Abstract

Social Safety Nets are policies or schemes of the government directed towards providing assistance for the marginalised and backward sections of society. It seeks to provide them security from exploitation in the economic, social, and political spheres. The objective of this research paper is to examine the effectiveness of numerous social safety nets designed to alleviate poverty in India.  This paper will comprehensively study the effect of these government initiatives in promoting financial inclusion and economic upliftment among the poor. It provides an overview of approaches addressing specific aspects of poverty to combat its various causal factors  – such as subsidies in certain industries and on essential commodities, direct cash transfers, welfare payments, and employment guarantee acts  to name a few. It seeks to understand the outcome of the implementation of vocational training in an attempt to build human resource capital as a means to uplift people from poverty. In the process of evaluating the success of these schemes  in achieving their objective, the paper also aims to bring to light the challenges en route to effective implementation of these policies. This study offers an extensive insight into the complexities of solving the problem of poverty in India and the challenges obstructing a holistic development and upliftment of economically weaker sections of India.

Introduction

Social Safety Nets are non-contributory transfer programs that aim to support and provide assistance to those sections of society that are vulnerable to facing economic hardship. Examples of safety nets include cash transfers, food distribution schemes, general price subsidies, and employment guarantees, to name a few. The concept of social safety nets emphasises the role of government investment in human development in order to ensure greater economic equality, equitable wealth distribution, and social mobility, which is vital for sustaining a prosperous growth cycle. 

In India, the primary focus of Social Safety Nets is to alleviate poverty, one of the biggest factors causing the country’s  underdevelopment. India is home to 28% of the world’s poor population—the second largest number of poor households in the world. These policies targeting the poor aim to provide them with basic necessities such as food, cash, employment and other subsidies, with the intention of maintaining minimum level of household consumption, preventing hunger, and reducing poverty. Social Safety Nets and their effective implementation are of utmost importance, as they also offer a means to optimise India’s sizable population by investing in and building human capital in the form of a resilient and skilled labour force. 

The successful implementation of these schemes are met by various hurdles. Inadequate availability of data, issues with targeting, leakages, fraud and theft, corruption and diversion all obstruct these policies from significantly impacting those who require its provisions. Various problems also arise from the planning and decision making process of these policies. According to a report by the World Bank, India spends just about 0.72 per cent of the Gross National Product (GDP) on social safety net programmes. The report, however, does not include the public food distribution system as a social safety net programme, on which India spends 0.6 per cent of GDP. These issues are a serious hindrance towards achieving the goal of poverty alleviation.

According to data from the World Bank, over 350 million individuals are supported by social safety net programs across the world. The crisis caused by the COVID 19 pandemic encouraged the large-scale introduction and implementation of social protection schemes in many countries. An estimated 36% of the poorest people were able to escape extreme poverty with the help of social safety nets, adding credibility to their impact in reducing poverty. Data shows that these programs lower inequality, and reduce the poverty gap by about 45%. Both middle income as well as low income countries from several diverse regions in the world have benefitted from social safety nets.

Success stories of social safety schemes from some of the most economically backwards regions, such as the Sahel in Africa, South America, and the Middle East, are evidence for the positive impact of social safety nets.

Social safety nets in Egypt cover 2.26 million households, with 88% of the beneficiaries being women. They include programs that provide conditional pensions to vulnerable families, and non-conditional pensions to the elderly, disabled and orphans.  Populations affected by extreme drought and disaster in  Lesotho, Madagascar, Malawi and Mozambique are assisted primarily using cash transfers. During the pandemic,  45 countries in Sub-Saharan Africa, had introduced social safety net programs, to support vulnerable populations, reaching 100 million individuals. Cash transfers were also provided in Madagascar to over 80,000 poor households while promoting nutrition, early childhood development, children’s school attendance and productive activities of families. Ethiopia’s Productive Safety Net Program reaches about 8 million people in poor and chronically food insecure households. It combines cash transfers with training and savings groups, helping with the skill development of the people. The direct effect of the payments has reduced poverty by 7%.

The Juntos cash transfer program in Peru helped address chronic malnutrition, reducing childhood stunting rate in half in just 8 years, from 28% in 2008 to 13% in 2016.

Even developed countries are shown to have benefitted from social safety nets. Census data from the USA in 2021 shows that safety net programs such as unemployment insurance benefits and the Child Tax Credit were responsible for poverty rates being lower in 2021 as compared to before the COVID-19 pandemic. Social Security had the most significant impact in lowering poverty in 2021, with the number of people in poverty being reduced by 26 million. Policy expansions including refundable tax credits, such as the earned income tax credit (EITC) and Child Tax Credit (CTC), as well as the economic impact stimulus payments also reduced the number of people in poverty by roughly 10 and 9 million people respectively.

In May 2020, The World Bank approved a package of  $750 million to enable immediate cash transfers to 320 million bank accounts as well as provide food rations for about 800 million individuals in India through the pre-existing safety net program of Pradhan Mantri Garib Kalyan Yojana, (PMGKY).  84% of India’s poorest households received at least one benefit of the PMGKY, 77.5% received food grains, and almost 80% received direct cash benefits through the Prime Minister’s Jan Dhan Yojna (PMJDY) bank accounts. Data from the Ministry of Finance shows that as of Sept 7 2020, more than 42 crore people had received financial assistance of 68,820 crore under Pradhan Mantri Garib Kalyan Package.

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