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Social Security and Safety Nets in India Dr. Tarun Das1 Economic Adviser, Ministry of Finance 1.

Social Security and Safety Nets (a) Protective safety nets In India, positive discrimination in favour of the scheduled castes (SCs). Scheduled Tribes (STs) and Other Backward Classes (OBCs), minority ethnic groups women etc. as an instrument of social justice has been heritage of the liberation struggle and a constitutional obligation endorsed by judicial sanctions. Social security has been listed in the Concurrent List of the Constitution signifying the responsibility of both the Centre and the States in this sphere. The task of providing meaningful social security continues to be challenging in view of financial as well as operational constraints, high incidence of poverty, unemployment, illiteracy and the large size of labour force in the unorganised and informal sector. The permanent social security benefits provided through legislative measures like Minimum Wages Act, Industrial Disputes Act, Workmen’s Compensation Act, Employees State Insurance Act, Employees Provident Fund & Miscellaneous Provisions Act, Maternity Benefit Act, and P payment of Gratuity Act, etc. cater to mainly organised urban labour comprising less than 10 per cent of the total labour force. Most of the states/UTs, have pension schemes for the old and disabled, but due to eligibility criteria of income and age, only 9 percent of old-age population gets the benefit of pension. Most of the States have also implemented the Minimum Wages Act, but the levels of minimum wages and coverage vary from state to state. Some special employment programmes are also being implemented by some state governments like the Employment Guarantee Scheme in Maharashtra and the self-employment Scheme for Registered Unemployed in West Bengal. Immediately after the independence, the Government enacted the Industrial Dispute Act (IDA), 1947 for protection of workers. IDA permits lay-off,
Prepared for the United Nations Economic and Social Commission for Asia and Pacific (UNESCAP) as inputs for the ESCAP Survey for 1998.


retrenchment and closure in all undertakings, which do not employ more than 100 workers. In the case of larger units, as per the Act, no retrenchment, layoff or closure is allowed without taking prior permission from the government and the affected workers not being served at least three months’ notice in writing indicating reasons for such actions. In addition, in order to mitigate the possible adverse impact of economic reforms, a National Renewal Fund (NRF) has been established to fund schemes for compensation, retraining and redeployment of workers affected by restructuring. The NRF is being financed partly by disinvestment of government equity in public enterprises and partly by contributions made by the World Bank and individual country donors. Since its inception in 1992 the Fund has financed the voluntary retirement of 90000 workers who have opted for voluntary retirement. Some important initiatives taken over the years to improve the wellbeing of the weaker sections like the scheduled castes, as well as Other Backward Classes include: (I) Reservation of jobs to the extent of 22 per cent for SCs/STs in both public and private sectors, (ii) Reservation of 27 per cent of jobs for Other Backward Classes (OBCs) in the Central Government and Public Sector Undertakings, excluding the creamy layer. (iii)Setting up a National Commission for Backward Classes, (iv) A scheme for education complexes in low literacy pockets for improving literacy among tribal women, (v) setting up of a National Backward Classes Finance and Development Corporation to promote economic and other development activities of the backward classes. (vi) Raising of the share capital of the National Scheduled Castes and Scheduled Tribes Finance Development Corporation. (vii) Providing rice and wheat to the tribal dominated areas at concessional prices even lower than the public distribution prices.. (viii) Special Component Plan for Scheduled Castes and Integrated Tribal Development Projects in selected states, (ix) Establishment of the Tribal Cooperative Marketing Development Federation, and (x) Indira Awaas Yojona and Million Wells Scheme to provide houses free of cost to persons belonging to SC/STs and bonded laborers.

(b) Other social security schemes


A Minimum Needs Programme (MNP) was introduced in the fifth five year plan (1974-1979) with the objective of establishing a network of basic services and facilities of social consumption in all areas up to nationally accepted norms with particular concern to meet the needs of those who cannot command them in the market. The minimum needs programmed covers elementary education; adult education, rural health, rural water supply and sanitation, rural roads, rural electrification, rural housing public distribution system, nutrition environmental improvement of urban slums and infrastructure for poor. In the last few years, group insurance schemes for landless agricultural labourers, life insurance scheme for integrated Rural Development Programme (IRDP) beneficiaries and group insurance for certain categories of workers belonging to weaker sections of a the society have been introduced. Commercial banks are required to lend at least 40 per cent of their total credits towards the priority sectors consisting of small scale industries, agriculture, retail trade, small transport operators etc. Banks also provide loans at concessional interest rates to the weaker sections of the society, minority communities and persons affected by natural calamities, riots, disturbances etc. All insurance companies, both life and general, are wholly nationalised. Insurance companies play a major role for providing social security in the form of various schemes such as insurance afro life floods, fire, earthquakes, riots, war risks, accidents etc. In recent years, they have introduced several special schemes such as Medi-claim Policy, Comprehensive Crop Insurance Scheme, Social Security Scheme for Poor Families in the age group of 18-60 (to provide personal accident insurance), Hut Insurance Scheme for Poor families in rural areas (to provide fire insurance cover afro huts and belongings of landless labourers), Railway passengers Insurance Scheme (to cover cases of deaths and injuries to bona fide passengers on account of terrorist attacks, bomb blasts etc.), Professional Indemnity Insurance, Teakwood Insurance, Tea Plantation Insurance etc. A Social Security Fund has been set up with contributions from the Government and the Life Insurance Corporation for the purpose of providing social security through group insurance on the lives of persons forming part of weaker and vulnerable sections of the society. Women and children deserve special and supplementary support in general development programmes. The Integrated Child Development

services (ICDS) programme seeks to ensure children in the age group 0-6 years and the expectant and nursing mothers, a package of services comprising health check-ups, immunization, referral services, supplementary feeding, nutrition education for mothers. Special Nutrition Programme (SNP) provides supplementary food to the children. Special mid-day meal schemes are also being implemented in certain states. Besides the ICDS, programmes like Early Childhood Education (ECE) and Balwadi Nutrition Programme (BNP) are contributing to children’s development. They have also been accorded priority in National Nutrition Policy (1993). In recent years, some special initiatives have been taken for development and welfare of women. The National Commission for Women set up in 1992, has a comprehensive mandate to study and monitor matters relating to constitutional and legal safeguards for women, and to look into complaints involving deprivation of their rights. (c) Promotive safety nets Poverty alleviation has been a primary objective of our planning since its inception in 1951 and several anti-poverty measures have been in operation focussing the poor as the target groups. The Government has introduced in recent years various special employment programmes like the National Rural Employment Programme, Integrated Rural Development Programme, Urban Micro Enterprises Scheme, Urban Wage Employment, Urban Housing Shelter Upgradation Scheme. Self Employment Scheme for urban poor (SEUP), self employment for educated unemployed Youth (SEEUY) to generate additional employment. In 1989 a new employment generation programme called the Jawahar Yojona (JRY) was launched to effectively implement the existing employment programmes. An Employment Guarantee Scheme for the drought-prone area has also been in operation since 1990. In view of the fact that the educated unemployment constitutes more than 40 per cent of unemployed and the growth of salaried jobs in the public and organised sectors are limited, special efforts are being taken to develop institutional mechanisms and support systems for promotion of selfemployment among the educated.
(d) The role of non-governmental organisations


Over the years government has taken initiatives to involve voluntary agencies while preparing and implementing some of its schemes on social welfare such as rural development, slum development, waste and hill development food for work programme, primary health care etc. Various non-governmental organisations (NGOs) and cooperatives are also participating on their own in community services. NGOs and religious organisations have established hospitals, schools, sodality houses, and rest houses, orphans homes and provide various welfare measures to the poor, disabled and weaker sections of the society. Many international agencies like Oxfam, Ramakrishna Mission, The Mother Missionary Home, Young Men’s Christian Association (YMCA), Young Women’s Christian Association (YWCA), Mother Teresha Missionaires etc. are providing a wide range of social services. (e) Poverty Alleviation Measures India’s anti-poverty strategy comprises of a wide range of poverty alleviation and employment generation programmes many of which have been in operation for several years and have been strengthened to generate more employment, create productive assets, impart technical and entrepreneurial skills and raise the income level of the poor. These programmes include the following:





The National Social Assistance Programme is a centrally sponsored scheme with 100 per cent Central funding to the States and Union Territories for providing social assistance to the poor households in the case of old age, maternity, and death of sole bread earner. Integrated Rural Development Programme (IRDP) aims at providing income-generating assets to identified families below the poverty line through a mix of credit and subsidy to enable them to improve heir levels of living and eventually to cross the poverty line. (Targeted) Public Distributed System (PDS) provides foodgrains to the poor households at subsidised prices, which are even lower than the subsidised prices of foodgrains supplied to the other households. Employment Assurance Scheme (EAS) aims at creating economic infrastructure and community assets for sustained employment for at least 100 days of unskilled manual labour in poor rural households. Nehru Rozgar Yojana (NRY- Nehru Employment Scheme) aims at providing employment opportunities for the urban poor under three









components comprising wage employment, micro-enterprises and shelter upgradation for the urban poor. Jawahar Rozgar Yojana (JRY- Jawarlal Employment Programme) aims at generating additional gainful employment for the underemployed in rural areas, strengthening rural infrastructure and assets and improving the overall quality of rural life. JRY had been restructured since 1996, and the Indira Awas Yojana (Indira Housing Programme) and Million Wells Scheme, which were earlier sub-schemes under the JRY, had become separate programmes since 1996. Prime Minister’s Rozgar Yojana (PMRY) for providing selfemployment to educated youth has been designed to provide employment to more than a million persons by setting up 0.7 million enterprises. As many as 0.82 million had already been sanctioned during the eighth plan, and a target of 1 million beneficiaries has been fixed for the Ninth Plan (1997-2002). The existing self-employment Scheme for Educated Unemployed Youth (SEEUY) has been subsumed under PMRY. Integrated Child Development Services provides an integrated package of services comprising supplementary nutrition, health, immunisation, health check-up and referral services, pre-school nonformal education and health to children below six years. Indira Awas Yojana aims at providing housing units free of cost to the members of the scheduled casts and scheduled tribes and free bonded labour below the poverty line. Million Wells Scheme in funded by the Centre and the States in the ratio of 80:20 to provide open irrigation wells free of cost to poor, small and marginal farmers belonging to the Schedules Castes and Schedules Tribes and free bonded labour. Rural Water Supply and Sanitation Programmes – various schemes are being implemented by the States and local governments under the Minimum Needs Programme to supply drinking water and to improve sanitation in rural areas and urban slums. Prime Minister’s Integrated Urban Poverty Eradication Programme (PMIUPEP) envisages a holistic approach to urban poverty eradication by creating a facilitating environment for significant improvement in the quality of life of the urban poor. Training of Rural Youth for Self-Employment (TRYSEM) aims at upgrading the skill of the rural youth from the target group of families so as to enable them to take up self and wage employment.






The Scheme of Development of Women and Children in Rural Areas aims at improving the socio-economic status of the poor women in the rural areas through creation of opportunities for income generating activities on a self-sustaining basis. The programme is at present being funded by the Centre and States on 50:50 basis. Ganga Kalyan Yojana is a centrally sponsored scheme launched in all districts since 1997 to provide irrigation through exploitation of ground water (bore wells and tube wells) to individuals and groups of beneficiaries belonging to the target groups i.e. small and marginal farmers below the poverty line. The Swarna Jawanti Shahari Rozgar Yojana (SJSRY- the Silver Jubilee Commemorative Employment Scheme) which came into operation since December 1997 seeks to provide gainful employment to the urban unemployed or under-employed poor through the setting up self-employment ventures or provision of wage employment. The Centre and the States fund it on a 75:25 basis. The scheme replaced the earlier Urban Basic Services Programme, Nehru Rozgar Yojana (NRY) and the PMIUPEP by two special schemes viz. The Urban Self-Employment Programme and the Urban Wage Employment Programme. Rashtriya Mahila Kosh is a national programme for extending credit to the poor women in the informal sector. The Mahila Samridhi Yojana aims to promote thrift among rural women and to empower them with control over their household assets. Balika Samridhi Yojana provides a grant of Rs.500 to the mother of a new born girl child in a family below the poverty line in rural and urban areas. Minimum Needs Programme – Under the scheme the states provides seven basic minimum services viz. Safe drinking water, primary education, primary health, housing, mid-day meals for primary school children, rural roads and strengthening public distribution system. Since 1996 a central assistance is also being provided to the states to meet a part of the expenditure under the scheme.

(f) Assessment and policy prescriptions

The expenditure on social security in India hardly accounts for 2.5 per cent of GDP. This is among the lowest in the world. Most of the social security benefits from the meager allocation accrue to the well organised

urban work force who account afro less than 10 per cent of the total labour force, However, there is now a growing realization among the states and the Centre about the needs to provide adequate social security to the rural and unorganised labour. A wide variety of social security schemes for rural labour as mentioned above are currently in operation in different states, although the coverage and scale of assistance are far from being adequate. Merging the various wage employment schemes being run by the Centre and state governments should launch a massive Employment Guarantee Programme for rural labour. The works under this programme should be used for improving productivity and creating rural assets. Works should be closely integrated with other area planning programmes, and sectoral development programmes. In the Indian situation, where rural wages are low and there is hidden and seasonal unemployment, employment guarantee schemes contributes in a significant way to social security. However, the benefits from the programmes for souci-economic, povertyalleviation, provision of basic needs and social security cannot accrue to the rural poor in full measure unless they are organized and become conscious of their rights. Right to work should be incorporated as a fundamental right. But most evaluations of these programmes, whether done by the government or others, agree that these programmes have not been very effective in reducing poverty, as these suffer from ill-defined multiple objectives, limited targeting towards the poor, under-funding and often complex administration, high administrative costs and leakage, lack of proper accountability and adequate monitoring. For example, a recent study of the Public Distribution System (PDS) suggested that as little as 25 per cent of the foodgrains actually reach the poorest 40 per cent of the population and that administrative costs far outweigh the income gains to the poor. In general, it costs the government between 2 and 7 rupees (with the highest value reported for the PDS) to provide one rupee to the poor. One of the bettertargeted programs is the Integrated Child Development Services (ICDS). Similarly, public works (popularly known as the foods for works programme) have been relatively more successful at targeting the poor and have improved significantly the living standards of a large number of poor at a relatively low cost. In 1998 budget, government proposed to unify the existing various poverty alleviation and employment generation programmes under two broad categories of Self Employment Schemes and Wage Employment Schemes.

Funding and organisational patterns will also be rationalised to achieve maximum beneficial impact of these programmes. In recent years both the Central and State governments are redirecting their priorities and allocating higher shares of the social sector budgets on primary education, basic health care and women and child welfare. Such a reorientation will yield high dividends to population policy, since many studies have underlined the importance of female literacy in reducing total fertility and crude birth rates. The reorientation of expenditure priorities in favour of primary education and basic health will entail reduction of existing subsidies to higher education and non-basic health facilities. State administrations, institutions in civil society, including many Panchayati Rajs are being strengthened to enhance the institutional capacity to carry out the ongoing reforms. In this respect, large opportunities for greater private sector involvement remain unexplored. The private sector plays a vital role in the provision of selected aspects of health services (accounting for nearly 80 per cent of overall health expenditures). There is a wide scope for strengthening the public-private partnership in the delivery of health care services. There is also a wider scope for more involvement of India’s several thousand Non-Government Organisations (NGOs) for implementation of many government schemes in social sectors.