving its implementation which has not only influenced other states to follow suite but also the central government.⁵³ The historical accomplishment of the South Indian states and the recent success of welfare program implementation in poorer states such as Odisha, Chhattisgarh, or Rajasthan offer an example of successful subnational political coalitions. State governments being closer to the citizens have a better understanding of the developmental priorities of the people and therefore can use the greater autonomy to articulate a more amenable social minimum. Clearly articulated welfare goals also provide a mandate to the bureaucracy, essential to discipline administration and improve implementation. Moreover, a greater role of the subnational government in the social protection allows the focus, form, and scope of state support to be more attuned to their own structural transformation process and the quality of public systems. For example, with greater autonomy, economically advanced states can gradually move toward social insurance-based protection systems while the ones lagging can learn and adapt as they grow and develop. In a federal polity, however, such devolutions of power to influence welfare can result in political apprehensions, and we have begun to witness such frictions.⁵⁴

As social welfare programs have gained more importance in the lives of the poor—led principally by the initiatives of the state government—tensions in India’s federal system have come to fore with regard to a competition for claiming credits and the fiscal support to finance it. Improvements in the social welfare programs emerged on the back of initiatives by the subnational governments. The rise in coalition politics since the 1990s—various state-level local parties supported the central parties to form a government in Delhi—strengthened subnational governments and the position of state Chief Ministers (CMs) as the supremacy of Prime Minister (PM) reduced.⁵⁵ A thumping majority to the Bharatiya Janata Party (BJP) in 2014, however, arrested this trend with a greater concentration of power at the center. Subsequent social welfare programs—new or renamed, along with greater prioritization—had a prefix PM (for “Prime Minister”) added to their name to indicate the central government’s munificence. At the same time, the administration of many social safety nets has been centralized—as part of the new welfarism—by delivering subsidies directly into the beneficiary’s bank account, which has further diminished the influence of subnational government in delivering welfare.

Besides credit claiming, a more serious disagreement has emerged around the sharing of tax revenues. India’s federal structure has an asymmetric center-state relationship with the central government holding disproportionately higher authority on most legal and financial matters. Recent trends suggest a decline in the financial devolution of tax revenues by the center to the state leading to political skirmishes resulting from a rising share of direct levies—cess and surcharges—in the overall tax revenues. The power to introduce such levies—to build infrastructure such as roads, health, or education—lies exclusively with the central government and the revenue proceeds fall outside the purview of the ‘divisible pool’ of taxes which are allocated to the state governments. As a result, there has been a reduction in the fiscal share of the subnational government which hampers their ability to spend on social welfare programs. Goods and Services Tax (GST), introduced in 2016 to streamline sales tax collection, has further curtailed the ability of states to raise resources for their own discretionary expenses. States like Kerala which have been lauded for their social welfare-driven human development gains feel the most aggrieved as it limits their public spending on welfare.

The political contestations between greater centralization and federal independence arise fundamentally from the nature of the Indian constitution and must be resolved under the same framework. Greater attention must be paid to the issue of social welfare spending by the Finance Commission (FC), an impartial constitutional body under the President, which is set up every 5 years to suggest federal tax sharing rules. Similarly, the GST Council steps up to oversee the distribution of GST between the state and center—must be empowered and leveraged more as a deliberative space—by the state government to put up their rightful demands.⁵⁶ NITI Aayog, the government think-tank, also proclaims to be a key policy organization in fostering cooperative federalism and must push this agenda more vigorously.

Improving State Capacity for Welfare Delivery

State capacity, defined as historical investment in strengthening legal and fiscal capacity and better governance structures, is paramount to implement, monitor, and sustain a social protection system. Existence of a strong state capacity differentiates better governed states like Tamil Nadu or Kerala from states (e.g., Bihar or Uttar Pradesh) which lack citizen-centric public systems leading to inefficient last-mile welfare delivery. Limited coverage of beneficiaries, rampant corruption, absenteeism among local public workers (ICDS staff, teachers, or health workers), unannounced closure of PDS shops, delayed wage payments, or denial of work to MGNREGS workers reflect the lack of state capacity to effectively implement and monitor the delivery of welfare programs. Overcoming these and many other occurrences of gross mismanagement and negligence in social welfare delivery necessitates a stronger local state capacity which includes building egalitarian local institutions comprising of civic-minded politicians, responsive bureaucratic apparatus, and empowered citizens.

A citizen-centric state capacity is also about overcoming oppressive social norms and creating an egalitarian power structure as information asymmetry, poor bureaucratic accountability, insufficient grievance redressal mechanisms, and disempowered citizens have all been attributed as the reasons for an apathetic state apparatus to deliver welfare. Building state capacity to overcome last-mile delivery requires simpler bureaucratic processes, greater accountability, and empowerment of communities.

Simpler Bureaucratic Procedures, Greater Citizen Awareness

Enrollment in social welfare programs itself is a cumbersome process with lack of clarity on eligibility criteria, cumbersome paperwork, and multiple rounds to the local bureaucrat which leaves the potential beneficiary demotivated. Eligible welfare beneficiaries often lack the awareness and the agency to navigate the cumbersome and costly application process. The burdensome practice of obtaining application form, preparation of documents to prove eligibility, and get them vetted by local representatives before submitting it to the designated offices is particularly tedious for the most vulnerable—women and elderly. The ordeal is further enhanced by unclear eligibility rules and discretion of the local bureaucracy to endorse and approve the application which allows for local elite capture and clientelistic favors.

A stronger state capacity requires simplification of bureaucratic procedures to identify beneficiaries and greater information dissemination about the welfare programs. A simpler way to identify beneficiaries is to use an ‘exclusion’ rather than ‘inclusion’ criteria.⁵⁷ Instead of collecting information on multiple indicators to create a poverty score or an index, one or two simple indicators can be conveniently used to exclude the rich. Such a simplistic screening process not only puts lesser burden on the administration and reduces discretion, but also improves targeting. Linking of the unique biometric unique identification number (UID), Aadhaar, with the tax identification number makes it easy to exclude some section of the population. Similarly, digitization of local land records in rural areas and its linkages with the Aadhaar can facilitate another screening criteria.

To increase program take-up, private and public informational campaigns can be used for awareness generation among the potential beneficiaries. While social welfare programs have an active dashboard where one can verify the details of the program implementation as part of the push toward greater transparency, beneficiaries do not use it rather they rely on peer or community networks to access information. An experimental study by Das et al. (2021) shows that personalized communications and community canvassing of the same information which is available publicly on the performance and benefits of MGNREGS enlighten the beneficiaries thereby increasing work participation. At the same time, it reduces delays in payment through increasing accountability of the local implementing authorities.⁵⁸

Information and awareness must campaigns also be paired with opportunities for political engagement and empowerment which ease the process of citizen-state mediation. Another experimental study of social pensions targeted at poor widows and divorced women. Gupta (2017) shows the lower take-up of the program is attributable to the bureaucratic ordeals but information alone may not be sufficient enough to increase enrollment. Beneficiaries garner greater benefit through application assistance and more frequent engagement with the local politicians and important social actors.

Public Accountability Through Improved Monitoring Systems

Responsive state officials and local bureaucrats are key to strengthening local state capacity which requires greater incentive to effectively implement welfare programs and improved performance monitoring system to enhance public accountability. Performance-based pay and greater use of technology have been professed as policy tools or ‘commitment devices’ to improve the performance of public sector employees in India and build implementational capacity.⁵⁹

The proliferation of information technology (IT) and mobile services can particularly reduce the monitoring cost of social welfare programs and improve efficiency. For example, the use of mobile-based payments, linked to the biometric identification, has been instrumental in bringing down the corruption in the MGNREGA and PDS (Muralidharan et al. 2016, 2020). Governance systems can benefit from technology-enabled cost-effective, real-time information collection from multiple agents in the value chain of service delivery by allowing higher-level bureaucrats to track those at the frontline. Dodge et al. (2018) find that internet- and mobile-based monitoring of local bureaucrats reduced wage payment delays under MGNREGS by 29 percent. Phone-based monitoring of Rythu Bandhu, a cash transfer to farmers in the state of Telangana, led to a 7.8 percent reduction in leakages once the sub-district officials were told that there might be a cross-verification of administrative records by randomly calling up the welfare beneficiaries (Muralidharan et al. 2021). Similarly, the introduction of a daily automated Interactive Voice Response Systems (IVRS) in Bihar to monitor the performance of school meals and further corroboration by designated officials, albeit at a lower frequency, streamlined program performance in terms of improved food intake, reported self-sufficiency among students, and the overall quality of the meals (Debnath et al. 2023).

The reliance on technological innovations, however, must be envisaged as a tool to serve the interests of the citizens—downward accountability—instead of employing technology as just another means of bureaucratic control. There are polarizing views on whether technology can improve identification of intended welfare beneficiaries and improve program delivery—through disciplining local state actors typically known for corruption, discretionary biases, and little accountability—or rather the technology-enabled payment and monitoring systems impose an additional burden on the poor citizens to claim their welfare entitlements. There is research to show that technology is unlikely to deter public sector underperformance in India if there is bureaucratic or political impunity to such behavior (Dhaliwal and Hanna 2017). Such perverse incentives are common in a society which works through patronage networks, weak contract enforcements, and weak community mobilization efforts. For technology-based monitoring system to be successful in fixing the ‘leaky pipes’ of the social welfare delivery architecture, necessary complementary inputs—political will, citizen empowerment, and appropriate grievance redressal mechanisms, are equally vital.

Reducing Bureaucratic Overloads and Improving Deliberative Norms

The much-maligned frontline Indian bureaucracy, however, also suffers from an increasing overload of work which impedes their motivation, affects prioritization, and lowers performance. It often gets unnoticed that India has one of the lowest numbers of lower-level bureaucrats across the globe. United States and China have almost five times the number of local public employees in India (Kapur 2020). In terms of the share of local expenditure out of the total, India stands at 3 percent in comparison with 27 and 51 percent by United States and China, respectively. These numbers suggest that blaming public servant for poor services is only half the story. Proliferation of administrative units—from 466 districts in 1991 to 766 currently—and the increase in social welfare schemes and infrastructure projects have increased the managerial responsibilities of senior bureaucracy as often the same officers are entrusted with multiple departments and responsibilities. The rising time constraints lead to ‘bureaucrat overload’ which lowers the quality of implementation.⁶⁰ Poor implementation further lowers fiscal devolution from above thereby reducing the state capacity. Among frontline bureaucratic workers, overburdened ICDS workers are an important example where they are increasingly assigned with multiple tasks. Hiring more workers, especially those at the frontline, would certainly increase the local state capacity with improved beneficiary welfare.⁶¹

Recruitment of local staffs and higher bureaucrats needs to be complemented by improved culture of frontline bureaucracy. Current bureaucratic norms reflect the sticky socio-political institutions. Indian administrative structure is designed along the lines of legal compliance to the superior officers rather than accountability to the ultimate beneficiaries, the citizens (Mangla 2022). Such ‘legalistic’ bureaucratic norms expose a culture of strict adherence to hierarchy, procedures, and paperwork, rather than flexible problem-solving and open deliberations which foster local participation by communities and civil society.⁶² These differential informal norms around the engagement of the bureaucracy with the state and citizens also contribute to subnational differences in state capacity. For better welfare delivery, a change in bureaucratic culture toward deliberative norms—which rely on iterative co-learning by the state officials working with the civil society—must be encouraged.

Facilitating Community Participation Through Decentralized Governance

The role of decentralized participatory governance institutions, therefore, is key for welfare delivery. By bringing government ‘closer to the people,’ decentralization of governance can potentially improve political bargaining power of the citizens and influences implementation of welfare programs thereby contributing to local state capacity.⁶³ Members of the village councils (or panchayats) are the first point of contact for a rural citizen to seek welfare programs—collect documents, find eligibility criterions, and get recognized as a beneficiary. Quotas for women and marginalized groups in these local bodies have further enabled democratic empowerment of the people.⁶⁴ Yet despite its promise, local participatory governance has not been able to command independent financial and administrative authority. In fact, the top-down approval for allocating public services and tax collection violates the basic principle of decentralization. Barring some states which have made greater progress on devolving powers to local government, local rural and urban bodies continue to be under-funded, and their influence is circumscribed by the higher-order bureaucrats and politicians.⁶⁵ As a result, the empowerment of citizens to assert their rights or engage in collective action—though enhanced—remains limited despite its huge potential. It is an opportunity which India’s social protection system must harness upon to empower citizens, improve participatory governance, increase bureaucratic accountability, and thereby build local state capacity. Going into the future, for any urban livelihood programs, or an idea like DUET to be implemented, the strength of participatory governance is likely to be of vital importance.

Generating Greater Fiscal Space for Financing Social Welfare

Revenue mobilization through tax collection is an essential component of building a capable state—richer countries have a broader tax base and a higher share of tax/GDP ratio—to invest in common interest public goods and redistribution among other enablers of human development.⁶⁶ India’s current social protection outlay (as a share of its GDP) is considerably lower than other countries at similar levels of economic development while the opportunities for increasing revenues along with expansion in social welfare outlay remain conceivable. We suggest three broad strategies to finance India’s expanding social protection system—increasing total revenues from direct taxation; ensure greater tax compliance by high net-worth individuals, and rationalization of subsidies through reduced outlay on non-merit subsidies.

In Chapter 9, we describe that an astonishingly small number of Indians (a little above 2 percent) pay income taxes. Consequently, India’s tax-GDP ratio (12 percent) remains a poor comparison with other democratic nations. Total tax revenues, further, have a disproportionally high share of indirect taxation which makes it regressive in nature. A lower income tax base, limited revenues, and greater reliance on indirect taxes lead to a constricted fiscal space to finance social welfare system. It is therefore imperative that a greater share of citizens around brought under the ambit of income tax, which can be made through lowering the minimum taxable income, better government efforts to increase tax compliance, and modernization of tax collection systems.

Increasing the tax base may still not yield a sufficient tax revenue if the high net-worth individuals can evade their dues. The ultra-rich Indians keep adding on to the list of global billionaires, yet they pay a miniscule amount of their wealth in taxes. While income tax evasion and misreporting of income among the rich is common, capital gains tax on wealth are rendered ineffective by loopholes in the taxation system. There are also no taxes on bequeathed assets which also contribute to concentration of wealth and perpetuation of inequality. Government must bring back the inheritance tax and identify the ultra-rich for tax collection process and introduce hefty fines for non-compliance. Digitization of land records and the use of Aadhaar for land transactions have certainly lowered the administrative costs of such tax collection and should be employed to coerce those at the top-end of the distribution much more vigorously than they are used to identify the poor welfare beneficiaries.

Finally, a significant share of government revenue can be mobilized through a reduction in non-merit subsidies which include the generous tax exemptions and extensive concessions provided to the large businesses at the pretext of promoting private sector incentives to spur innovation and trade. Researchers have quantified heavy financial leakages on these initiatives with little gains which calls for a rationalization of subsidies from powerful entities toward investments in social protection system.

Investing in Statistical Capacity for Policy Evaluation and Feedback

A robust social welfare architecture necessitates a strong, credible, and timely statistical system to track implementation, monitor progress, and evaluate welfare impact to complete the policy feedback loop. Statistical capacity of governments is as much a tool to govern and evaluate public programs as it is for citizens to hold public representatives accountable. In a political economy, lack of authentic data therefore can be a ploy to conceal poor governance and hinder evidence-based policymaking. When data can be used to question governance, the state—which is responsible for building credible statistical capacity—also has the power to influence or sabotage such exercise fearing a repercussion. A professional, well-trained, and independent statistical system is central to a strong social protection system not only to monitor welfare programs but also to keep track of key economic and developmental variables which determine the form, focus, and scope of social welfare architecture.

It is worrying to see a secular decline of India’s statistical capacity. There is no official poverty figure for more than a decade, results from the most recent economic census numbers have been withheld, COVID-19-related deaths were massively underestimated because of inadequate death registration system, and the impending population census exercise supposed to be conducted every decade by the government has been put on the side burner.⁶⁷ Weakened statistical capacity has coincided with the open-data revolution led by real-time digital records of infrastructure creation and welfare delivery through government dashboards. A seminal assessment of India’s statistical capacity refers to this as ‘data explosion’ along with ‘statistical implosion’ where independent data portals by various ministries publishing the latest ‘real-time’ numbers on their performance—punched in by local data entry operators without complete disclosures around definitions, harmonization, standardization across regions, and devoid of any scrutiny or audit—are held as substitutes for carefully designed sample surveys (Bhattacharya 2023).⁶⁸

Lack of credible statistics has ominous consequences for the evaluation for social welfare programs and the subsequent feedback into policymaking.⁶⁹ Isolated small-scale studies by independent researchers are no substitute to national scale evaluation for evaluating social policies. For example, the absence of good quality micro-surveys has affected evaluation studies on the expansion of NFSA since 2013 and health insurance under PM-JAY, along with the introduction of many newer schemes such as cash transfers to farmers through PM-Kisan which now comprise important component of the social welfare architecture. Besides the need of micro-data for program evaluation and tracking human development outcomes, statistical prowess of the government is key for statecraft—gather information on citizen through census, draw cartographic boundaries, identify the poor and deserving, and intervene with appropriate developmental programs. For social welfare programs, such information allows for a better representation of the developmental challenges, tracks progress, and identifies the poor more efficiently.⁷⁰ Investment in statistical systems for a credible, timely, and open data—a combination of surveys, socio-economic censuses, and program implementation indicators at granular levels—which can be linked to each other for credible policy evaluations and public accountability is paramount to building a strong social protection system in India.

Gradualism in Policy Reforms

We would like to bookend our arguments by revisiting the ongoing debate on the future of India’s social protection programs which veer around replacing PDS with cash, the use of technology to improve last-mile delivery, and the potential of UBI as a be-it-all welfare transfer. One observes a sense of palpable restlessness among the proponents of change in their clarion calls for greater use of digital technologies and market-based instruments of social protection to improve the lives of the poor. This impatience for policy changes surely emerges from their noble intentions, but such a missionary zeal must also consider the reality of underdeveloped Indian state and sticky social norms which provide a countervailing force to modernization.

Social protection systems and their modernization—in terms of its form, focus, and scope—must therefore be studied in the light of India’s socio-political realities. Modernization of the economic structure—markets, infrastructure, financial literacy etc.—necessitates evolution of social norms around social identity and gender, greater trust in the government, and a more empowered citizen in her interactions with the state. Social norms and political culture take time to evolve. Less than satisfactory progress in the last seven decades on this front suggests that social policy reforms require an element of gradualism while simultaneously pushing the cause of socio-political changes in a more urgent manner.

Cash Instead of Food: Future, Not the Present

Cash transfers are preferable when markets function well, citizen trust their government, and gender relations are egalitarian. There is a long way to go for India to claim success on these fronts which suggest that replacing food assistance with cash transfers would not be beneficial. In fact, the overwhelming preference of beneficiaries for cash stems from these persistent norms. The political economy challenge of how to overcome interlinked state-led procurement-distribution system further complicates any progress. But pragmatism is key to policy reforms. The feasibility of cash should however be tested in contexts where these socio-political hurdles are relatively lesser, such as the urban areas, beginning with the metropolitan cities. Similarly, it is important to investigate what happens when consumers are also provided the option of cash transfers instead when they receive food grains because households may have differential preferences regarding cash or food. A cash or food option can also familiarize citizens with the new system and build trust in delivery system, while other aspects of the welfare system evolve. State governments can take a lead in this direction and policy learnings can flow across subnational borders.

Citizen Interest: At the Heart of Technological Innovation

Indians are fascinated by digital technologies and none more than the policymakers. An aspirational class of IT technocrats has changed India’s global economic positioning and multiple IT-based entrepreneurs have revolutionized the value chains, financial systems, and informational delivery in a country where internet access is ubiquitous even in the hinterland and among the cheapest in the world. This has led to an unabashed confidence in IT-based services to overcome every issue of governance and welfare delivery at the push of a button. Universal bank accounts (under the PM Jan Dhan scheme), unique biometric identity (Aadhaar), and mobile phones comprise of the digital architecture referred as the ‘JAM trinity’ presented as the ingenious solution to build state capacity and mitigate the last-mile challenges of identifying and delivering welfare benefits.

We have argued that such faith is often misplaced because corruption, clientelism, and last-mile implementational deficits continue to be pervasive, even if they have declined over time.⁷¹ While technology has a key role to play in improving welfare delivery, it is neither a sine qua non for building state capacity, nor it necessarily prioritizes citizen interest. Moreover, there are preconditions for its effectiveness, and it must work within a particular socio-political environment, citizen grievance often remains unacknowledged, and bureaucratic indifference outlines the endemic challenges of welfare delivery. Digital technologies often serve the interests of their masters—policy elites, bureaucrats, local administrators, and politicians—than the citizens. The future of Indian social welfare ought to be the one in which citizen interests are the center. Persistence of teething issues in the digital infrastructure suggest that any sweeping change in the welfare delivery systems is likely to have an adverse impact the poor. Multiple studies, including government’s own audit, have shown that there are teething problems with the JAM infrastructure; it is ‘fragile,’ open to manipulations, and often excludes the most marginalized. Inadequate data protection laws further pose a challenge to civil liberty and bring down trust in government systems. Having an option for those who do not want to (or face problems while doing so) link their digital identity, Aadhaar, along with alternative means to biometric authentication, would ease citizen access to welfare systems.

The use of technology must be prioritized for democratic empowerment of citizens, facilitate information dissemination, increasing public accountability, improve grievance redressal systems, through multiple means such as personalized communications about welfare programs, interactive voice-response systems (IVRS) for grievance redressal, and mobile-based monitoring of delivery systems. Some of these have already been piloted by various subnational governments but require scaling up along with a strong political commitment to promptly act upon the deficiencies in delivery system.

UBI: Distal to Current Developmental Needs

The arguments against cash as a form of welfare assistance apply equally to the idea of Universal Basic Income (UBI) but there is more to unpack here. The altruistic idea behind providing every citizen a certain amount of cash—a form of social minimum, a citizenship right—is laudable but little is known about how it can be operationalized, even in the developed countries, where this idea has gained greater political traction. A fundamental challenge with UBI in India, however, is that replacement of cash transfers with all the other schemes (or even a few) pushes the welfare agenda back by a few decades by placing the developmental scope of welfare system as poverty reduction. Even when implementation is perfect and financial resources sufficient, what good is cash when undernutrition is persistent, jobs are scarce, health systems are prohibitively exploitative, and credit markets are imperfect? Current development needs of the nation are more acute and basic (food, housing, nutrition, health, and skills) for cash transfers to replace the array of social safety nets which are designed to address these fundamental aspects of underdevelopment. A revolutionary idea, which UBI is, requires an equally radical state to implement it in a context where economic risks and vulnerabilities arise often from non-income sources and the enablers of the development process still in infancy (see Fig. 10.1). Research has shown that households which lack capital endowment (human and physical) suffer from deprivations on several count. Cash transfers can ameliorate only the short-term financial constraints with questionable impact on long-term asset accumulation or building resilience against unanticipated shocks. UBI, therefore, could surely be a key component of social welfare system, but probably in the future. We must wait for more research on the effectiveness of UBI in advanced nations to have an informed debate around it.

Opportunity to Consolidate the Recent Gains in Welfare Expansion

Radical innovations to policy reforms stem from the exuberance of India’s growth story—its economic modernization, bustling metropolises, construction boom, and rise of an aspiring middle class—but the other side of story—persistent undernutrition, rising informality, patriarchal norms, bureaucratic apathy, fragile technologies, lack of social mobility among the majority, etc.—suggests that pragmatism calls for a gradual and more deliberate path toward reforms. Greater use of technology, cash transfers, and eventually UBI such as citizenship rights are all desirable possibilities to make social assistance efficient but the policy must outline who are these designed to benefit. Technological innovations have not entirely disciplined bureaucracy or reduced political capture. Cash transfers in the form of social pensions and PM-Kisan to the farmers are already being implemented, but neither their implementation is perfect nor their impact transformative. But it is important to use them in unison with the scope of other welfare programs rather than merging all social transfers into one.

The frictions created by India’s socio-political system further do not allow for sweeping reforms which is not necessarily ominous for a nation where social protection systems are still in infancy. We suggest that while future reforms are discussed and policy is learning from various pilot experiments, there is an imminent need to consolidate and build upon the existing welfare architecture through improving the performance of existing schemes and creation of credible public systems as enablers of resilience. Consolidation of current programs is likely to put India on a higher pedestal of human development gradually, create empowered citizens, and contribute toward a healthy social democracy where citizens can bargain more strongly with the state actors in designing a favorable social contract. Such propitious development process as a scope of the welfare system would progressively obviate the need for many social welfare schemes or enable the desired transition to more market-based forms of social assistance.

Conclusion

Synthesizing arguments presented earlier in the book, this chapter sketches out a schema for the future of India’s social protection system. We discuss the various ways through which the fledgling social protection architecture in the country can ensure a social minimum—necessary to live a life of dignity—and facilitate a resilient development process. Guided by the historical experience of the expansion of social welfare programs in India and rest of the world, we argue for envisaging a social protection system which is inclusive, spans over an individual’s life cycle, and is adaptable to the specific path of the economic structural transformation. The resilience enhancing ability of such a system necessitates a strong political coalition around progressive welfare ideas, a capable state to deliver welfare, investments in public infrastructure, empowered citizens, and sufficient fiscal capacity to fund welfare programs.

From the vantage point of history, we observe several missed opportunities where social policy occupied itself with the symptoms of poverty while skirting around the underlying structural constraints which limit human efforts at improving their situation. As India takes the pole position as the most populous nation on earth and its economic dynamism felt globally, leaving behind its poorest and the most vulnerable would lead to an unrealized potential of millions of its citizens and that of the nation-state itself. Persistence of inequality of opportunity and disenfranchised citizens can debilitate any nation. With the rise of informality, an overwhelming share of workers lacks social protection through employment. In the absence of work-based social protection, citizens increasingly look at the state for social support. Indian state, therefore, must envisage social policy reforms as citizenship rights and not merely as an employment-based benefit.

Looking into the future, a stronger social protection system is of supreme importance not only to lift people out of poverty but also to reduce vulnerability which may emerge from anticipated and unanticipated changes in the economy and environment. Drivers and manifestations of deprivation are likely to change over time, and the social policies must respond to them through a combination of direct social assistance as well as state-supported social insurance. The design of these programs—form and focus—require active deliberations in the public space, evidence generation through small-scale experiments, and greater devolution of powers to the subnational regions to implement these programs. Subnational variations are a peculiar feature of India’s structural transformation which can become a source of learnings across the states in terms of building a social welfare system which is context-specific—economic, social, and political—and the central government must support the state governments within the federal framework of the Indian constitution.

We have also argued that investment in social protection system is not only crucial for the scope of promoting human resilience but also political roots of the nation through creating a vibrant social democracy. The citizen-state social contract is motivated by reciprocity and common goals. The democratic state provides a credible social commitment to a minimum standard of living—social protection and public services—and citizens contribute through taxes, compliance to laws, and allegiance to national sovereignty. Such a process fosters a culture of inclusive political institutions and citizen-focused civic culture—through commitment to the ideals of justice, fairness, and equity—which becomes an overarching foundational framework for greater trust in the government, equality of opportunity, and shared prosperity. The 75th anniversary of the independent Indian state might just be the opportune time to inspire such a credible social contract. One must remain hopeful even if the road is long and arduous.