The New Indian Welfare System

NEW DELHI: The Indian economy is competing presently with trends of newer dimensions bridged with transient changes into a rapidly progressive produce force, while the conditions to it overlap with a slower welfare base.

In the frameworks adopted post liberalisation, the Indian economy has opted for wider markets, freer norms and flexible taxations, but underlying the development indices are the patterns of shortage of farm based activities, deficient credit platforms, poorer identification of beneficiaries and a disintegrated welfare model.

The challenges to the economy by and large lies on inclusive governance, better reform structures, improvement of employability and mandating livelihood regimes.

The Indian economy is trying to maximise fiscal prudence by bringing in stricter reforms in the welfare structures for a population with diversely changing consumption and expenditure behaviour. As highlighted in the economic survey for 2016-17 the recommendation to progress with a universal basic income (UBI) is itself a parameter of change in the current welfare scenario, where the system is trying to move into a lesser in-kind based transfer model.

The wider debate here lies in the percentages of inclusion or marginalisation that such reforms may bring in over a period of a time and whether the cost of a universal model is feasible for a vulnerable rural based population. Several policy pundits believe that in a rapidly growing economy minimising the in-kind subsidies with a comprehensive cash transfer model is probably the best progress towards fiscal recovery but the results of it must be weighed significantly. In the case of the PDS the government spends about Rs 98,979.52 cr on food subsidies through an actively running 5.21 lakh fair price shops, that forms about 0.3 % of the total sub share of the economy.

There have been many such amendments in the past to link the fair price shops of the PDS system to a cash based transfer framework rather that distributing subsidised grains. The biggest challenge to the PDS coverage is that the total and estimated number of poor cannot be matched accurately since several households above the BPL list manage to procure the pulses and then sell them under the non-controlled agricultural markets to derive higher prices on subsidised cereals.

This further causes price destabilisation that makes the market volatile and unfriendly for the small and marginal households. Thus, in a state like this introducing a cash based non-subsidy framework will only help if the initial number of estimated and counted poor are of equal ratio’s minimising the exclusion trends. As several pockets of rural India are still unable to balance grain shortages it would be an increased burden on such communities if they are not able to procure the subsidised grains through the fair price shops.

The agrarian model of development in India has recently attracted several reforms promising a better farmers welfare model with more inclusiveness and increased participation. Such reforms can be labelled with direct bank transfers, increased e-credit platforms, more Aadhaar identifications and e- agri markets.

Unfortunately, such reforms are yet unable to build credibility in terms of providing protection from increased monetary shocks due to price volatility of cereals and pulses. Several small and marginal agricultural households in rural sections are still unable to obtain continuous credits to protect them from in formalisation and asset failures. The reforms in context to the agrarian model is poorly distributed with very few changes in terms of the credit programmes.

Several reforms are directed mostly towards digitisation and productivity practices with little attention to the on-going credit crisis and farmer distress loans for medium produce households. In terms of credit sourcing platforms there are fewer options available apart from the National Bank for Agriculture and Rural Development (NABARD) and some basic centrally sponsored schemes which are not targeted towards the marginal farmers.

Credit distress in one of the main challenges that is driving the agricultural households to take up non-farm based practices that barely have any social protection nets. In the past ten years, itself we have noticed a severe shortage in terms of farm based activities with decreased land productivity behaviours making a stable agricultural household depend on non-farm based wages for livelihood. The welfare system for agricultural practicing households are still widely stagnant with the minimum support price (MSP’s) endorsements and the common minimum programmes facilitated through the NREGS.

The agricultural markets in India are extremely vulnerable with almost constant inflation on food articles which makes the markets devoid of price stabilisation. It is indeed important at this stage to have a better functioning welfare base that can protect the farmer’s from losing their lands, build better credit sources and help the agri households to maintain a minimum produce, matching with the market competitiveness.

Recently one of the statements released from the World Bank lauded the governments initiative of the Aadhaar as the proudest methods of inclusion as a benefitting social protection measure. The Aadhaar initiative of the government is now gradually focussing on linking every welfare safety net programme to it, shaping a newer pathway of a digitally progressive India. Linking the UID to a pool of centrally sponsored welfare schemes like the PDS or the mid-day meals (MDM) might exclude the most primitive rural pockets from claiming their rights to subsidized goods and commodities.

The system of welfare digitisation in India hasn’t institutionally yet become a feasible process which can support massive numbers of beneficiaries linking them to their incentive and subsidiaries. Several pilot projects in the most backward pockets, have pointed out the fact that unorganised rapid changes in the schemes targeted for the rural population might unbalance the entire rural welfare system into a disintegrated non-homogenous landscape.

The entire agenda behind a strong welfare system is so that it can protect and stabilise the needs of the most backward and primitive groups or communities while promoting their paths to development. The Indian economic architecture is raising concerns of becoming a non-targeted reform structure that is not practising the needs of the most involved groups like the rural sectors of agricultural and other workers. These households need better opportunities changes in the existing welfare scenario to protect their rights of land, livelihood and living.

In the pretext of total fiscal management and responsibility, the government should not make the welfare scenario non-participating for the small and marginal rural pockets.