In a new book, The Future of India’s Social Safety Nets, Andaleeb Rahman and Prabhu Pingali, research associate and founding director, respectively, at the TataCornell Institute, Cornell University, argue that while “standalone welfare schemes are important to address various forms of human deprivation, it is imperative to think about social welfare as a ‘system’ of programmes (welfare support) with ‘development resilience’ as its overarching objective”.
In a Zoom interview from New York, Rahman speaks to ET about the threat from “new welfarism”, why inheritance tax could be an option and why it is too soon for universal basic income. Edited excerpts:
An overarching theme in your book is that India needs to take a systems approach to social welfare. What would that look like?
Right now, India’s (welfare) programmes are standalone schemes to address one kind of deprivation by a particular department—for eg, Integrated Child Development Services (ICDS) exists as a solution to address maternal and child nutrition issues by the Ministry of Women and Child Development, while the public distribution system (PDS) exists as a household-level food security programme by the ministry of agriculture in a combination with, depending on the procurement, ministry of consumer affairs. Most of these programmes don’t speak to each other. They address individual problems, which are important. But going forward, India might see a reduction on some of these fronts—for example, the nutrition problem might persist while food security improves.
It has to be understood that these are all programmes collectively to serve people on multiple dimensions of vulnerability. A systems approach means there has to be enough synergy and coordination between departments running the programmes and people thinking about these developmental challenges—it cannot be piecemeal.
One of the first acts of the new government was to sign off on the PM-KISAN disbursal. You have said the scheme doesn’t address structural issues farmers face. Should it be redesigned?
It’s like taking supplements while we don’t change our diet fundamentally. Many of these schemes have become compensatory schemes where the government is less interested in addressing the structural problems. Rs 6,000 is beneficial for a farming household though it’s not a lot. But it’s still very marginal to address stagnant farm income or productivity. Farmers are still stuck in the low-productivity trap.One of the contentious debates in this election was around inheritance tax so it was interesting to see that you argue for its return to reduce inequality. Where has it worked and what would an effective version look like?
The most common examples people give are a comparison between the US and Europe. It’s been much more important in Europe, where inequality is lower, compared with the US. The US can, of course, tax an inheritance if they want to because they have proper land records. But it has different democratic ideals. In India, inheritance tax would be more of a challenge because land records are poor. It can only happen when land gets transferred and registration happens, which is under way. But the elites in India, who are powerful, would have to agree. Again, other countries have better social welfare programmes because they are able to tax more. In India, taxes, especially land taxes, are very low, compared with other places. There are a lot of other issues to be addressed before this can be implemented.
You also write that universal basic income (UBI) would be a challenge. Philosophically, I’m not against it, but the question is, is India there yet?
Given India’s trajectory in terms of policy ideation and implementation, if all the attention goes to universal basic income, firstly I don’t know if the idea of income transfers will work to achieve the developmental deficits that exist. If households are unequal in terms of bargaining power, where will the money go? Will it go towards addressing children’s nutritional needs or women empowerment, or better investment choices? It (UBI) works better when social empowerment has already happened. There’s also an infrastructure aspect. If the government says, okay we are giving so much money to people, and doesn’t invest in public services, they are not going to see an impact.
To what extent will public health insurance work in the absence of quality government healthcare infrastructure or regulatory systems which ensure that patients are not charged beyond what’s required? The systems approach we discussed earlier would also ensure that infrastructure or institutional enablers are in place. Right now, UBI might divert from this though in the course of time we might get there.
‘New welfarism’, you say, can be a threat to social protection, even when it is developmental in scope. What is new welfarism and how does it pose a threat?
“New welfarism” was a term used by (former chief economic advisor) Arvind Subramanian and his coauthors a few years ago when they were talking about ration or public work via NREGA where there are administrative channels where people sign up, declare they are poor, etc., versus schemes where there is a distant citizen-state interaction, with a benevolent state transferring a certain amount to a bank account. The schemes are useful but where it creates a challenge for the future of social protection is that while it is a direct transfer, the connect between citizens’ grievances in terms of what they actually want and how they deliberate in a democratic process is absent. The government says, I think people need x amount of money and I am going to give it to them. But if I’m a poor person, I may have other needs. There’s no democratic process at the local level where I can explain my needs or how developmental challenges can be articulated.
Is the lack of a proper evaluation of welfare schemes and data holding back our development programmes?
To implement any policy and to understand how valuable it is for longer developmental outcomes, we need to evaluate it correctly. We can’t do it only on the basis of a few randomised controlled trials because these things are very institutional in nature. If I run an experiment in Gujarat, will the results hold true for Rajasthan as well? We don’t know. Large, nationally representative datasets which have traditionally been in use tell us how good these programmes are, in which regions they are working well, or not.
So in the absence of high-quality data on a variety of indicators we are still struggling to understand what the impacts are. A good example would be the National Food Security Act. It’s been 11 years since the act was implemented but we haven’t had a nationally representative dataset to understand if it’s addressed food insecurity, affected consumption baskets, its impact on poverty. In the absence of data, we don’t know.
It probably pushes back the welfare agenda slowly because the debate is happening in a vacuum where people on either side of the debate do not have enough data to claim what they are saying is right.
