Download Document

Social Protection Policies in the
Context of Rising Inequalities and
Social Sustainability in India
Ravi Srivastava
Professor of Economics, JNU, New Delhi
& Former Member,
National Commission for Enterprises in the Unorganised Sector
[email protected]
India is now the second fastest growing country in the world.
It averaged a growth rate of 7.7% per annum in the last
decade second only to China.
GDP growth rate 5 years
9.0
8.0
7.0
6.0
5.0
4.0
3.0
GDP growth rate 5 years
Poly. (GDP growth rate 5 years)
2005-06
2000-01
1995-96
1990-91
1985-86
1980-81
1975-76
1970-71
1965-66
1960-61
1955-56
2.0
Rising Inequalities and the Threat to
Social Sustainability
We show that despite rapid growth and limited
improvements in levels of living, interpersonal and interregional inequalities have increased sharply in India.
 Rapid growth has necessitated faster rates of exploitation of
forest and mineral resources and acquisition of land,
threatening livelihoods in rural and tribal areas.
 Large scale militant (naxalite) movements in about 150
districts; movements against land acquisition; and eruptions
and violent protests in industrial areas.
 Social protection policies and programmes have picked up;
there is a thrust towards rights based entitlements, but the
movement is still weak and fluctuating.

Rising Share of Billionaires

13 billionaires in India in 2004, 49 in 2009 and 69 in
2010.
Net wealth of the 100 richest Americans is $836 billion; that
of 100 richest Indians is $300 billion (2.8 times) while per
capita income in the US is 45 times that in India, and almost
15 times in PPP terms.
 There are eight Indians among the top 100 billionaires of the
world. There are none from China.
 Of the top 20 billionaires in the US, eight are from the IT
sector, three from finance, five from retail and one from
media. Of the remaining three, two are from engineering and
only one from real estate. In other words, one billionaire out
of 20 is from a rent-thick sector. Among the top 20 in India,
nine are from such sectors.

The other billion …….





That billion, which is still consuming less than Rs50 a day, is
slipping on international rankings in almost all measures of
human development.
India’s rankings on food, nutrition, gender and poverty issues
in the last decade have either remained stagnant or have
worsened.
India is home to the largest number of poor, of hungry and
malnourished, of child labourers, of people defecating in the
open, of those without access to safe drinking water, of
illiterates and so on.
India is the last country on international environment index,
PISA scores, Global hunger index and so on
It is also among three countries in the world whose global
hunger index has worsened
Inequality has been on the rise since 1993 as seen from the
consumption surveys but these are gross underestimate of the actual
extent of inequality prevailing
Limited Evidence from Income Survey data (IHDS 2005)
shows that our inequality indices on income are among
the worst in the world.
CES MRP EUS
IHDS consumption IHDS Income
Rural
0.35
0.27
0.36
0.49
Urban
0.36
0.36
0.38
0.48
All-India
0.37
0.35
0.38
0.52
The growth pattern across states also
confirms increasing regional inequality
This increase in regional inequality is further
confirmed by the inequality of per capita SDP.
Source: Ahluwalia (2011)
Within the organized manufacturing sector, the growth rate of
income has largely been due to increase in managerial incomes. ASI
data shows that the workers wages have increased much slower
than managerial emoluments
ASI data also shows that the share of wages have gone down
considerably with profits share in NVA increasing faster than
ever
This is also confirmed from the National Accounts with
profits of the organized sector increasing in the last decade
Intake indicators such as calorie intake from NSS show
worsening while outcome indicators from NFHS show
very slow or no improvement in nutritional status
Rural
1972-73
Urban
2266
2107
2221
2089
1993-94
2153
2071
1999-00
2149
2156
2004-05
2047
2020
2009-10
1958
1922
1983
Poverty incidence among SC and ST households
compared to others have increased.
No improvement in per capita food availability which has
been declining since the mid 1990s.
Other indicators still show sharp disparities across
social groups, although the gap is narrower for some
groups and for some outcomes (eg. Enrolments)
60
Nutritional Indicators by Caste (NFHS-3)
50
40
30
20
10
0
Stunted (0-3)
Wasted (0-3)
ST
Underweight
(0-3)
SC
OBC
WomenBMI(
15-49)
Others
Men BMI (1549)
Acceleration in GDP growth has also coincided with the worst phase
of employment growth with Negligible improvement in regular
employment and bulk of employment increase happening in
construction and as casual workers
Change in structure of workforce with percentage of
workers in informal and low quality employment
increasing. More than quantity, quality of workforce has
also deteriorated.
Among paid workers in non-agriculture, there is a sharp
increase in workers without any contract in a short period of
five years
90
Non-agricultural Wage Workers and Contractual Status, 2004-05 & 2009-10 (% to total)
80
70
60
50
No Job Contract
Contract 1 -3 yrs
40
Contract > 3 yrs
30
20
10
0
2004-05
2009-10
Regular wage employee
2004-05
2009-10
All wage employees
Increasing recourse to contract labourers by the employers in
organised manufacturing. These workers are deprived of social
security and minimum wages.
Flexibilisation through employment of workers with no
fixed contract has sharply increased even in the
government sector and Public Ltd Companies
80.0
Contractual Status of Workers in Govt. Cos. & Public Ltd. Cos, 2004-05 & 2009-10 (% to
Total)
70.0
60.0
50.0
No Job Contract
40.0
Contract 1 -3 yrs
Contract > 3 yrs
30.0
20.0
10.0
0.0
2004-05
2009-10
Govt Sector
2004-05
2009-10
Public Ltd Cos.
Low and Declining Social Security Coverage.
A/c to the NCEUS, only about 7% of the total workforce in
India has any form of social security. With increased flexibility,
even among wage employees in non-agricultural establishments,
social security coverage is declining.
Wage and Salaried Workers in Non-agricultural
Establishments with any Social Security (% Paid Workers)
Workers Size Class
1999-00
2004-05
2009-10
0-5
8.4
8.0
7.3
6-9
20.2
17.4
16.7
10-19
35.1
29.7
30.1
20+
67.0
61.7
54.8
All
32.6
28.6
26.4
Urbanisation Process in India has become more
exclusionary and less sustainable providing less space to
the poor and the migrants




Between 1991 & 2001 urban population increase has
overtaken increase in rural populations for the first
time.
But major contribution to urban increase is from newly
designated urban areas, and population increase in the
three largest metros has been negligible.
Urban planning and urban development focus on
creating ‘world class” infrastructure for the urban rich
and “global cities” and have become more and more
exclusionary for the urban poor.
Although migration powers industrial and urban
agglomeration, larger share of migrants remain
circulatory and footloose.
Extremist Maoist movements are endemic in 125
districts over 10 states

Over 9000 incidents between 2006-10 in which there were 2900 civilian,
1300 security personnel, and about 1000 naxalite casualties.

Wealthy Regions, Poor People. The states affected by naxalism are
regions which contains most of the country’s natural and mineral wealth.

Regions affected comprise of a high percentage of dalits (SC and ST) who
show a much higher percentage of poverty, low literacy rates, high
mortality and high levels of under nutrition compared to their low overall
averages.

Some of the manifest reasons for the discontentment are:

Increasing land alienation and displacement

Dwindling Livelihood and Environmental Resources –
decreasing Forests, Increasing Pollution

Exploitation by state and non-state agents & lack of Just and
Effective Governance

Usurpation of Participatory Institutions
Both inequality and living status of the poor and the
socially deprived would have been much worse, had it
not been for the greater focus on social protection
programmes which are also entitlement based




The UNCHR has emphasised the role of rights based social
protection as a means of mitigating poverty and ensuring
sustainable equitable development.
In 2004-05, the victory of the UPA was seen as a rejection of the
NDA’s slogan of “Shining India” and UPA’s commitment to the
“common man”. Mrs Sonia Gandhi steered a National Advisory
Council with prominent grassroots activists and aimed to
consolidate a social agenda.
Civil society groups, the NAC and bodies like the NCEUS, with
crucial judicial support, advocated important legislative changes
and a Rights Based Discourse began to underpin several of social
policy proposals and social protection programmes.
Led to the enactment of the Right to Information (2005), National
Rural Employment Guarantee Act (2005), Right to Education (2002,
2009), Unorganised Workers Social Security Act (2008) and the
National Food Security Act (now on the anvil).
Expenditures by Central government on social protection
increased during 2000-2010, particularly in education and rural
poverty reduction
Combined Budgetary Transaction of Centre (Combined Revenue
and Capital Expenditure) in India (in %)
Particulars/Year
1990- 1995- 2000- 2005- 200991
96
01
06
10
0.05 0.11 0.16
0.33
0.35
Elementary Education*
Medical, public health,
0.14 0.14
sanitation & water supply
0.15 0.14
Family Welfare
0.05 0.07
Housing
0.06 0.05
Labour & Employment
0.02 0.04
Social Security & Welfare
0.10 0.55
Rural Development
0.57 1.10
Total
Source: India Public Finance Statistics & RBI,
*Includes only Revenue Account Expenditure
0.16
0.18
0.26
0.16
0.13
0.05
0.06
0.24
0.97
0.17
0.12
0.04
0.02
0.47
1.33
0.18
0.16
0.04
0.02
0.77
1.78
State governments are mainly responsible for social protection.
Combined expenditures by Central and States increased at a
much faster rate during 2005-10.
Combined Budgetary Transaction of Centre & State (Combined
Revenue and Capital Expenditure) in India (% of GDP)
1990- 1995- 2000- 2005- 2009Particulars
91
96
01
06
10
Elementary Education*
Medical, public health, sanitation
& water supply
1.54
1.40
1.65
1.51
1.59
1.27
0.18
0.15
0.14
0.28
1.00
1.15
0.17
0.14
0.11
0.32
1.10
1.27
0.15
0.22
0.11
0.34
0.77
1.17
0.17
0.19
0.09
0.45
1.08
1.24
0.21
0.30
0.09
0.88
1.29
Total
4.57
4.40
Source: India Public Finance Statistics & RBI.
*Includes only Revenue Account Expenditure
4.50
4.65
5.60
Family Welfare
Housing
Labour & Employment
Social Security & Welfare
Rural Development
Expenditures on social protection programmes (excluding
flagship programmes in elementary education and health) show
sharp increases, especially in employment generation and food
security
EXPENDITURE ON SOCIAL PROTECTION PROGRAMMES
BY CENTRE
(AS % OF GDP & EXCLUDING HEALTH AND
EDUCATION)
Particulars/Years
1999-00 2004-05 2009-2010
Employment Generation
Schemes
0.17
0.18
0.64
Social Security Programmes
0.06
0.05
0.06
Housing
0.09
0.09
0.14
Food Security
0.52
0.82
1.13
Skill Development
0.02
0.02
0.02
The Employment Guarantee Programme has led
to important labour market and other impacts.
The state provides limited employment guarantee (100
days of unskilled employment per rural household),
mainly in public works. through an Act in 2005.
 Provides for cost indexed wages and other limited
labour standards, as well as other transparency and
accountability standards.
 Generated 2.57 bill. days of employment for 54.9 m.
households, in 2010-11 of which 51.5% for SC/ST &
47.7% was for women.
 Impacted on distress migration, reservation wages in
rural and urban areas and gender disparity in wages. Has
probably contributed to improvement in real wages

since 2004-05.
Food security and nutritional
support
Three main components are the Integrated Child
Development Scheme (ICDS) for children 3-6 yrs;
adolescent girls, pregnant & lactating mothers; Mid Day
Meal Scheme; and the Public Distribution Scheme
(PDS).
 These are proposed to be brought under a single
national legislation, the National Food Security Act
(NFSA).
 The NFSA will entitle “priority” households to fixed
quantities of highly subsidised cereals, and cheap cereals

to a larger group of households.
Right to Elementary Education

Article 45 of the Directive Principles of the Indian Constitution called for
free and compulsory education of every child within ten years.

In response to civil society movements, the Supreme Court in a series of
landmark judgments interpreted the right of every child to have free and
compulsory schooling as an extension of the fundamental right to life with
dignity.

The 86th Amendment was approved in 2002 and added Article 21A
recognising the right to education as a fundamental right.

A major initiative for universal elementary schooling by 2010 was launched
in 2002 under the Sarva Shiksha Abhiyan (SSA) flagship programme of the
government. Led to a significant increase in the budgetary allocation to
elementary education by Central government.

The Right to Education Act was passed by parliament in Aug. 2009 and
came into force from April 1 2010. The Act prescribes modality for the free
and compulsory schooling of every child in the age group 6 to 14 years.
Social Security
The NCEUS (2006) has proposed a national
minimum social security package for all
unorganised workers consisting of
hospitalisation cover; life/accident cover; &
retirement cover.
 The package was estimated to cost the
government 0.48 % of GDP.
 The NCEUS envisaged a national legislation
creating unorganised workers’ entitlement to
minimum social security within a period of five
years.

Social Security – Governmental
response & follow up
Government legislated a Unorganised Workers Social Security Act
in Dec. 2008 & appended 10 Schemes in a Schedule to the Act.
 Provided for registration of workers, but no universal coverage or
integrated implementation.
 Introduced/enlarged three schemes:
 All old age (above 65 yrs) BPL persons Covered under an
extended pension scheme.
 National Health Insurance Scheme (RSBY) for poor workers with
hospitalisation cover and a a premium of Rs 750 (presently covers
25 m families).
 Life –cum-accident cover (AABY) for landless rural labourers
(premium of Rs 200).
* The National Advisory Council (NAC) has now revived a proposal
for a national minimum social security package on the lines of the
NCEUS.

Basic Health





Public expenditure on health in India is currently about 1.2 %
of GDP and nearly 71% expenditure is private out of pocket.
Hospitalisation rates in the bottom MPCE decile are a fifth of
those in the highest decile.
A Health Policy document (2002) aimed at increasing public
healthe xpenditure to 2 % of GDP by 2010
GoI has launched a National Rural Health Mission in order
to strengthen public health infrastructure and provision of
health care.
Now, a high level expert group (HLEG) has recommended
universal health coverage, strengthening of public health
systems, and increase in health expenditure to about 2.5% of
GDP.
Challenges
Little change in growth centred paradigm with focus on
easing constraints on private investment and labour
market flexibility.
 Limited commitment in government to expanding social
protection and to floor labour standards.
 Strong debate on fiscal space for SPF.
 Current slowdown in growth has provided a rationale
for fiscal contraction in social spending, although this
may be eased next year because of political
compulsions.
 Debates on defining scope of rights, and obligations in a
federal form of government.
