Welfare Reforms and Scope of Poverty in India

Market fundamentalism and free market strategies have always restricted the poor to uplift themselves from poverty, especially in context to a dynamic economy such as India. In the era of liberalisation, reform based policies have progressed faster than people creating majorly deprived communities. We are living in the age of reforms and our welfare schemes are not devoid of them either. In such a context, it is extremely important to evaluate whether frequent reforms have impacted as pro-poor or not.

A major problem with most of our welfare policies is that they are politically driven rather than having a community approach. The political ecology of such policies is complex and devoid of actual poverty perspectives. A major example of this lays in politics of welfare coverage expansions. Welfare policy reforms have been more indicative of their coverage than actually targeting the poor. Though most developmental thinkers and policy makers will argue on the fact that increased coverage of any welfare scheme is unconditionally the most important criteria, but impact evidences to it have to be balanced.

The Public distribution scheme under the National Food Security Act is one of the largest social welfare scheme that has about 90.2 crore beneficiaries (assuming every family has about 5 members in average). This programme is highly paradoxical to the coverage reform equation since the system suffers about 61 percent exclusion error. Another case study is of the Integrated Child Development Services (ICDS) which covers the nutritional needs and overall cognitive development of about 8 crore children (ages below 6 years under the Anganwadi scheme) out of which approximately 2 crore children are under the severely malnourished category. According to the National Sample Survey data from 2005 to 2012 the total coverage of our welfare polices increased categorically from 35 percent to 67 percent, but just to widen the social protection schemes emphasis towards  eliminating multidimensional poverty remained unattended.

The introduction of cash support mechanism to integrate cash transfer with welfare policies is a very ambitious leap in the reform based development agenda. Looking from one perspective, cash support has a huge potential, since it is inclined towards providing financial sustainability to the rural poor. But unfortunately like other pro-poor reforms, the cash support method has several policy odds. First of all the cash transfer study does not take into account market dynamics and rising inflations. Presently there is 26.1 percent inflation in prices of food which is technically the highest post August 2014. Linking direct payments to ration shops (fair price shops) has to take into account the current inflation rates or the rural population will not be able to buy ration at all. Additionally, we cannot have a minimum wage or transfer limit in this case since the market prices surge up tremendously over months. This model is highly dependent on identifying eligible households for cash support which unfortunately is a huge bias in the rural context as identication of household is done by the state which leads to maximum exclusion. Economic democracy of the rural poor is extremely important but interlinking financial sustainability to welfare schemes might not be the only way of doing it.  Policy reforms should focus on eliminating income disparities and advocate better labour rights such that National Rural livelihood schemes and skill development missions work towards creating a progressive economic model for the poor.

Case Study: The Brazilian Bosla family Model

The decentralized context of the Brazilian Bosla approach is an interesting study on the impact of bottoms up approach in rural policy. Introduced as a conditional cash transfer model a decade ago, the patterns delivered reforms since then with maximum impacts. Poor families with this scheme have been receiving an amount of U$ 35 to maintain their basic needs. With cash transfer benefits, the model has looked beyond basic wealth indicators in identifying eligible households and actively adapted to the Human Development Index (HDI) and Multidimensional Poverty Index (MPI) actively. The most striking feature of this social development programme is inclusion of nearly 5,576 municipal corporations to ensure error free identification of families and non-delayed direct transfer methods. Presently there are nearly 11 million families directly benefiting from this programme.

Indian economy of the plural times barely has any space for the poor with public policies that have fewer highlights on the concerns of the deprived. In recent times, reforms in pro-poor schemes have been efficient in tracking the poor more than tracking poverty. In the eras of welfare capitalism rapid reforms might not be the best way to uplift the poor. Policies should advocate more on the ideas of progress out of poverty than pushing communities to be newly poor with rapid market driven growth models.

Profile photo of Gaurav Bhattacharya
Gaurav Bhattacharya is a rural development fellow on a fellowship programme hosted by State Bank of India. He is working with a local NGO on a National Health Mission project to effectively implement a Malnutrition Treatment Centre in the Community Health centres in the tribal blocks of south-eastern Rajasthan in India. He completed his masters from the University of Oxford, and has been active in the study of rural economics to analyse social inequalities and exclusions of the rural poor.