Social Protection Policies in the Context of Rising Inequalities and Social Sustainability in India

1. 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 ravisriv@gmail.com

2. 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.

3. Rising Inequalities and the Threat to Social Sustainability • We show that despite rapid growth and limited improvements in levels of living, interpersonal and inter-regional 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.

4. 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.

5. 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

6. 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

7. Limited Evidence from Income Survey data (IHDS 2005)shows that our inequality indices on income are among the worst in the world.

8. The growth pattern across states also confirms increasing regional inequality

9. This increase in regional inequality is further confirmed by the inequality of per capita SDP. Source: Ahluwalia (2011)

10. 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

11. ASI data also shows that the share of wages have gone down considerably with profits share in NVA increasing faster than ever

12. This is also confirmed from the National Accounts with profits of the organized sector increasing in the last decade

13. Intake indicators such as calorie intake from NSS show worsening while outcome indicators from NFHS show very slow or no improvement in nutritional status

14. Poverty incidence among SC and ST households compared to others have increased.

15. No improvement in per capita food availability which has been declining since the mid 1990s.

16. Other indicators still show sharp disparities across social groups, although the gap is narrower for some groups and for some outcomes (eg. Enrolments)

17. 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

18. 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.

19. Among paid workers in non-agriculture, there is a sharp increase in workers without any contract in a short period of five years

20. Increasing recourse to contract labourers by the employers in organised manufacturing. These workers are deprived of social security and minimum wages.

21. Flexibilisation through employment of workers with no fixed contract has sharply increased even in the government sector and Public Ltd Companies

22. 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.

23. 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.

24. 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

25. 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).

26. Expenditures by Central government on social protection increased during 2000-2010, particularly in education and rural poverty reduction

27. State governments are mainly responsible for social protection. Combined expenditures by Central and States increased at a much faster rate during 2005-10.

28. Expenditures on social protection programmes (excluding flagship programmes in elementary education and health) show sharp increases, especially in employment generation and food security

29. 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.

30. 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.

31. 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.

32. 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.

33. 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.

34. 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.

35. 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.