Shifting from schemes to systems: Shrayana Bhattacharya, World Bank

[vc_row][vc_column][vc_column_text]Across the globe, even with the best access to markets and opportunities, governments need to protect the poorest and help citizens cope with risks and vulnerabilities. Shrayana Bhattacharya, an Economist in the World Bank’s Social Protection and Labour unit for South Asia on social protection as an instrument for reducing poverty.[/vc_column_text][vc_column_text][/vc_column_text][vc_column_text]

• Why do we need social protection programmes?

Well-designed and implemented social protection systems can complement the economic transformation process by promoting resilience, equity and dynamic efficiency through mitigating market failures and welfare losses from shocks. India has experienced sustained growth and poverty reduction in recent years, however vulnerability remains high even in economically advanced states. India has experienced sustained growth and poverty reduction in recent years, however vulnerability remains high even in economically advanced states (see Table 1).

Divergence in income and social indicators across and within states has also increased the diversity of social protection needs in different parts of the country.  Basic subsistence needs and services remain the priority in some areas, while others face second generation challenges of diversifying social protection instruments to deal with structural transformation, and the new risks and vulnerability it brings.

 

• Do they have a long-term impact on poverty?

The real and potential impacts are through three channels. Social protection systems, policies, and programs help individuals and societies manage risk and volatility and protect them from poverty and destitution—through instruments that improve resilience, equity, and opportunity. Key instruments of promoting resilience include programs that minimise the negative impact of economic shocks and natural disasters on individuals and families—such as unemployment and disability insurance, old-age pensions, scalable public works programs, post-disaster cash transfers to affected households, humanitarian assistance, etc.  Equity is enhanced through protecting against destitution aftershocks are experienced. Social safety net (also known as social assistance) programs help alleviate chronic poverty and protect against destitution.  They also protect poor individuals and families from irreversible and catastrophic losses of human capital (nutrition, health, and education), thereby contributing to equality of opportunity. Opportunity is also promoted through policies and programs that contribute to building human capital, assets, access to jobs and productive investments.

• What have been India’s most successful social protection interventions?

The net of coverage in India has expanded and so have the number of programs supporting and promoting the vulnerable and poor. These are great positives. In 2011/12, nearly six out of ten poor households were using the PDS to buy subsidized grains. However, the success or failure of interventions appears linked to where they are being implemented. Let me explain with two examples of the largest programs in India. Take MGNREG, Berg et al (2012) and Imbert and Papp (2013) find positive effects on wages, but only in states where implementation is of high quality and intensity, and hence where the demand for work is more likely to be met. My colleagues (Dutta et al) studied MGNREG in Bihar and find that weak implementation seriously curtails the programs impacts on poverty.

Actual impact on rural poverty was estimated at 1 percentage point. More than two-thirds – about 10 percentage points – of the gap between potential and actual performance was attributable to the ways in which the scheme was not fulfilling the provisions of the Act.

Recent studies illustrate similar concerns on the PDS and social pensions. The interesting dynamic in India is the same program functions very differently in different states. So, the PDS has helped many in Chhattisgarh cope with food price inflation, but the same program reports very low coverage in Punjab. Despite major gains in PDS coverage, inclusion of the poorest and most vulnerable in the low-income states remains a challenge.  Under MGNREGS, there are high levels of unmet demand, particularly in the lower income states. This suggests that the location of the program seems to determine how successful it has been.

• What are the hallmarks of a successful intervention?

There is one important hallmark –and this is consistent with Target 1.3 of the SDGs to move towards an integrated systems approach. Target 1.3 (Goal 1) seeks to implement nationally appropriate social protection systems and measures for all, including floors, and by 2030 achieve substantial coverage of the poor and the vulnerable.  This implies a movement from scheme-based silos towards creating integrated platforms where schemes can be well-coordinated to ensure maximum gains. Of course, understanding what is “nationally appropriate” given the heterogeneity amongst states requires changing the way programs are financed and managed between center and state governments.

Government of India is moving in this direction with the recent focus on co-operative federalism and converging schemes through the NITI Ayog.  A coherent SP system will have two key features :

• The program mix will reflect diverse needs and risk profiles of states as a one-size-fits-all program mix does not account for such differences: Despite several changes in the social and economic fabric of the country, India’s social protection architecture continues to focus on alleviating chronic poverty through rural safety nets. The two largest programs, the Public Distribution System (PDS) and the Mahatma Gandhi National Rural Employment Guarantee (MGNREG) program, absorb more than 2 percent of GDP, accounting for more than half the spending on safety nets. There is a plethora of other schemes as well, many of which are small in budgetary terms. While protective programs have received a major boost through the enactment of entitlements, the government has also begun to invest in preventive instruments, such as insurance programs that provide coverage to the poor in the informal sector to deal with unexpected health care costs, accidents, and death.  However, take-up remains low. Coverage also tends to be lower in urban areas, even when programs are available.  The program mix currently replicates the design of rural programs in urban areas. It needs to foster adaptation to service the needs of an increasingly urbanizing and mobile population.  The rebalancing of social protection programs to suit urbanizing environments with well-functioning markets is critical.
• Bolster capability of sub-national governments to implement programs: There are a number of promising initiatives, including delinking program eligibility from “below poverty line” lists and greater devolution of responsibilities to lower tiers of administration, are steps in the right direction. Innovations such as Aadhaar (digital identity program), Jan Dhan Yojana (no-frills bank accounts), and mobile technology hold promise for improving financial access and the delivery of core safety nets through direct benefit transfers. Drawing on the Socio-Economic and Caste Census to develop a social registry could identify vulnerable individuals and families eligible to receive benefits, thus accelerating inclusion. However, state governments differ in their ability to adopt and leverage ICT and other reform instruments. Bolstering the success of social protection interventions requires convergence in the ability of sub-national governments to ensure effective implementation. As more flexibility is given to states, their capacity to implement programs must be strengthened, particularly the low-income states.

[1] Percentage of individuals who are vulnerable (per capita monthly expenditures between PL and 2*Poverty line)[/vc_column_text][/vc_column][/vc_row]