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Lifesavers are not enough

A new World Bank study reiterates that social security funds are not reaching the poor.

india Updated: May 19, 2011 22:22 IST

The findings of the World Bank’s Social Protection for a Changing India report, which was released in New Delhi on Wednesday, will not surprise many, including the top policymakers in the government.

Nonetheless, the report, which was commissioned by the Planning Commission, is definitely a timely reminder to the government that along with the various schemes and funds, something more needs to be done. The governance and delivery system must be toned up, especially at the state level, if it wants to get value for the money it is spending on the poor.

India spends a healthy 2% of its GDP on core safety net programmes (the Public Distribution System, Mahatma Gandhi National Rural Employment Guarantee Scheme, Indira Awas Yojna and others), much more than its South Asian neighbours and even countries like China and Indonesia.

Yet, as the report says, only 40% of the poor benefit from the safety net that successive governments have spread out. What happens to the funds meant for the other 60% is anybody’s guess.

While the report’s recommendation of replacing the PDS with cash transfers will not go down well with many, including some senior policymakers, economists and politicians within and outside the government, two proposals — other than the much-needed (and much discussed) structural reforms and improvement in implementation strategies — mentioned by the authors might be worth exploring.

First, the need to fine-tune social protection so that the urban poor also benefits and second, the need for some sort of carrot-and-stick policy for states to ensure better fund utilisation and more effective implementation of projects.

With increasing migration from the villages to the cities, the percentage of poor in rural and urban India has now become more or less the same. But still, most schemes target the poor in rural areas. But what happens when they leave these benefits and move to the cities in search of a livelihood?

Since this trend has been increasing over the years and will only see an upward growth, it’s time that the government unveils a social security package targeted at the urban poor. As for the second point, it is well known that the performance of all states is not equal, and many don’t even manage to spend the central funds because of lack of capacity and skills.

Along with improving these aspects, funds must be linked to the overall performance of the states in disbursing them on time and improving access for poor people.

While all these will not be easy, the road could become a little clearer if the government manages to do the real groundwork and get a fix on how many poor people we have in the country. Without this, we can safely assume that the poor will continue to fall through the cracks.