India has moved 271 million people out of multidimensional poverty between 2006 and 2016. In the same period, it has also halved its poverty rate. Neither of these milestones, however, have contributed towards ensuring households do not experience transitional poverty – the condition of households falling in and out of poverty over time. The analytical apparatus used to measure poverty often leaves out a significant section of these transitional households, which is comprised of mainly of those from the unorganised sector that contributes to around 85% of India’s entire workforce. This leaves a significant proportion of the workforce vulnerable to the risk of transitional poverty, which can be triggered by income, livelihood, longevity and health-related shocks. Trends of growing informalisation of the workforce, even within the formal sector, further exacerbates these vulnerabilities.
The role of public policy in combating poverty is twofold – a promotional role, where the aim is to enhance the asset base of households and thus eliminate the occurrence of chronic poverty, and a protective role, where the objective is to prevent vulnerable households from entering into a spiral of poverty due to adverse shocks. While we had earlier worked on related aspects of social security, the Social Protection Initiative, a newly launched workstream at Dvara Research, will look to conduct research that will inform the design and implementation of a universal social security system. We believe a universal social security system is one that protects households and individuals against the vulnerabilities faced across the life cycle. At the same time, it is important to keep in mind India’s unique demographic and economic realities. These vulnerabilities are the outcomes of complex interactions of being exposed to a threat, of a threat materialising, and of lacking the defences or resources to deal with a threat.
We believe that there are three dimensions to approach this work:
1. Designing Universal and Comprehensive Social Security – One of the biggest challenges to ensure universal social security is the fragmented ownership and design of different social security schemes in India. Social security is a subject in the Concurrent List of the Indian Constitution, which leads to an overlap between social security schemes provided by the central and state governments. This often leads to an inequitable distribution of social security benefits across India, where more prosperous states provide much higher benefits as compared to poorer ones. Data on social security schemes is also captured separately, which has led to limited feedback mechanisms and more generally, low levels of innovation in scheme design, both of which hinder progress in universal coverage. A comprehensive effort towards streamlining ownership and governance of social security schemes would represent a significant step forward in India’s ability to provide adequate, reliable, and affordable social protection options for its vulnerable population.
2. Activating Missing Insurance Markets – Markets relating to insurance in India are either non-existent or largely ineffective. At least 75% of all Indians do not have life insurance, and 66% do not have any form of health insurance, which has pushed around 55 million Indians into poverty in 2011-12 alone. Climate-based insurance is underserved as well, with India rated “high risk” on the Natural Hazard Vulnerability Index. The lack of active private insurance markets magnifies the inability of households to cope in the event of shocks or to sacrifice on essential commodities to do so. Thus, social protection policy should play an important role in activating markets for risk management products, specifically for low-income and vulnerable households.
3. Ensuring last-mile delivery – The Jan Dhan – Aadhar – Mobile (JAM) framework was brought about to ensure the smoother movement of services between customers and providers. The move to JAM has brought some unintended consequences, where situations that create either transitional or permanent exclusion have arisen. The migration of schemes to the JAM framework, which increases footfall at bank branches exacerbates older issues in the banking system. As the government aims to bring schemes under JAM, it is critical to evaluate whether the current intervention machinery is robust enough to provide universal social security for India.
We intend to engage and closely deliberate with different stakeholders on this important topic and will share our learnings and insights as we progress on this new workstream.