61275 v1 @2011 The International Bank for Reconstruction and Development/The World Bank 1818 H Street, NW, Washington, D.C. 20433 USA Disclaimer This report has been discussed with the government of India but does not bear their approval for all its contents, especially where the Bank has stated its judgment/opinion/policy recommendations. The findings, interpretations and conclusions expressed in this paper are based on staff analysis and recommendations and do not necessarily reflect the views of the Executive Directors of The World Bank. Rights and Permissions The material in this work is copyrighted. Copying and/or transmitting portions or all of this work without permission may be a violation of applicable law. The International Bank for Reconstruction and Development/The World Bank encourages dissemination of its work and will normally grant permission promptly. All queries on rights and licenses, including subsidiary rights, should be addressed to the Office of the Publisher, The World Bank, 1818 H Street, NW, Washington, DC20433, USA, fax: 202-522-2422, email: pubrights@worldbank.org. Photo Credits Source: World Bank, New Delhi Sunai Consultancy (P) Ltd., Patna, Bihar Designed and Printed by Macro Graphics Pvt. Ltd. www.macrographics.com Acknowledgements This report, in two volumes, was prepared at the Kennedy School of Government), and Mamta Murthi request of Government of India. Volume II contains the (ECSHD). full detailed report with all analyses and findings, while Volume I is a more condensed version highlighting The report draws on background papers prepared by main conclusions. The report team was led by Philip N.C. Saxena (Anti-Poverty Programs), Mahendra Dev, O'Keefe (EASSP, then SASSP), and the core team K. Subbarao, C. Ravi, and Prof. Galab (Safety net program included Puja Vasudeva Dutta, Mohammed Ihsan performance, drawing on the three state SP survey), Ajwad, Kalanidhi Subbarao, Robert Palacios, Rinku Puja Vasudeva Dutta (Poverty and vulnerability; Social Murgai, and Dina Umali-Deininger. Mansoora Rashid, pensions), Martin Ravallion and Rinku Murgai (ex-ante Sector Manager Social Protection for South Asia, simulations for MGNREG), Soumya Kapoor and Vidhya guided its preparation, and Julian Schweitzer was Soundararajan (MGNREG program performance), the then Human development Sector Director. The Sumita Chopra (Smart cards) Mohammed Ihsan Ajwad report was thoroughly updated by Philip O'Keefe, Puja (national SP program performance, drawing on the Vasudeva Dutta, Robert Palacios and John Blomquist IHDS data), Rinku Murgai and Jyotsna Jalan (2002 BPL in 2010 to reflect recent developments in Social System; Social pensions); Dina Umali-Deininger and Protection (SP) policy and programs, more recent data for some programs, and government feedback. Vidhya Klaus Deininger (PDS), Robert Palacios and Sangeeta Soundararajan provided extensive research support to Goyal (Social security for unorganized sector); Navolina the team during revisions to the report. Renu Gupta, Patnaik (Welfare funds); Philip O'Keefe (Workfare and Savita Dhingra and Tanusree Talukdar provided team social security); Jayashree Balachander, Philip O'Keefe support throughout preparation. Peer Reviewers are and Puja Vasudeva Dutta (SP review for Jharkhand); Shubham Chauduri (EASPR); Lant Pritchett (Harvard R. Badiani, S. Dercon and P. Krishnan (chronic and transient Acknowledgements poverty, capture in development programs, drawing development, GoI), Dr. Pani (then Secretary Rural on ICRISAT data) and S. I Rajan (Social pensions). It has Development, GoI), Arjun Sengupta, K.P. Kannan, also benefited greatly from two surveys: (i) a national and Ravi Srivastava (NCEUS), Amita Sharma (Joint survey conducted by NCAER in 2005 in collaboration Secretary, MoRD, GoI), Neelam Sawhney (Joint with the University of Maryland. This was a survey of Secretary MoRD, GoI), Abhijit Sen (Member, Planning many human development issues and included a Bank- Commission), Santosh Mehrotra (then Advisor, financed set of safety net questions. The team is most Planning Commission), Anil Swarup (DG, MoLE, grateful to Amaresh Dubey (then NCAER) and Professor GoI), Mr. Prashant (then Director, DEA, GoI), K. Raju Sonalde Desai (University of Maryland) for their efforts (then Principal Secretary Rural Development, GoAP), in producing the data and insights into the survey Pronab Sen (Chief Statistician and Secretary, Ministry process, and to Suman Bery (NCAER) for support; and of Statistics and Programme Implementation, GoI), (ii) a three-state SP survey commissioned for this report. A. Mishra (then Special Secretary Planning, GoUP), This was carried out by AC Nielsen ORG-MARG under R.V. Singh (Secretary Planning, GoO), A. Singh (Secretary the leadership of Sumit Kumar, and with inputs and Social Welfare, GoR), Dr. Sharma (Secretary Food, GoO), oversight by a team from Centre for Economic and Social K. Saha (then Secretary Food, GoB), A. Mukerkji (then Studies, Hyderabad, led by Professor Mahendra Dev, Principal Secretary, Rural Development, GoB), and and including Professors C. Ravi and Galab. Kalanidhi many other officials at state and district levels. Others Subbarao was also a key participant in design and who provided their time and insights included Alakh analysis. The study was financed from a DFID Trust Fund, Sharma (IHD Delhi) and Geeta Unikrishnan (DFID, support from which is gratefully acknowledged. New Delhi), Marc Socquet (ILO, New Delhi), Robert Jenkins, Ramya Subramanian, Annemieke Burkmeister The scope of the report was defined following a launch and Rajib Ghosal (UNICEF, New Delhi and Lucknow), workshop in New Delhi in late 2004, which was jointly and World Bank colleagues Shonali Sen, Gaurav organized with Government of India, World Bank, Datt, Christine Allison, Maitreyi Das, Tara Vishwanath, and World Food Program, in particular with Nisha Sumita Chopra and colleagues in the South Asia Social Srivastava. The report has also benefited enormously Protection group. The report has also greatly benefitted from interactions with and feedback from a range of from formal comments received from the Ministries Government of India and state level officials, and with of Rural Development (September 2008), Consumer researchers and civil society representatives. They Affairs, Food & Public Distribution, Panchayati Raj and include Renuka Vishwanathan (then Secretary Rural Labour and Employment (April 2010). Regional Vice President Isabel Guerrero, SACVP Country Director N. Roberto Zhaga, SACIN Sector Director Michal Rutkowski, SASHD Sector Manager Mansoora Rashid, SASSP Task Team Leader Philip O'Keefe, EASSP (then SASSP) Social Protection for a Changing India: Volume I Acronyms AABY Aam Aadmi Bima Yojana AAY Antyodaya Anna Yojana ACA Additional Central Assistance APL Above Poverty Line BPL Below Poverty Line CAG Comptroller and Auditor General CBO Community-based Organization CCT Conditional Cash Transfer CSS Centrally Sponsored Scheme CSO Civil Society Organization DEA Department of Economic Affairs DPC District Planning Committee DRDA District Rural Development Agency EPFO Employees Provident Fund Organization FCI Food Corporation of India FM Financial Management FPS Fair Price Shop GDP Gross Domestic Product GoB Government of Bihar GoD Government of Delhi GoI Government of India GP Gram Panchayat GoR Government of Rajasthan GoUP Government of Uttar Pradesh HD Human Development HH Households IAY Indira Awaas Yojana ICDS Integrated Child Development Scheme ICRISAT International Crops Research Institute for the Semi-Arid Tropics ICT Information and Computer Technology IEC Information and Education Campaign IRDA Insurance Regulatory and Development Authority Acronyms JBY Janshree Bima Yojana LIC Life Insurance Corporation of India LPG Liquified Petroleum Gas M&E Monitoring and Evaluation MDM Midday Meal MEGS Maharashtra Employment Guarantee Scheme MFI Micro-finance Institution MIS Management Information System MKSS Mazdoor Kisan Shakti Sangathan MOLE Ministry of Labour and Employment MoRD Ministry of Rural Development NCEUS National Commission on Enterprises in the Unorganized Sector NFFWP National Food for Work Program NGO Non-governmental Organization IGNOAPS/NOAPS Indira Gandhi National Old Age Pension Scheme MGNREGA Mahatma Gandhi National Rural Employment Guarantee Act NRLM National Rural Livelihood Mission NSAP National Social Assistance Program NSS National Sample Survey JNNURM Jawaharlal Nehru National Urban Renewal Mission OBC Other Backward Classes PDS Public Distribution System PEM Public Expenditure Management PEO Performance Evaluation Office PFMA Public Financial Management and Accountability PMGY Pradhan Mantri Gramodaya Yojana PMT Proxy Means Test POS Point-of-service PRFDA Pension Fund Regulatory and Development Authority PRI Panchayati Raj Institution RBI Reserve Bank of India RSBY Rashtriya Swasthya Bima Yojana RD Rural Development SC Scheduled Caste SFC State Food Corporation SGRY Sampoorna Grameen Rozgar Yojana SGSY Swarnajayanti Gram Swarozgar Yojana SHG Self-Help Group SJSRY Swarna Jayanti Shahari Rozgar Yojana SP Social Protection SRM Social Risk Management ST Scheduled Tribe ULB Urban Local Bodies UTI Unit Trust of India UWEP Urban Wage Employment Program VAMBAY Valmiki Ambedkar Awaas Yojana v Social Protection for a Changing India: Volume I Table of Contents Executive Summary vii Chapter 1: Policy Reform in Social Protection 1 Chapter 2: Improving Implementation: Protective Programs 7 Public Distribution System (PDS) 8 Social Pensions 17 Targeted Housing Programs 18 Chapter 3: Improving Implementation: Public Works and Promotional Programs 21 Public Works 21 Programs to Promote Movement Out of Poverty in the Short and Long Run 25 Chapter 4: Social Security: Closing the Coverage Gap 27 Chapter 5: Financing and Institutions for Social Protection 31 Financing of SP Programs 31 Institutional Roles for SP Programs 33 Chapter 6: Social Protection Program Administration 35 Awareness and Outreach 35 Applications Process 36 Financial Management 37 Payment Systems and Record Keeping 37 Monitoring and Evaluation 38 Chapter 7: Targeting Mechanisms 39 Improving Geographic Targeting 40 Improving Household-level Targeting 41 Other Reform Options 45 Chapter 8: Political Economy of Social Protection Reform 47 References 49 Table of Contents v List of Tables Table 1: Major central social protection schemes, 2009 x Table 2: Summary of SP program performance (all-India) xiv Table 1.1: Major central social protection schemes, 2009 4 Table 2.1: Share of PDS grains captured by consumption quintiles, 2004/05 9 Table 2.2: Planning commission estimates of BPL grain leakage in PDS, early 2000s 9 Table 2.3: Household coverage rates and benefit incidence of social pensions by wealth, location and social category, 2004/05 (%) 17 Table 3.1: Coverage of MGNREG using administrative data, 2006/07 to 2008/09 22 Table 4.1: Selected insurance and pension programs of the unorganized sector 28 Table 7.1: Type of targeting by SP programs 39 List of Figures Figure 1: Correlation between major CSS SP program share in total allocations (LHS) and releases (RHS) by state and state share of total poor/poverty rate, 2004/05 xii Figure 2: Diversion and leakage of BPL PDS grains (as % of total) by state, early 2000s xiii Figure 3: Share of poor household by state misclassified as non-poor by 2002 BPL method xvii List of Boxes Box 2.1: Smart cards in food programs 14 Box 3.1: Some state-level innovations in implementing MGNREG 23 Box 6.1: Community monitoring of social programs: Experience from Rajasthan and AP 36 Box 7.1: International experiences with proxy means testing 43 v Social Protection for a Changing India: Volume I Executive Summary The SoCial PRoTeCTion of the social protection system. India's SP system is one which has the resource base and institutional capacity ConTexT in inDia of a lower-middle income country, but expectations from its population and the political establishment that india's surge in growth and rapid expansion in increasingly approach those of a middle income power. public spending in the past decade has created new Matching fiscal and institutional capacity with societal possibilities for its social protection system. The expectations will be a major challenge for policy makers growing importance of social protection (SP) is reflected in the coming decade. While sustained spending in the Government of India (GoI) Common Minimum increases on SP have been seen in recent years and Program and 11th Five Year Plan which commit to should continue to be possible with robust growth, a institutionalization of programs as legal rights (as in challenge will be to avoid the growth dividend being the case of public works, through the National Rural diluted on programs which do not effectively address Employment Guarantee Act), continued upscaling of the needs of India's poor. interventions (e.g., social pensions and midday meals), and proposals to expand new types of SP interventions while the indian economy has undergone a sea-change to the large unorganized sector (e.g., social security). since the 1970s, the country's social protection Increased resources and political priority for social policies and implementation practices have only in very recent years begun an overdue transition. protection are at the core of India's 11th Plan commitment to a more inclusive growth model. Social protection systems need to evolve to meet the needs of their populations and developments in in addition to presenting opportunities, india's the economy. In this respect, the policy mix of the SP growth has raised expectations from the population system has until very recently been to a significant Executive Summary v extent founded on the needs of the India of the 1970s.1 one of considerable dynamism in the SP arena in India This was a period when around half the population was when compared to the preceding decades. Notably, chronically poor, the country was in aggregate food MGNREG represents a qualitative leap in the design and deficit and importing grains, private market channels execution of public works, a commitment which has for grains were very under-developed, the financial and been matched with massive resources. While still in an banking infrastructure had minimal rural penetration, earlier stage of development, the RSBY health insurance growth was consistently low, technologies available for program for BPL households is path-breaking in its program administration were rudimentary, and only design and has pioneered approaches to delivery which around one fifth of the population lived in urban areas. provide a model for other public programs. There has In much of the country, the scenario is quite different also been overdue but increasing recognition that some to the 1970s, which creates new opportunities to parts of the SP system have serially under-delivered and realize significant equity and efficiency dividends from need fundamental overhaul, as seen for example in the SP reforms. reforms of SGSY under the aegis of the National Rural Livelihoods Mission and the ongoing debate on the PDS while poverty has gradually reduced in recent in the context of the Food Security Bill. decades, vulnerability remains high, new sources of vulnerability have emerged, and the diversity of however, while the momentum of sp reform has been needs among the poor has increased. Since the 1970s, positive in recent years, there is a strong need to the poverty headcount has fallen from around one take the lessons of success from individual programs half of the population to closer to one quarter, though and from the experience of states as a basis for more poverty rates remain significantly higher in several fundamental transformation of the sp system in its lagging states. With increasing urbanization, the share relevance, efficiency and welfare impacts. Despite of the urban poor in total has also increased, particularly recent progress, India is not getting the "bang for the in small and medium towns. In addition, a large rupee" that its significant expenditure would seem to proportion of households, both poor and non-poor, warrant, and the needs of important population groups may be vulnerable to poverty even though they may remain only very partially addressed. This has several not be currently poor. Variability of incomes and coping elements. Firstly, PDS continues its long term pattern of with recurring shocks are a common feature, especially consuming large resources with huge inefficiencies and among poor households. Despite these developments, leakage, and "promotional" SP programs (e.g., SGSY) SP spending remains focused on programs to alleviate have not performed as expected in much of the country. chronic poverty, and focused overwhelmingly on rural Secondly, the needs of the growing number of urban areas. Divergence in income and social indicators across poor remain inadequately addressed, and initiatives and within states has also increased the diversity of such as JNNURM have not proven effective in reversing social protection needs in different parts of the country, the situation. Similarly, the system is largely unprepared including growing needs among the urban poor.2 Basic to address the needs of mobile populations, a group subsistence needs and services remain the priority which is likely to continue to grow as economic reforms in some areas, while other areas are facing second deepen. Thirdly, identification of the poor people who generation challenges of expanding SP instruments to the SP system seeks to prioritize remains problematic, deal with economic modernization, and the new risks with major issues in design and implementation of the and vulnerability it brings. BPL system. Fourthly, execution is a perennial challenge the authorities at central and state levels recognize and one where progress is slow. Innovations in delivery the need for a more effective and relevant social systems in terms of ICT use, increased social and protection system, and there has been considerable community engagement, and other features remain innovation on sp policy and delivery systems in piecemeal, both in program terms and geographic recent years. The period since the mid-2000s has been penetration. However, this variable SP program 1 Saxena(2006)documentstheevolutionofprogramssincethe1960s. 2 SeetheWorldBank'sIndiaPovertyAssessment(2011)forevidenceondivergenceacrossthecountryinkeyindicators. v Social Protection for a Changing India: Volume I implementation experience across states offers valuable lessons for the future. The FRamewoRk FoR looking it thus seems timely to look at where india's sp system aT The SP SySTem has come from, where it stands, and where it might the report organizes the discussion of sp policies and be expected to move in the coming decade. The report programs according to terminology widely used in deals with two key elements of India's social protection india.5 the three main pillars of sp programs in this system: safety net policies and programs, and social typology are: security for the unorganized sector.3 It has been prepared "promotional" measures, which aim to at the request of Government of India, which requested improve incomes, both in the short to medium a review to assess which SP programs work best, which term (through livelihood interventions) and are less effective, identify gaps and overlaps, and in the longer run (through human capital suggest reform options. In response, the objectives of interventions). In the context of this report, the the report are to: (i) review trends in poverty, inequality key programs in this area are SP interventions and vulnerability in India; (ii) evaluate SP program to support investments in human capital (e.g., performance ­ including both safety net programs and stipends; midday meals; conditional cash social security for the unorganized sector - according transfers), and targeted credit and livelihood to: (a) a coherent social protection policy framework; programs for the poor. Public works programs (b) empirical indicators of performance, including can be viewed as a hybrid of promotional and awareness, coverage, adequacy and benefit incidence, and preventive measures. (c) financing, administrative, and institutional systems; and "preventive" measures, which seek to avert (iii) provide recommendations for improving the ability to reach the poor with more effective public spending, deprivation prospectively by supporting private participation and stronger administration. households to manage different risks and shocks ex ante. The main preventive instruments the report draws on existing and new data sources, . addressed in this report are public social insurance including analysis of: (i) administrative data; (ii) several programs for the unorganized sector. rounds of the National Sample Survey (NSS) data; "protective" measures, which provide relief (iii) the 2004/05 Human Development Profile of India against deprivation ex post to the extent that survey (undertaken by NCAER and the University of the other two sets of measures fail to do so. This Maryland), which included a World Bank-financed could address those falling into poverty as a safety nets module and was representative nationally result of shocks, and/or for the chronically poor. and for major states; (iv) a social protection survey The main protective public programs in the (SPS) undertaken for this report in 2006 in rural areas of report are PDS, social pensions, and targeted Orissa, Madhya Pradesh and Karnataka; (v) dedicated housing programs for the poor. In the private surveys on social pensions in Karnataka (KSPS) and arena, such strategies would include sale of Rajasthan (RSPS) in 2005 and 2006 respectively; household assets, reduction in consumption, (vi) a living standards survey conducted in Jharkhand running down savings, or taking children out in 2005 (JLSS).4 In addition, the report incorporates of school. a rich body of secondary sources on SP program performance and impact by national researchers and this typology is similar to the social risk management Government agencies. (srm) framework commonly used by the world bank 3 Whilelabormarketpoliciesareanimportantelementofsocialprotection,theyarenotthefocusofthisreport.Forarecentstudyonlabormarkettrendsand policiesinIndia,seeAhmedandNarain(2010). 4 Annexes 1 and 2 give details of the HDPI and the SPS surveys. The HDPI survey data is publicly available at http://www.icpsr.umich.edu/icpsrweb/ICPSR/ studies/22626,seealsoAjwad(2006)andDevetal(2007). 5 DrèzeandSen(1989);Guhan(1994);SeealsoGentilini(2005)foradiscussionoftheseconcepts.Inthefollowingdiscussion,"socialprotection"referstopoliciesand programsunderallthreeofthesepillars;"safetynets"refertoprotectiveandpromotionalmeasureslargely;"socialassistance"referstoprotectiveprogramsonly; and"socialinsurance"and"socialsecurity"areusedinterchangeablytorefertoinsurance-basedprograms. Executive Summary x and familiar internationally.6 The SRM approach . is based on the insight that individuals, households key FinDingS and communities are exposed to multiple risks, both while india's range of social protection programs is covariate and idiosyncratic, and that the poor are impressive for a developing country, the sp system particularly vulnerable to the manifestation of these risks in spending terms and priorities remains strongly in the form of shocks. Social risk management strategies focused on protective programs to mitigate chronic can be grouped into three broad categories, each of poverty, and on rural areas. This can be seen in which involves a mix of reliance on public interventions, Table 1. While a primary focus on protective interventions informal arrangements, and market-based approaches: is understandable, the policy mix of the SP system (i) risk prevention strategies, which seek to reduce the has not to date responded to the evolution of living probability of adverse shocks occurring.Such strategies standards as much as might have been expected.There may be at the macro level, such as labor policies are three areas where the evolution of SP programs and which increase employment growth, or investments spending has been less and/or later than one might at household level in human capital or livelihood have expected: promotion; (ii) risk mitigation strategies, which help to reduce the impacts of shocks ex ante when such shocks insurance-based interventions remain in their are unavoidable. The classic example of this is insurance infancy in terms of coverage of the unorganized against low income in old age, or health insurance sector, though RSBY is an exciting and rapidly in the inevitable event of serious health events; and expanding initiative which can provide a way (iii) ex post "risk coping" strategies, which seek to mitigate forward. Expanding informal sector coverage the impacts of shocks after they have occurred, which of social insurance is a challenge that India has would classically be social assistance programs, whether had relatively limited success with until very in kind or cash. recently, despite a series of central and state- Table 1: major central social protection schemes, 2009 allocation (2009/10) Primary objective; Scheme Type Description (` crore) benefit (cash/food) Public Distribution Subsidized Subsidized wheat and rice, plus 42,490 for food; Protective System (PDS) food and fuel kerosene and sugar in most states. distribution Level of subsidy varies according 2,866 for to whether APL, BPL, AAY or kerosene/LPG Annapurna household. Food/fuel Mahatma Gandhi Self-targeted public Unskilled and low skill public MGNREG: Protective (and National Rural works works. MGNREG guarantees 100 preventative) Employment days employment per rural HH 30,100 Guarantee (MGNREG) per year in all districts. SGRY had aimed for 100 (non-guaranteed) days in rural districts, with a cash MGNREG: Cash and food component. After 2006 (formerly food and cash SGRY was limited to non-MGNREG under SGRY) districts, but was discontinued in 2008. Swarnajayanti Gram Targeted credit Subsidized lending from banks 2,115 Promotional (short to Swarozgar Yojana scheme for to groups of BPL people, with medium term) (SGSY) groups and some allowance for some individual individuals lending, and small APL share in groups. Cash (credit) 6 SeeHolzmannandJorgensen(2000)foranelaborationoftheSRMframework. x Social Protection for a Changing India: Volume I allocation (2009/10) Primary objective; Scheme Type Description (` crore) benefit (cash/food) Indira Gandhi National Non-contributory Monthly cash benefits for BPL 5,109 Protective Old Age Pension social pensions elderly (originally called NOAPS Scheme (IGNOAPS) Annapurna until renaming to IGNOAPS and expansion in 2007), and state schemes for widows and disabled people (since 2007 also included in the central Indira Gandhi pensions Social pensions: Cash program). Annapurna: Food Indira Awaas Yojana Targeted rural Subsidies for rural BPL with 7,920 Protective (IAY) housing inadequate housing for housing construction. Cash for housing Midday meals School feeding Hot meal for children in grades 8,000 Promotional (long term) program 1-8 in government and aided schools. Food Schools stipends Stipends for school Some central and some state ­ Promotional (long term) enrollment schemes for various target groups, including SC, ST, some categories of girls, disabled. Cash Rashtriya Swasthya Subsidized and Subsidized health insurance 350* Preventative Bima Yojana (RSBY) targeted health for hospitalization for BPL insurance households (and MGNREG) in 26 Cash districts. Aam Admi Bima Life/disability/ Free insurance covers natural ­ Preventative Yojana (AABY) accident insurance death, disability and accident for for BPL rural landless households. Cash Social insurance for Subsidized social Variable by state, though central 270 Preventative unorganized workers insurance welfare funds for select sectors (e.g. beedi workers). Mixed Specific urban anti- Targeted urban Housing construction and 535 Protective poverty programs housing (VAMBAY) upgradation for slum dwellers, and employment and wage and self-employment for the poor (SJSRY) programs for unemployed or underemployed urban poor. Cash Source: Bank staff and Government of India budget documents 2009/10 and 2008/09. RSBY allocation refers to 2008/09. specific schemes. This has been a product of poor promotional interventions in the public sector design, inadequate attention to institutional continue to receive relatively little emphasis, and implementation arrangements, and a "start- particularly given the continuing challenges stop" approach to new initiatives. Of course, such in improving human capital outcomes. expansion is not easy, and many developing Overall, safety nets in India remain primarily countries have struggled to expansion social "nets" rather than "ropes" or "ladders" which insurance coverage in the face of large informal seek to promote sustained movement out of sectors.7 poverty.8 7 SeeO'KeefeandPalacios(2006)foradiscussionofinternationalexperience. 8 SeePritchettetal.(2002)foradiscussionofthesedistinctions. Executive Summary x otherthanPDS,SPinterventionsinurbanareas be hoped for a variety of reasons. In household are negligible and even more strongly biased terms, in 2004/05, total spending allocated per poor towards protective interventions. With the rural household nationally on major CSS SP programs combination of urbanization and slower rates was significant, at around `9065 (about 40 percent of urban poverty decline, the urban poor are a of the annual rural poverty line) Despite this, impacts growing share of all poor people. Despite this, on the poor as measured by survey-data appear to be per capita SP spending on the poor remain much lower. A first reason for this is that the absorptive heavily biased towards rural areas, and the capacity of poorer states is typically low. They are not promise of JNNURM as a vehicle for transforming able to utilize all funding available given limitations the situation in this regard has to date failed to in administrative capacity. SP CSS allocation formulae be realized in any significant measure. are redistributional, however, providing more funds there remains a strong emphasis on food-based to states which have higher poverty, but which have support which is subject to major governance the lowest capacity to spend effectively. This results and implementation problems and which is of in pro-poor allocations with regressive actual releases questionable relevance for many among the of SP funds across states (Figure 1). Such patterns are poor whose non-food spending needs are an then exacerbated at the sub-state level in many cases, increasing source of pressure. At the same time, and finally at the household/delivery level through food programs remain important for certain misidentification of beneficiaries, and a range of groups, in certain chronic food deficit areas and implementation problems. at certain times in other areas. These issues are in programmatic terms, the main driver of poor cost currently being debated in the context of the effectiveness and impacts of india's safety net is its Right to Food legislation. largest program ­ the public distribution system (pds). While it consumes almost 1 percent of GDP and has wider Safety nets coverage than other safety net programs - between 20-25 percent of the population in the mid-2000s based while india spends significant resources on its core on actual drawing of grains by beneficiaries, and closer safety net programs ­ over 2 percent of gdp in to 40 percent based on administrative numbers on BPL recent years ­ the returns to spending in terms of households - its impact on the poor is very limited in poverty reduction have been much lower than could many states, particularly a number of lagging states. Figure 1: Correlation between major CSS SP program share in total allocations (LHS) and releases (RHS) by state and state share of total poor/poverty rate, 2004/05 60 25 50 20 Poverty share (%) 40 15 HCR 30 10 20 5 10 0 0 0 2 4 6 8 10 12 14 16 18 20 0 2000 4000 6000 8000 10000 12000 14000 Allocation share (%) Central release per poor rural HH Source: GoI, various years for program expenditure; Sen and Himanshu (2007) for poverty estimates. Notes: Programs included: PDS, SGRY/NFFW, SGSY and IAY. HCR refers to head count poverty rate. x Social Protection for a Changing India: Volume I This is due to a combination of high leakage of grains guarantee act (mgnrega) in 2006. In philosophy, this is a (estimated by the Planning Commission to be around major innovation in taking a rights-based and demand- 58 percent nationally in the early 2000s and even driven approach, guaranteeing all rural households up higher based on estimates using NSS data), a range of to 100 days public works employment per year at the demand and supply side issues in program design and agricultural minimum wage. The program also has a host implementation, and considerable leakage of subsidies of implementation innovations (e.g., social audits by to the non-poor. Although many of the shortcomings of communities of performance; a structured role for PRIs PDS and its very poor performance have been known in implementation; closer attention to the staffing needs for some time, it continues to absorb substantial public at lower levels of the system) which provide a model for resources with limited benefits for the poor. This limits future reforms of other SP programs. Administrative the fiscal options for more effective SP interventions data and field studies suggest both significant successes in the absence of PDS reform. At the same time, there relative to previous public works programs (e.g., high have been a range of state-level initiatives, national- coverage of rural households, with impressive inclusion level pilots, and proposals to improve the functioning of SC/ST and women workers) and many challenges in of PDS which have merit. In recent years, there has translating improved program design into outcomes for been increasing recognition of the need for reforming the poor, such as, matching demand for work with the the PDS as evident by the findings of the Wadhwa administrative demands of opening worksites; aligning Committee report and the ongoing debate around the piece rate compensation with the minimum wage Right to Food legislation and the recent proposal in requirement; strengthening mechanisms for community the 2010/11 Economic Survey in favor of direct subsidy participation in works identification and oversight. The (through food coupons) as opposed to the current diversity of implementation experience across states indirect subsidy. provides a rich opportunity for cross-state learning to achieve better and more transparent impacts. A number the most heralded reform of sp programs in of innovations in MGNREG design ­ including social recent years has been the introduction of the audits ­ seem worthwhile to mainstream in other anti- mahatma gandhi national rural employment poverty programs. Figure 2: Diversion and leakage of BPL PDS grains (as % of total) by state, early 2000s All-India WB UP TN Rajasthan Punjab Orissa Maharashtra MP Kerala Karnataka HP Haryana Gujarat Bihar Assam AP 0 20 40 60 80 100 % of BPL grains diverted and leaked Source: Planning Commission, GoI. Executive Summary x Social security for unorganized specialized agency. Setting up this agency is the key short run challenge for the RSBY. workers in addition to the rsby, a number of important insurance and pension programs are less developed changes to the social security landscape appear to be relative to safety nets and cover fewer than ten unfolding both in terms of program design as well as percent of the labor force. Despite repeated attempts delivery. The 2010 Budget includes a budget to finance to introduce new programs for unorganized sector a matching contribution of `1000 per annum to those workers over the years, insurance against life's major workers that voluntarily choose to contribute at least shocks such as health, old age, disability and death has that amount. This incentive, combined with the kind of not been available to the vast majority of the population. outreach typical of the RSBY program, could generate Recognition of this public policy gap led to the passage a significant increase in pension coverage for the first of framework legislation in December 2009 and the time in India. creation of a Social Security Board. the most promising effort in this area is the targeted administration and delivery of social health insurance scheme known as rashstriya swasthya bima yojana or rsby. This program now protection programs provides insurance for hospitalization for more than most safety net and social security programs in most forty million poor people and is growing rapidly. The states are characterized by a range of problems RSBY may be the first social sector program in India which also reduce their poverty reduction impact. that simultaneously takes into account the perspective There are different experiences with implementation of the poor, focuses on getting the incentives of the across SP programs and states. This includes programs various players that have to deliver the benefits which have wide coverage but are plagued by leakage right and encourages changes over time based of subsidies that limit the impact on the poor (e.g., PDS), on evidence. The experience of the first year or others which are well targeted and increasingly well so has been positive, particularly in terms of designed but face a range of implementation challenges demonstrating that the target population can be (e.g., public works - MGNREG), and still others which reached (despite the poor quality of the BPL list). appear to be well designed and with systems for better However, in no country has such a large health implementation (e.g., RSBY). Summary indicators of insurance scheme operated without the oversight of a program performance are presented in Table 2. Table 2: Summary of SP program performance (all-india) Coverage Bottom Benefit Spending (% of quintile as incidence evidence allocation relevant % of total (% to bottom of leakage hh rank population; beneficiaries quintile) outside Targeting Program 2008/09 2004/05) (2004/05) (2004/05) awareness beneficiaries mechanism (1) (2) (3) (4) (5) (6) (7) (8) Public 23.3% of all 27% 29.7% High High BPL Distribution 1 HH (APL and System (PDS) BPL) mahatma 2 33% of rural ­ ­ Substantial ­ Self-targeting gandhi HH national Rural (2008/09) employment guarantee (mgnReg) xv Social Protection for a Changing India: Volume I Table 2: Summary of SP program performance (all-india) Coverage Bottom Benefit Spending (% of quintile as incidence evidence allocation relevant % of total (% to bottom of leakage hh rank population; beneficiaries quintile) outside Targeting Program 2008/09 2004/05) (2004/05) (2004/05) awareness beneficiaries mechanism (1) (2) (3) (4) (5) (6) (7) (8) Sampoorna 5 1% of rural 43.4% 34.2% Low ­ Self-targeting grameen Rozgar HH yojana (SgRy) Swarnajayanti 7 0.8% of rural 32.9% 7.7% Low Intermediate BPL gram Swarozgar HH yojana (SgSy) indira gandhi 6 8.3 % HH 32.8% 31.1% Substantial Low Mixed national old with elderly age Pension (noaPS) annapurna ­ 1.7 % HH 51.9% 37.9% ­ Low Mixed with elderly widow pension ­ 6 .2% HH 43.2% 32.8% Substantial Low Mixed with widows Disabled ­ 14.1 % of HH 30.7% 27.6% ­ Low Mixed pension with disabled indira awaas 4 12.8 % of 28.6% 24.6% Substantial High BPL yojana (iay) rural HH midday meals 3 ­ ­ High ­ Government/ aided schools only Schools ­ 9.6 % of HH 22.6% 11.7% Low Low Various; stipends with children strong SC/ST school age focus Source: Ajwad (2006) based on the 2004/05 HDPI, except for PDS based on Bank staff estimates from the 2004/05 NSS 61st round. Awareness based on 2006 SP survey in three states; Leakage based on HDPI survey and NSS (for PDS) and GoI and CAG reports. Notes: l Col. 2: GoI budget data for spending allocation rank l Col. 3-5: Coverage and targeting indicators are based on national household survey data, namely the 2004/05 National Sample Survey for PDS and the 2004/05 Human Development Profile of India survey (NCAER-University of Maryland) for all programs except PDS. The only exception is coverage rates for MGNREG ­ these are based on administrative data for 2008/09. See also Ajwad (2006) for coverage and targeting indicators based on the 2004/05 HDPI. Note that coverage refers to the share of beneficiaries in the relevant population. For instance, coverage of old age pensions are estimated for households with at least one elderly (65 years and above) member; PDS coverage for all BPL and APL households; MGNREG coverage for all rural households, etc. l Col. 6-8: These are broadly summarized based on the findings of several GoI and other research studies, including those commissioned for this report. For instance, assessment of awareness among households of various SP programs draws on the Social Protection Survey in three states, the Jharkhand Living Standards survey, the Rajasthan social pensions survey, etc. Awareness levels: High = 70% + of population aware; Substantial = 40-70%; Low = < 40% aware. Assessment of leakage is based on comparisons of household survey data against administrative data as well as findings of CAG reports and other studies. l Population coverage: For NOAPS as share of HH with member. 65+, for Annapurna, for HH with member 60+; for widow pension, for HH with a widow; for disabled pension, coverage as share of census PWD rate in state; Awareness levels: High = 70% + of population aware; Substantial = 40-70%; Low = < 40% aware. despite such spatial and cross-program lack of coordination and overlap in delivery diversity, a number of common challenges emerge, of programs (both within and across levels of including: government), reduces accountability of those Executive Summary xv responsibleforSPservicedelivery.Lack of financial investment. The RSBY program indeed provides a and human resource capacity - most notably at "state of the art" example of how a well thought- the block and GP level but also at higher levels out and executed delivery model has the potential in terms of functions like strategic planning - to be transformative and provide a backbone for compounds the challenges of service delivery. other parts of the SP system to consolidate around As in many areas of service delivery in India, SP robust systems. programs suffer from incomplete alignment of for a number of programs, expansion of and the "3 Fs" (functions, funds, and functionaries) for innovation in the private sector has created a variety of reasons. Even where there has been possibilities for new modalities of Public Private progress in specific programs (such as MGNREG) Partnership (PPP) program delivery which have or states (such as Kerala), there remains a huge yettobeexploredfullybythepublicsector.Most unfinished agenda in "squaring the circle" in a SP programs remain dependent on the traditional sector that is dominated by centrally sponsored mode of publicly financed and delivered benefits. schemes operating in a broader environment of While for some programs (and/or in some constitutionally-mandated decentralization of geographic areas) market failures will continue service delivery. to make this the appropriate delivery mode, the maintenanceofa"onesizefitsall"SPprogram expansion of private sector players makes mixed andpolicymixfromthecentredoesnotrespond delivery options more feasible than in the past. to the growing spatial diversity in living Some programs such as MGNREG have successfully standards.While the insight that "India is a big partnered with civil society and communities for and diverse country" is a truism in public policy, program execution and oversight. Similarly, RSBY the CSS which continue to dominate SP policies has partnered with private sector providers for give states limited flexibility to tailor central program delivery. subsidies and programs to their diverse needs. a poorly designed and executed household While there has been progress in allowing targeting mechanism (the so-called BPL 2002 states flexibility at the margin in adapting methodology). The BPL method does not implementation specifics of some schemes, reflect good practice in design of proxy means- their overall SP policy mix remains largely testing mechanisms, and as a result in its design determined on a uniform basis by the centre, misidentifies almost half the poor as non-poor, more so in lagging states where own-resources and conversely almost half the non-poor as poor are limited. (Figure 3). In addition, empirical evidence on the basic "nuts and bolts" of program performance indicates that it typically performs administration and procedures in most states worse in targeting terms than other methods. In are far below the standards that could be contrast, methods such as self-targeting (in public possible given India's technological and human works), mixed methods of identifying the poor capital capacity. The report outlines a range (as in social pensions) have notably better of challenges where India has struggled to targeting efficiency and inclusion of the poorest, modernize SP program administration, including while some states rely on community wealth program outreach and awareness raising, the ranking and verification. applications process, public expenditure and financial management, record keeping and the emerging experience with some programs payment systems, and monitoring and evaluation suggests that problems in sp service delivery can as well as public-private partnerships. At the same be overcome. Despite the significant policy and time, the progress made in modernizing program implementation challenges facing SP programs, administration in states such as AP and under experience with programs (such as MGNREG and specific programs such as MGNREG suggests that RSBY) and/or in specific states across programs (e.g., a modern SP delivery system is an achievable goal AP, Kerala, Gujarat, TN) suggests that sufficient will and for India with sufficient commitment and modest attention to incentive structures of different service xv Social Protection for a Changing India: Volume I Figure 3: Share of poor household by state misclassified as non-poor by 2002 BPL method WB UP TN RA PU OR MA MP KE KA HP HA GU BI AS AP 0 10 20 30 40 50 60 70 80 90 100 % of poor HHs misclassi ed as non-poor Source: Jalan and Murgai (2008). delivery agents can improve the implementation of programs. While the above problems have SoCial PRoTeCTion FoR a characterized the safety net system for some time, the Changing inDia last decade has witnessed much greater innovation and experimentation by states in addressing perennial the report finds that significant reforms are needed challenges. The core challenges are therefore to with both respect to the medium term social protection create space for innovation by states and a feedback strategy and in implementation arrangements of loop, via the systematic collection of evidence on current programs. India needs to consider both the implementation, to the design of central SP policies vision and policy mix of social protection programs, and programs from best practice in the states. and how to improve implementation of its current and future programs. It suggests that India could significantly in recent years, increasing attention is rightly being improve and modernize its social protection system - in given to implementation, delivery and tracking both safety nets and social security ­ and in so doing help of benefits. A Committee has been charged with reduce chronic poverty and assist both poor and non- improving the flawed methodology for determining the poor households to manage risk better. A more effective BPL list and at least one state has already implemented social protection system would allow India to promote a new round. The Government of India is sponsoring an greater equity, i.e., to ensure the benefits of growth are unprecedented scale of biometrically based, national ID shared by the poor. It could also contribute to growth, through the Unique Indentification Authority of India by allowing individuals to make risk/return choices that (UIDAI) which could facilitate everything from financial contribute to higher productivity, enhancing dynamic inclusion for direct payments of benefits to verification of efficiency. Someofthekeymessagesare: identification for receipt of public transfers or MGNREGA wages. In parallel, many states are attempting to tighten verification and tracking of benefits in major programs Policy reform in social protection such as PDS, NOAPS and MGNREG through the use of biometric identification and the creation of a back-end there is a need to deepen the ongoing policy database that can track what happens on the ground. reorientation of the indian social protection system The challenge facing the country is to coordinate all of to meet the changing and increasingly diverse needs of these good initiatives towards minimizing duplication, its population. Marginal changes alone will not deliver converging on national standards for interoperability the kind of safety net which a changing India needs for and allowing for portability of benefits. its poor and for its economy.This would involve several Executive Summary xv elements: (i) a rebalancing of the policy mix across poor.The "big elephant in the room" in this respect different types of public SP priorities; (ii) consolidation is fundamental reform of PDS. The poor long of the large number of central and state schemes to run performance of the program in many states a core set of flagship programs; (iii) in the context of suggests that the medium term vision of a reformed consolidation, introducing an element of choice and PDS for most groups should be cash-based, though flexibility for states in the specific program mix of this would face substantial resistance in light of centrally-supported schemes that they operate; and the ongoing debate around the Right to Food (iv) in some areas and for some programs, actively legislation. A reformed PDS could still provide exploring the possibilities for leveraging the role of food-based support for specially vulnerable private players (both non-governmental and for-profit) groups (consistent with Supreme Court orders), in delivery of interventions. and in specific areas facing chronic or acute food shortages, but for most areas and most people, a in terms of reorienting the policy mix, the report cash-based social assistance system seems a more suggests several directions: efficient and transparent means of providing an increasingtheemphasisonpreventiveprograms income floor. An intermediate solution currently which help the poor and those vulnerable to being mooted in the 2010 Economic Survey is to poverty to manage risks and shocks better. This transfer the subsidy directly to households (rather implies a significant expansion in coverage of than the PDS store owner) through food coupons different social insurance instruments, though with a lumpsum entitlement that can be exchanged in a phased manner consistent with institutional at any PDS store. and fiscal capacity. Experience to date suggests in the face of demographic change and slower that phasing would benefit from: (i) starting with rates of poverty reduction in urban areas, starting simpler-to-administer insurance products such as toaddresstheneglectofurbansocialprotection life and permanent disability, while continuing to policy. While some of the needs of the urban pilot and evaluate experience with more complex poor are common to their rural counterparts, products such as health insurance; and (ii) for the possibilities (and constraints) of the urban reasons of ease of worker mobilization and to environment suggest that simple mimicking of control transactions costs, focusing initially on the rural models of SP programs and service delivery "low hanging fruit" of unorganized workers who mechanisms is unlikely to be an adequate are members of groups (e.g., MFIs, cooperatives, response. For example, the options for "voice trade union and worker associations, SHG accountability" of service providers which can federations) that could play an intermediary be mobilized in rural areas through collective function between workers and the state/insurers. community action are likely to be less possible rethinking programs which seek to promote in urban areas, while the possibilities for "choice movement out of poverty in two ways: firstly, accountability" (through income enhancement moving from administratively driven subsidized and offering options in service providers where credit to public financing of a more diverse range possible) are likely to be greater. The JNNURM of livelihood promotion approaches better suited program offers a base for larger reforms affecting to the labor market conditions of individual states urban policy, however closer consideration may as is currently being proposed under National be needed regarding support to specific SP policy Rural Livelihoods Mission (NRLM); and secondly implementation. considering the options for use of safety net the specific proposal of this report is that central transfers (see next bullet) to leverage participation sp programs over time aim for a "3 +block" strategy. in core education, health and possibly nutrition This would involve 3 core CSS SP programs or "pillars", services, in order to promote long term movement combined with an SP block grant from which states out of poverty. could finance other SP programs - or supplement movingtomoreconsolidatedandmorecash-based benefits under the core pillar programs - more social assistance programs for the chronically tailored to the poverty and vulnerability profile of the xv Social Protection for a Changing India: Volume I individual state. This would also involve significant vary according to state-level priorities, and include expansion in urban areas. This could promote both interventions such as livelihood support of different a more coherent and less duplicative SP system, but forms, targeted housing, interventions to incentivize use also give states more leeway to adapt the SP policy of basic social services, nutrition and/or early childhood mix to the needs of the poor in individual states in care (e.g., through conditional cash transfers as being light of available economic opportunities. The three piloted in some states), specific urban SP programs, core pillars proposed are: or other options as proposed by states. A secondary a major social assistance program. The obvious benefit of such an approach would be strengthening of candidate for this is a significantly reformed complementarities between CSS and state-sponsored PDS, merged for specific groups with existing schemes in order to control unnecessary duplication. social pension programs.9 This report details A common core national SP system under the three options for reform of PDS, with a preference for a pilars could promote portability of basic entitlements, predominantly cash transfer approach. and be increasingly useful as mobility of workers and households increases. a public works program, for which MGNREG would be the building block, as well as piloting in terms of promoting both more effective spending on expansion in urban areas. There are several sp, the "3+block" proposal would allow more cross- benefits of a reliable public works program at this program flexibility to states ­ or possibly districts - stage of India's development: (i) by its demand- in deciding their sp expenditure priorities, while still driven nature, it can be responsive to shocks in a maintaining a common national core sp system. It way that longer run programs typically can not. would also allow for greater adjustment in light of In this way, it functions as a "quasi-insurance" poverty levels and key vulnerabilities. This could be done program for the extended period during in a variety of ways, possibly using a menu approach to which more structured insurance is expanded SP programs, and a flexible form of social protection to the unorganized sector; (ii) the positive block or matching grant which consolidates resources targeting outcomes of self-targeted works; and from existing SP CSS.10 This is an approach which has (iii) the potential for multiplier effects from received increased attention in India in recent years as asset creation and community mobilization policymakers seek greater impacts from SP spending. distinguish public works from other SP Given current financing channels from the centre to programs. states in India, a more flexible granting mechanism for abasicsocialsecuritypackageforthoseoutside SP programs to states could take different forms ­ as a the formal sector which could be expanded more "bundled" anti-poverty CSS, as Additional Central in terms of coverage and scope of benefits Assistance (ACA) along the lines of programs like as institutional capacity and fiscal space is Pradhan Mantri Gramodaya Yojana (PMGY), or through a developed. The core types of insurance which more fungible realignment of Gross Budgetary Support GoI aims to expand include life, disability, old age shares between the states and central Ministries which pension, and health, and the RSBY program is control CSS.11 already an important step forward in this regard. the above approach would require close consideration The report provides suggestions on institutional, of the policy design of existing programs. The financing, sequencing and other aspects of an findings of this and other reports suggest that the expansion strategy. PDS require fundamental consideration of its current beyond the three "pillars", states could receive an design, SGSY is currently undergoing significant change additional transfer and implement state-specific and attention to implementation under NRLM, while sp interventions. How this is programmed could two others warrant experimentation to see whether 9 ThiswouldbesimilartotheChineseurbanandemergingruralsocialassistancesystem,whichisbuiltaroundthe"dibao"programwhichprovidescashbenefits tothepoor,andhasadditionalprovisionforspeciallyvulnerablegroupssuchasdisabledandunsupportedelderly.SeeWorldBank(2009b). 10 SeedeNeuborg(2002)foradiscussionofthestrengthsandweaknessesofdifferentblockandmatchinggrantmechanismsinthecontextofSPprograms. 11 SeeSaxena(2006)forahistoryofcentraltransfersforanti-povertyprogramssincethe1960s. Executive Summary xx innovative approaches can yield better outcomes than a second overarching need in such policy reorientation seen to date ­ IAY and school stipends. The other major will be greater willingness to experiment in program programs ­ public works and social pensions - would also design and base reforms on results of evaluations. benefit from policy improvements but these are more This will require changes in two tendencies of Indian in the nature of incremental policy reform which can be SP policy since the 1970s: firstly, what CAG has called expected in the normal course of program evolution. "rechristening and revamping" of programs at the Urban programs remain small, but pre-conditions expense of genuine experimentation and innovation, suggest that merely transferring rural SP models to and secondly a limited willingness on the part of the urban settings will limit potential impacts, and equally central government to give states (and in some cases, the that the SP system needs to explore stronger linkages sub-state level) a freer hand in adapting their policy mix with the livelihood opportunities available to the poor among programs, by allowing flexibility in adjustment in urban areas. of specific programs to suit their diverse circumstances. The experience of a number of developing countries a number of cross-cutting issues in policy evolution including Bangladesh in recent decades provides a of the sp system will also be important. These positive example of the social benefits of experimentation include cross-program convergence and consolidation, in SP policy. Closer to home, there is growing innovation willingness to experiment with new types of programs at the state level in India which demonstrates the value and modes of delivery, and more structured efforts to of such an approach, and the increased buy-in among build understanding of the benefits of reforms and politicians and administrators for innovations which are manage the political economy of the reform process. "home grown". An additional challenge will be ensuring increased attention in SP policies to the needs to the urban poor. a third overarching theme of policy reform is that These are discussed in turn below. "government cannot do it alone", and programs would benefit from appropriate partnerships with firstly, central and state-level policymakers will the non-government sector. This partnership could need to accelerate cross-program convergence and be in both policy formulation and the specifics of policy consolidation in policy and administration to make design. The "non-government sector" in this respect the system more understandable to the population, could range from communities themselves (in the form realize economies of scale in policy development of SHGs and other forms of CBOs), to the NGO sector, and administration, and simplify ongoing planning to the for-profit private sector in specific programs and execution of sp programs. This will require and functions. The design of MGNREG is a promising enhanced efforts of institutional coordination within example of such a reorientation of policy formulation and across levels of government and administration. and program design, with its clear roles for community Both at central and state levels, there seems a need for and NGO actors, and willingness to bring in private formation of an inter-departmental Task Force for Social sector expertise and research institutions on areas Protection which would promote coordination (and such as M&E. But there is room for much more active possibly reduce duplication) across targeted programs, engagement with the commercial private sector also, and promote more coherent strategy development including in areas such as public grain distribution, on the medium term policy mix and priorities. This targeted credit and livelihood interventions for the poor, could in turn assist the transition from the current and low-income urban housing. program-driven approach to SP to thinking in terms of a social protection systemwhich is animated more by poverty outcomes and less in terms of scheme-based improving implementation of SP target fulfillment. Such institutional reforms have been important elements of successful SP reforms in programs a range of developing and developed countries. Some even if the necessary reorientation of the sp policy Indian states, notably Kerala and more recently Delhi, and program mix can be achieved, it will not improve are also moving towards an integrated approach to outcomes for the poor unless accompanied by a SP delivery. thorough overhaul of sp program administration, xx Social Protection for a Changing India: Volume I including institutional arrangements. Whatever infrastructure to overhaul payment systems, and the evolving mix of SP policies, there will be several building a strong culture of M&E. Recent reforms key elements of administration and institutional in RSBY and to a lesser extent MGNREG, together arrangements which will need to be confronted if India with a number of state-specific program pilots, is to achieve the poverty reduction outcomes that its provide many lessons in this area, and it is hoped significant spending on SP warrants, including: that they can be systematically incorporated in other SP programs over time. delineating clear lines of accountability accompanied by adequate staff and finances. overhauling existing targeting mechanisms, Delineating appropriate institutional bothatthehouseholdlevelandgeographically. responsibilities for all links of the SP service Any social protection system needs to be able delivery chain, and aligning the division to identify who are the poor with a reasonable of functions with assignment of personnel degree of accuracy. Innovations already operating and allocation of resources for program in India and good practice from other developing implementation will be critically important for countries offer a range of options for significant improved implementation of SP programs. This improvements in targeting mechanisms. These will require first and foremost greater proactivity include: (i) development of "poverty maps" at on the part of states to approve policies and a sub-state (probably block) level which would put into practice the PRI/ULB decentralization allow more precise geographical allocation of SP provided for under the 73rd and 74th constitutional funds to poor areas; (ii) overhaul of the BPL 2002 amendments. This would need to be followed methodology in line with good practice in design by a process-intensive reconciliation of central of proxy means-tests (PMT) in other developing guidelines, state-level stances on service delivery countries, including allowing for cross-state decentralization, and capacities at sub-state and urban/rural variations in the PMT formula; levels to perform the required implementation and (iii) in rural areas, continued piloting and functions in SP programs. Achieving this goal will strengthened evaluation of community-based require coordination and gradual convergence beneficiary identification for SP programs with across the many departments of government an eye to convergence with a reformed BPL responsible presently for different programs, and system, and possibly ­ as has already happened commitment to strengthening implementation in AP ­ its replacement in appropriate settings. capacities at the lower levels of the system, in While the new BPL methodology proposed by particular at the block and GP levels. It will also the Saxena Committee improves upon the 2002 mean building on innovations in institutional system in several ways, several drawbacks of the roles to promote greater accountability among previous method remain. Piloting the proposed SP service providers, as exemplified by social methods and subjecting this methodology to audits in MGNREG. the test using NSS data as done with the 2002 rapid and substantial improvements in the basic BPL method would yield interesting insights into "nuts and bolts" of program administration how well the new dejure targeting design would and procedures. Broadly, they would involve perform. overhauling a range of bureaucratic procedures in the area of social security for unorganized which impede funds flow, strengthening processes workers, past experience suggests that direct for administrative and social accountability of public provision, financing and administration service providers, a through modernization is neither feasible nor desirable. It seems more of program record keeping and reporting feasible to partner with existing non-governmental arrangements (including computerizing systems entities (for-profit, NGOs, and membership - and taking advantage of India's ICT prowess to based organizations) and restrict the role of look for "technology leap-frogging" opportunities government to: (i) providing targeted subsidies; such as introduction of smart cards and other and (ii) regulating these entities and setting basic innovations), building on improved rural banking standards. This model already exists in India in Executive Summary xx several forms, such as the JBY scheme operated broader societal understanding of the need for and by Life Insurance Corporation of India (LIC) for benefits of reforms. life insurance, and more importantly the RSBY some of the political economy challenges that the program. In addition, many other schemes falling sp system confronts if it is to become more coherent into the community based or micro-insurance and more effective as a tool for promoting poverty category could be incorporated under an umbrella reduction and inclusive growth include: program that provided matching contributions or premia but set certain standards in terms of as in many areas of policy reform in India, benefit targets, eligibility conditions, investment consolidation and reform of the SP system policy and recordkeeping, among others. within a coherent strategy will run counter to the past experience of scheme-driven initiatives if such a reform agenda can be delivered, the benefits by a plethora of Ministries, and the observed for the poor of india could be substantial, and make tendency of each new government at both growth significantly more inclusive. In addition, there central and state levels to want new SP programs are likely to be positive impacts on growth itself from an clearly distinguishable from their predecessors. SP system which more effectively addresses a range of Reducing these natural bureaucratic and political market failures which result in poor and unproductive tendencies will be very challenging. A first step is citizens. The traditional view of social protection obviously having an integrated SP strategy which systems and the redistributional objectives underlying is driven by the top politicians and bureaucrats them was that there was a clear growth versus equity at central and state levels, with strong inputs trade-off. However, empirical evidence increasingly from civil society in its development, including highlights that a well-designed and implemented opposition parties. However, even if such a SP system provides dynamic efficiency gains to the strategy process can be developed, it will be economy through positive impacts on productivity, and important for it not to become a "one shot" as an important tool for governments in managing the exercise, but to have institutional coordination impacts of reforms in the wider economy.12 mechanisms in place which explore program duplication and exploit synergies. Political economy of SP reform giving states a more flexible hand in use of central SP resources will be a challenging the political economy of sp policy reorientation transformation both for central administrators is complex, and will require intensive efforts to (whose past tendency has been to define build consensus on reforms. In particular, it will be the parameters for use of central funds quite important to ensure that the interests of perceived tightly) and politicians (who not unexpectedly "losers" of SP and broader economic reforms are taken seek political attribution for centrally-financed into account. While reforms that involve expanded coverage or new types of interventions are unlikely to schemes implemented by states). The first of be controversial, there are strong interests in preserving these challenges is perhaps easier to address the status quo in SP programs among a range of actors, through development of more outcome-based including administrators, politicians, contractors and monitoring systems. The second is more difficult others. Simply cutting programs or excluding certain in a democracy. groups of beneficiaries or institutional players is in a number of programs, there are presently therefore unlikely to be successful unless incentives significantrent-seekingopportunitiesforarange for institutions and households which will be affected ofactors.Such opportunities are facilitated by the by reforms can be part of the reform package. The current complexity of the SP program mix, but political economy of SP reform is challenging in all also by the number of intermediaries who often countries, and governments in India would benefit are involved in the interactions of poor people from more innovation in their efforts to create a with the SP system. The generic identity of such 12 SeeWorldBank(2004). xx Social Protection for a Changing India: Volume I official intermediaries and unofficial middlemen National Rural Employment Guarantee Act, (now is generally well-understood, but minimizing the renamed the Mahatma Gandhi Rural Employment potential avenues for their continued roles has only Guarantee Act) was passed in 2005. Other similar recently become a more explicit goal of SP policy Acts include the Right to Education Act (2009), design. While it is too early to say, even apparently the Scheduled Tribes and Other Traditional naïve blanket bans on certain actors in legislation Forest Dwellers (Recognition of Forest Rights) Act and/or guidelines (such as the ban on contractors (often called simply the "Tribal Rights Act", 2006) under MGNREGA) do appear to help. However, a while legislations such as for food security are on more comprehensive approach will require a more the anvil. thorough modernization of SP business processes. a consequence of the above is the increasingly Examples where such approaches already appear prominent role of communities and civil society to be making headway include greater reliance on in promoting more effective poverty reduction direct transfers to beneficiaries through banking outcomes from spending. In this respect, the and postal systems, and innovations in use of ICT strengthening of the "authorizing environment" in SP program delivery. for communities in SP service delivery in recent it is increasingly important to understand how years is encouraging. This is both cross-cutting, increased decentralization of responsibilities through reforms such as the Right to Information to panchayats generates different patterns of Act, and program specific, such as the anticipated contention, cooperation and collusion between role of social audits in MGNREGA, and new roles newly elected panchayat officials and traditional for community groups such as SHGs in delivery of loci of influence among administrators and some SP services (e.g., running Fair Price Shops). higher level politicians such as MLAs and MPs. An However, there is no guarantee of "trickle down" essential first step in promoting decentralization to citizens in terms of awareness of their emerging of SP service delivery as a tool for contestability entitlements. The role of NGOs, media and other and hence accountability will be getting a better actors in this respect can not be under-stated, as empirical understanding of the diversity and various political and administrative actors at local evolution of experience. This would include how level may not have strong incentives to promote the gradual increase in the role of panchayats is such citizen-based accountability mechanisms. proceeding (and what factors ­ such as limited Notable examples such as Mazdoor Kisan Shakti control of resources and very low capacity), Sangathan (MKSS) in Rajasthan demonstrate the and the extent to which panchayats effectively potential impacts of such partnerships. promote accountability in SP service delivery are captured by local social, political and administrative elites. The STRuCTuRe oF The RePoRT a more nascent, but powerful, element in the this report summarizes the findings and politicaleconomyofSPreformisthepolicyshift recommendations detailed in the companion volume ii. towards a rights based approach. Government It begins by outlining the key recommendations for short of India is increasingly operationalizing such and longer term reforms of the SP system. There is then an approach in a number of areas through a summary discussion of key performance indicators of legislation and specific policies and programs. For the major SP programs, exploring coverage, adequacy of instance, the Right to Information Act was passed benefits, incidence of benefits and determinants of the in 2005 and mandates the government to release programs outcomes. In the case of preventive programs, timely information demanded by citizens. It has the report examines the Indian experience and strategies been widely hailed as one of the most important for expanding coverage of different types of social drivers of governance reform and transparency in insurance to unorganized workers.The following chapters India. The Right to Food and Right to Livelihood then explore different aspects of program financing, movements are led by civil society, but have program administration, and institutional arrangements managed to influence government so that the that help to understand the observed outcomes. This is Executive Summary xx followed by a discussion of targeting mechanisms and final chapter highlights some of the political economy options for SP programs, in particular the BPL (Below challenges that must be addressed if the SP system is to Poverty Line) targeting method that acts as a backbone become more effective as a tool for promoting poverty targeting mechanism for several key programs. The reduction and inclusive growth. xxv Social Protection for a Changing India: Volume I Chapter­1 Policy Reform in Social Protection india will undoubtedly continue its strong financing, targeting, institutional arrangements commitment to a social protection system which seeks andadministrationofexistingschemes;and to serve the poor. The question is how best to do that Building consensus around the reforms to be more effectively in the short and medium term. There undertaken. It will be necessary for political are likely to be three broad elements necessary for an constituents, including a significant share of those effective SP reform strategy for India: who may lose from reform, to support the stages Reorientingthepolicymixandspecificprogram of policy and implementation evolution if they policies across SP programs in order to meet are to be successful. the diverse needs of India's poor ­ diversity which has several dimensions: spatial across if such a reform agenda can be delivered, the benefits and within states; across socio-economic for the poor of india could be substantial, and make categories; and between households trying growth significantly more inclusive. In addition, there to manage different types of risks and shocks. are likely to be positive impacts on growth itself from an This would include exploring new SP tools for SP system which more effectively addresses a range of leveraging improved human capital outcomes market failures which result in poor and unproductive and household productivity, and innovating citizens. The traditional view of social protection with policies and programs to support the systems and the redistributional objectives underlying urban poor; them was that there was a clear growth versus equity Getting better poverty reduction outcomes from trade-off. However, empirical evidence increasingly existing programs through improvements in highlights that a well-designed and implemented CHAPTER-1: Policy Reform in Social Protection SP system provides dynamic efficiency gains to the moving from administratively driven subsidized economy through positive impacts on productivity, and credit to public financing of a more diverse range as an important tool for governments in managing the of livelihood promotion approaches better suited impacts of reforms in the wider economy.13 to the labor market conditions of individual states as is currently being proposed under NRLM; there is a need to deepen the ongoing policy and secondly considering the options for use of reorientation of the indian social protection system safety net transfers (see next bullet) to leverage to meet the changing and increasingly diverse needs participation in core education, health and of its population. Marginal changes alone will not possibly nutrition services, in order to promote deliver the kind of safety net which a changing India long term movement out of poverty. needs for its poor and for its economy. This would moving to more consolidated and more cash- involve several elements: (i) a rebalancing of the policy mix across different types of public SP priorities; based social assistance programs for the (ii) consolidation of the large number of central and chronicallypoor.The "big elephant in the room" state schemes to a core set of flagship programs; in this respect is fundamental reform of PDS. (iii) in the context of consolidation, introducing an The very poor and long run performance of element of choice and flexibility for states in the specific the program in many states suggests that the program mix of centrally-supported schemes that they medium term vision of a reformed PDS for most operate; and (iv) in some areas and for some programs, groups should be cash-based, though this would actively exploring the possibilities for leveraging the face substantial resistance in light of the ongoing role of private players (both non-governmental and for- debate around the Right to Food legislation. A profit) in delivery of interventions. reformed PDS could still provide food-based support for specially vulnerable groups (in line in terms of reorienting the policy mix, the report with Supreme Court orders), and in specific areas suggests several directions: facing chronic or acute food shortages, but for increasingtheemphasisonpreventiveprograms most areas and most people, a cash-based social which help the poor and those vulnerable to assistance system seems a more efficient and poverty to manage risks and shocks better. This transparent means of providing an income floor. implies a significant expansion in coverage of An intermediate solution currently being mooted different social insurance instruments, though in the 2010 Economic Survey is to transfer the in a phased manner consistent with institutional subsidy directly to households (rather than the and fiscal capacity. Experience to date suggests PDS store owner) through food coupons with a that phasing would benefit from: (i) starting lumpsum entitlement that can be exchanged at with simpler-to-administer insurance products any PDS store. such as life and permanent disability, while in the face of demographic change and slower continuing to pilot and evaluate experience rates of poverty reduction in urban areas, starting with more complex products such as health toaddresstheneglectofurbansocialprotection insurance; and (ii) for reasons of ease of worker policy. While some of the needs of the urban mobilization and to control transactions costs, poor are common to their rural counterparts, focusing initially on the "low hanging fruit" the possibilities (and constraints) of the urban of unorganized workers who are members of environment suggest that simple mimicking of groups (e.g., MFIs, cooperatives, trade union and rural models of SP programs and service delivery worker associations, SHG federations) that could mechanisms is unlikely to be an adequate play an intermediary function between workers response. For example, the options for "voice and the state/insurers. accountability" of service providers which can rethinking programs which seek to promote be mobilized in rural areas through collective movement out of poverty in two ways: firstly, community action are likely to be less possible 13 SeeWorldBank(2004). Social Protection for a Changing India: Volume I in urban areas, while the possibilities for "choice abasicsocialsecuritypackageforthoseoutside accountability" (through income enhancement the formal sector which could be expanded and offering options in service providers where in terms of coverage and scope of benefits as possible) are likely to be greater. The JNNURM institutional capacity and fiscal space is developed. program had appeared to offer a solid base for The core types of insurance which GoI aims to such an urban SP reform, but has largely failed to expand include life, disability, old age pension, deliver in this regard and closer consideration is and health, and the RSBY program is already an needed of how to affect urban SP policy change. important step forward in this regard. Chapter 4 the specific proposal of this report is that central gives suggestions on institutional, financing and sp programs over time aim for a "3+block" strategy. other aspects of an expansion strategy. This would involve 3 core CSS SP programs or "pillars", beyond the three "pillars," states could receive an combined with an SP block grant from which states additional transfer and implement state-specific could finance other SP programs - or supplement sp interventions. How this is programmed could benefits under the core pillar programs - more tailored vary according to state-level priorities, and include to the poverty and vulnerability profile of the individual interventions such as livelihood support of different state. This would also involve significant expansion in forms, targeted housing, interventions to incentivize use urban areas. This could promote both a more coherent of basic social services, nutrition and/or early childhood and less duplicative SP system, but also give states more care (e.g., through conditional cash transfers as being leeway to adapt the SP policy mix to the needs of the piloted in some states), specific urban SP programs, poor in individual states in light of available economic or other options as proposed by states. A secondary opportunities. The three core pillars proposed are: benefit of such an approach would be strengthening a major social assistance program. The obvious of complementaries between CSS and state-sponsored candidate for this is a significantly reformed PDS, schemes in order to control unnecessary duplication. merged for specific groups with existing social A common core national SP system under the three pension programs.14 Chapter 2 give more details pillars could promote portability of basic entitlements, on the options for reform of PDS proposed by and be increasingly useful as mobility of workers and this report, with a preference for a predominantly households increases. cash transfer approach. a public works program, for which MGNREG in terms of promoting both more effective spending would be the building block, as well as piloting on sp, the "3+block" proposal would allow more expansion in urban areas. There are several cross-program flexibility to states ­ or possibly benefits of a reliable public works program at this districts - in deciding their sp expenditure priorities, stage of India's development: (i) by its demand- while still maintaining a common national core sp driven nature, it can be responsive to shocks in a system. It would also allow for greater adjustment in way that longer run programs typically cannot. light of poverty levels, key vulnerabilities, etc. This could In this way, it functions as a "quasi-insurance" be done in a variety of ways, possibly using a menu program for the extended period during which approach to SP programs, and a flexible form of social more structured insurance is expanded to the protection block or matching grant which consolidates unorganized sector; (ii) the positive targeting resources from existing SP CSS.15 This is an approach outcomes of self-targeted works; and (iii) the which has received increased attention in India in recent potential for multiplier effects from asset creation years as policymakers seek to get greater impacts from and community mobilization distinguish public SP spending. Given current financing channels from works from other SP programs. See Chapter 3 for the centre to states in India, a more flexible granting a discussion. mechanism for SP programs to states could take 14 ThiswouldbesimilartotheChineseurbanandemergingruralsocialassistancesystem,whichisbuiltaroundthe"dibao"programwhichprovidescashbenefits tothepoor,andhasadditionalprovisionforspeciallyvulnerablegroupssuchasdisabledandunsupportedelderly.SeeWorldBank(2009b). 15 SeedeNeuborg(2002)foradiscussionofthestrengthsandweaknessesofdifferentblockandmatchinggrantmechanismsinthecontextofSPprograms. CHAPTER-1: Policy Reform in Social Protection different forms ­ as a more "bundled" anti-poverty CSS, also benefit from policy improvements but these are as Additional Central Assistance (ACA) along the lines more in the nature of incremental policy reform which of programs like Pradhan Mantri Gramodaya Yojana can be expected in the normal course of program (PMGY), or through a more fungible realignment of evolution. Urban programs remain small, but pre- Gross Budgetary Support shares between the states and conditions suggest that merely transferring rural SP central Ministries which control CSS.16 models to urban settings will limit potential impacts, and equally that the SP system needs to explore the above approach would require close consideration stronger linkages with the livelihood opportunities of the policy design of existing programs. The available to the poor in urban areas. See Table 1.1 for a findings of this and other reports suggest that the description of current central schemes. PDS require fundamental consideration of its current design, SGSY is currently undergoing significant change a number of cross-cutting issues in policy evolution and attention to implementation under NRLM, while of the sp system will also be important. These two others warrant experimentation to see whether include cross-program convergence and consolidation, innovative approaches can yield better outcomes than willingness to experiment with new types of programs seen to date ­ IAY and school stipends. The other major and modes of delivery, and more structured efforts to programs ­ public works and social pensions - would build understanding of the benefits of reforms and Table 1.1: major central social protection schemes, 2009 Scheme Type Description Public Distribution System (PDS) Subsidized food and fuel distribution Subsidized wheat and rice, plus kerosene and sugar in most states. Level of subsidy varies according to whether APL, BPL, AAY or Annapurna household. Mahatma Gandhi National Self-targeted public works Unskilled and low skill public works. MGNREG guarantees 100 Rural Employment Guarantee days employment per rural HH per year in all districts. SGRY (MGNREG) and SGRY had aimed for 100 (non-guaranteed) days in rural districts, with a cash and food component. After 2006 SGRY was limited to non-MGNREG districts, but was discontinued in 2008. Swarnajayanti Gram Swarozgar Targeted credit scheme for groups and Subsidized lending from banks to groups of BPL people, with Yojana (SGSY) some individuals allowance for some individual lending, and small APL share in groups. Indira Gandhi National Old Age Non-contributory social pensions Monthly cash benefits for BPL elderly (originally called NOAPS Pension Scheme (IGNOAPS) until renaming and expansion in 2007), and state schemes for widows and disabled people (since 2007 also included in the central program). Indira Awaas Yojana (IAY) Targeted rural housing Subsidies for rural BPL with inadequate housing for housing construction. Midday meals School feeding program Hot meal for children in grades 1-8 in government and aided schools. Rashtriya Swasthiya Bima Subsidized health insurance Subsidized health insurance for hospitalization for BPL Yojana (RSBY) households in selected districts, rolling out to national coverage by 2013. Aam Admi Bima Yojana (AABY) Life/disability/accident insurance for Free insurance covers natural death, disability and accident BPL for rural landless households. Other social insurance for Subsidized social insurance Variable by state, though central welfare funds for select unorganized workers sectors (e.g. beedi workers). Specific urban anti-poverty Targeted urban housing (VAMBAY) and Housing construction and upgradation for slum dwellers, programs employment programs for the poor and wage and self-employment programs for unemployed or (SJSRY), now merged under JNNURM underemployed urban poor. 16 SeeSaxena(2006)forahistoryofcentraltransfersforanti-povertyprogramssincethe1960s. Social Protection for a Changing India: Volume I manage the political economy of the reform process. expense of genuine experimentation and innovation, An additional challenge will be ensuring increased and secondly a limited willingness on the part of the attention in SP policies to the needs to the urban poor. central government to give states (and in some cases, the These are discussed in turn below. sub-state level) a freer hand in adapting their policy mix among programs, by allowing flexibility in adjustment firstly, central and state-level policymakers will of specific programs to suit their diverse circumstances. need to accelerate cross-program convergence and The experience of a number of developing countries consolidation in policy and administration to make including Bangladesh in recent decades provides a the system more understandable to the population, positive example of the social benefits of experimentation realize economies of scale in policy development in SP policy. Closer to home, there is growing innovation and administration, and simplify ongoing planning at the state level in India which demonstrates the value and execution of sp programs. This will require of such an approach, and the increased buy-in among enhanced efforts of institutional coordination within politicians and administrators for innovations which are and across levels of government and administration. "home grown." Both at central and state levels, there seems a need for formation of an inter-departmental Task Force for Social a third overarching theme of policy reform is that Protection which would promote coordination (and "government cannot do it alone", and programs possibly reduce duplication) across targeted programs, would benefit from appropriate partnerships with and promote more coherent strategy development on the non-government sector. This partnership could the medium term policy mix and priorities. This could be in both policy formulation and the specifics of policy in turn assist the transition from the current program- design. The "non-government sector" in this respect driven approach to SP to thinking in terms of a social could range from communities themselves (in the form protection system which is animated more by poverty of SHGs and other forms of CBOs), to the NGO sector, outcomes and less in terms of scheme-based target to the for-profit private sector in specific programs fulfillment. Such institutional reforms have been and functions. The design of MGNREG is a promising important elements of successful SP reforms in a range example of such a reorientation of policy formulation of developing and developed countries. and program design, with its clear roles for community and NGO actors, and willingness to bring in private a second overarching need in such policy reorientation sector expertise and research institutions on areas will be greater willingness to experiment in program such as M&E. But there is room for much more active design and base reforms on results of evaluations. engagement with the commercial private sector also, This will require changes in two tendencies of Indian including in areas such as public grain distribution, SP policy since the 1970s: firstly, what CAG has called targeted credit and livelihood interventions for the poor, "rechristening and revamping" of programs at the and low-income urban housing. CHAPTER-1: Policy Reform in Social Protection Chapter­2 Improving Implementation Protective Programs while a reorientation of aspects of the sp policy and put into practice the PRI/ULB decentralization program mix can be achieved, it will not improve provided for under the 73rd and 74th constitutional outcomes for the poor unless accompanied by a amendments. This would need to be followed thorough overhaul of sp program administration, by a process-intensive reconciliation of central including institutional arrangements. Whatever guidelines, state-level stances on service delivery the evolving mix of SP policies, there will be several decentralization, and capacities at sub-state key elements of administration and institutional levels to perform the required implementation arrangements which will need to be confronted if India functions in SP programs. Achieving this goal will is to achieve the poverty reduction outcomes that its require coordination and gradual convergence significant spending on SP warrants, including: across the many departments of government delineating clear lines of accountability responsible presently for different programs, and accompanied by adequate staff and finances. commitment to strengthening implementation Delineating appropriate institutional capacities at the lower levels of the system, in responsibilities for all links of the SP service particular at the block and GP levels. It will also delivery chain, and aligning the division mean building on innovations in institutional of functions with assignment of personnel roles to promote greater accountability among SP and allocation of resources for program service providers, as exemplified by social audits implementation will be critically important for in MGNREG. improved implementation of SP programs. This rapidandsubstantialimprovementsinthebasic will require first and foremost greater proactivity "nuts and bolts" of program administration on the part of states to approve policies and and procedures. Broadly, they would involve CHAPTER-2: Improving Implementation: Protective Programs overhauling a range of bureaucratic procedures in the area of social security for unorganized which impede funds flow, strengthening processes workers, past experience suggests that direct for administrative and social accountability of public provision, financing and administration service providers, a through modernization is neither feasible nor desirable. It seems more of program record keeping and reporting feasible to partner with existing non-governmental arrangements (including computerizing systems entities (for-profit, NGOs, and membership - and taking advantage of India's ICT prowess to based organizations) and restrict the role of look for "technology leap-frogging" opportunities government to: (i) providing targeted subsidies; such as introduction of smart cards and other and (ii) regulating these entities and setting basic innovations), building on improved rural banking standards. This model already exists in India in infrastructure to overhaul payment systems, and several forms, such as the JBY scheme operated by building a strong culture of M&E. Recent reforms LIC for life insurance, and more importantly the RSBY in RSBY and to a lesser extent MGNREG, together program. In addition, many other schemes falling with a number of state-specific program pilots, into the community based or micro-insurance provide many lessons in this area, and it is hoped category could be incorporated under an umbrella that they can be systematically incorporated in program that provided matching contributions or other SP programs over time. premia but set certain standards in terms of benefit overhauling existing targeting mechanisms, targets, eligibility conditions, investment policy bothatthehouseholdlevelandgeographically. and recordkeeping, among others. Any social protection system needs to be able to sp programs can be classified into three main pillars. identify who are the poor with a reasonable degree "Protective" measures or programs, which provide of accuracy. Innovations already operating in relief against deprivation and shocks once they have India and good practice from other developing occurred. "Promotional" measures attempt to improve countries offer a range of options for significant incomes in the short and longer term through livelihood improvements in targeting mechanisms. These and human capital interventions. "Preventive" measures include: (i) development of "poverty maps" at seek to avert deprivation by supporting the ability of a sub-state (probably block) level which would households to manage different risks and shocks they allow more precise geographical allocation of SP may face ex ante. The main sets of programs falling into funds to poor areas; (ii) overhaul of the BPL 2002 each of these categories are discussed below, together methodology in line with good practice in design with a number of cross-cutting areas critical for program of proxy means-tests (PMT) in other developing success, including financing and institutions, program countries, including allowing for cross-state administration, and targeting. and urban/rural variations in the PMT formula; and (iii) in rural areas, continued piloting and The programs intended primarily to protect individuals strengthened evaluation of community-based and families once risks have been realized, include PDS, beneficiary identification for SP programs with social pensions and targeted housing programs. The an eye to convergence with a reformed BPL remainder of the chapter reviews the performance of system, and possibly ­ as has already happened each and identifies some program reform options. in AP ­ its replacement in appropriate settings. While the new BPL methodology proposed by the Saxena Committee improves upon the 2002 PuBliC DiSTRiBuTion system in several ways, several drawbacks of the previous method remain. Piloting the proposed SySTem (PDS) methods and subjecting this methodology to the dominant program as far as safety net reform in the test using NSS data as done with the 2002 india is concerned is the targeted public distribution BPL method would yield interesting insights system (tpds), often abbreviated pds. This is for a into how well the new de jure targeting design range of reasons which are presented in this and other would perform. reports. Firstly, it remains easily the largest safety net Social Protection for a Changing India: Volume I program. Secondly, it has poor targeting outcomes, through the supply chain have been estimated at nearly and in many of the poorest states appalling levels of 60 percent in the early 2000s (see Tables 2.1 and 2.2). leakage which have persisted over many years. Thirdly, However, reform options for PDS have to be assessed the procurement system on which it relies is becoming with a clear acknowledgement of the context: technical, increasingly strained in the face of gradual liberalization political economy, and possibly legal. This context is of of agricultural markets in India, both domestically and in course strongly affected by also the commitment of GoI terms of openness to trade. to the Food Security Bill which would convert PDS from a scheme to a legislated right. These include: looking at results from the poor states in particular, it is hard to argue that pds comes anywhere near reformofPDSisinextricablylinkedtothepublic achieving its food security and poverty alleviation procurement system. While the benefits of PDS objectives. Wealthier households capture a significant to households are spread across India, the main share of PDS grain benefits, while leakages of grains in beneficiaries of public procurement of grains to terms of diversion from intended BPL recipients and feed the PDS are concentrated among farmers in a few states: Punjab, Haryana, some parts of Uttar Pradesh, and Andhra Pradesh to a lesser Table 2.1: Share of PDS grains captured by extent. Without some reform of the public consumption quintiles, 2004/05 procurement system ­ in terms of pricing policy average offtake Share of total Share of with respect to the Minimum Support Price and (kg) By those beneficiaries total offtake the control of government in grain procurement Quintile accessing PDS (%) captured (%) more broadly ­ there will continue to be large Poorest 23.0 30.5 33.5 grain stocks purchased each year which need to 2 20.9 24.0 23.9 be drawn down. 3 20.4 19.9 19.4 there is a large internal bureaucracy running 4 19.2 15.8 14.5 PDSwhichislikelytoresistfundamentalreform Richest 18.6 9.8 8.7 options which would undermine their role. The Source: Report team estimates from 2004-05 NSS data. FCI alone employs around 450,000 people in Table 2.2: Planning commission estimates of BPl grain leakage in PDS, early 2000s State Diversion (% BPl grains) aPl share of BPl grains (%) Total leakage of BPl grains (%) Andhra Pradesh 20.6 37.0 57.6 Assam 41.7 12.0 53.7 Bihar 81.5 9.6 91.1 Gujarat 42.1 5.0 47.1 Haryana 55.7 11.0 66.7 Himachal Pradesh 31.4 14.5 45.9 Karnataka 43.4 27.5 70.9 Kerala 21.7 17.3 39.0 Madhya Pradesh 62.4 3.6 66.0 Maharashtra 26.5 8.0 34.5 Orissa 23.4 13.0 36.4 Punjab 76.5 13.0 89.5 Rajasthan 32.0 3.0 35.0 Tamil Nadu 15.7 49.9 65.6 Uttar Pradesh 61.3 6.2 67.5 West Bengal 19.2 7.8 27.0 All-India 36.4 21.5 57.9 Source: Planning Commission 2005. Notes: Bihar, Madhya Pradesh and Uttar Pradesh refer to un-split states. CHAPTER-2: Improving Implementation: Protective Programs India, and SFCs a further number. This in itself is a provided to the aged, infirm, disabled, destitute strong lobby which is likely to resist any changes women, destitute men who are in danger of in the PDS which would imply either a potential starvation, pregnant and lactating women and role for the private sector in grain provision, or destitute children, especially in cases where more fundamentally a shift in use of the PDS they or members of their family do not have subsidy from food purchase and distribution to sufficient funds to provide food for them".18 The cash for poor households. implications are taken up below. despitetheshiftattheaggregatelevelfromfood in light of this context, three reform options are deficittofoodsurplus,thereare­andwillcontinue presented for pds, which could themselves have tobe­areasofthecountrywhichareperiodically variants borrowing from the approaches discussed. foodinsecure.This reality will continue to support Each approach is outlined below. It is stressed that none arguments for a direct food security role for the of the options assumes any necessary decrease in the state. At the same time, penetration of private food aggregate level of public spending devoted to social markets has increased sharply in recent years, so assistance for the poor: that the actual availability of food is there with the anincrementalapproachtoreformwhichwould exceptions of some tribal and dry land areas, and retain the current PDS model but with a host of market infrastructure of well-developed and sub- improvementsinthepolicyandimplementation markets are increasingly well-integrated. Thus, systemstoincreaseefficiencyfromitsoftenvery even with the food crisis of recent years, in most poorstate. areas the challenge is not so much availability per se as price and affordability. anintermediatereformoption,whichwouldretain afood-basedentitlementprogrambutintroduce the maturity of the PDS has naturally created privatesectorparticipationingrainprocurement socialexpectationsthatitispartofthefabricof and delivery and a more fundamental overhaul social policy. The results on awareness of PDS of the PDS administration through use of smart are instructive in this respect, and the social cards. constraints of any enforced fundamental change in PDS should not be under-estimated. fundamental reform which allows for cash transfers instead of food-based transfers, either theremayalsobelegalconstraintsontheability whenthestateprovesitselfunabletofulfillitsfood ofthestatetowithdrawfromdirectprovisionof transferobligationsorbyofferinghouseholdsthe grainsthroughPDS.The Supreme Court of India, choiceofgrainorthecashequivalentofthegrain in response to Public Interest Litigation take up subsidy.19 by the People's Union for Civil Liberties in 2001 with Union of India, FCI and eventually all state the overall position of this report is that fundamental governments as respondents, has clarified that reform options for pds should be considered and Article 21 of the Constitution on the Right to that offering households the option of a cash Life also implies a right to live with dignity. The transfer - while retaining the core food security SC agreed that one aspect of this was a right to and buffer stock functions of fci, and ensuring pds food, with the PDS a central plank of the right. grains in areas where access is a genuine issue ­ is an The Court has made various orders subsequently attractive option. While there is certainly potential to in efforts to improve the functioning of food- improve PDS performance (as is currently being done based schemes.17 A point of note is that the through the Ministry's nine point action plan), there initial order from 2001 indicated that "what remain a host of structural issues with a SP program so is of utmost importance is to see that food is dependent on many intermediaries operating within 17 Ausefulsummaryandbackgroundmaterialscanbefoundatwww.righttofoodindia.org. 18 SeeSupremeCourtOrder,of23rdJuly,2001. 19 ThisoptionhasbeensuggestedbyarangeofIndiancommentatorsovertheyears,includingKapur(2008)andPanagariya(2008). 0 Social Protection for a Changing India: Volume I such weak governance systems. In that light, the circle" in this respect could be the use of mobile incremental approach represents a triumph of hope FPS vans such as Himachal Pradesh is already over experience which cannot be expected to resolve using in a number of remote districts; and (v) the situation of PDS in much of the country. The long in line with Planning Commission suggestions, term problems of PDS cannot be solved quickly or with increase the margin on grains for FPS to 2 percent a single prescription for all states and all time. However, of the economic cost. offering options which allow households choices in deepening ongoing reforms in management of how they benefit from the massive public subsidy of FPS.States ­ both rich and poor - are increasingly PDS could allow for flexibility, greater efficiency, and moving from FPS operated by private operators accountability for the system. While the proposed Food to operation by community-based institutions, Security Bill will potentially have a major impact on including PRIs, SHGs, and cooperatives (e.g., in the legally possible range of options, it is hoped that Tamil Nadu in 2009, almost 90 percent of FPS it is not too prescriptive, but leaves open approaches are run by cooperatives). This seems eminently which would appear to have the possibility to improve sensible in terms of having operators who are the welfare of poor households. In this light, the default more accountable to their communities and more provided for in the consultation draft of the Bill for likely to operate the FPS on a regular basis. Results provision of cash where the PDS system is unable to from the SPS surveys on safety nets are instructive provide adequate and decent quality grains seems in this respect. Despite kerosene distribution in sensible. The system has so clearly demonstrated its PDS being notorious for being high leakage, the inability to do so for so long in so many places that incidence of kerosene from PDS in Orissa is far ruling out such an option seems likely to leave many more progressive than that of grains. A simple poor households with a stronger legal right but no explanation appears to be that kerosene has been better a real world situation. the first commodity transferred to operation by introducing a range of measures to make women's SHGs in the state.20 By early 2009, about honestly operated FPS financially viable, so that 83,000 FPS (out of the 4.98 lakhs shops across leakageisnotafinancialinevitabilityofthePDS the country) had been allotted to cooperatives, atthatlevel.The measures proposed ­ many of women's and other SHGs, PRIs, etc. which are in practice in some states - include: (i) decentralization of grain purchases. This would doorstep delivery of grains to FPS at the cost of the state (currently being done in 17 states/UTs); have several possible advantages, and a number (ii) provision of rent-free premises by panchayats of states are increasingly exploring this option in for FPS operations; (iii) allowing FPS to sell non- their grain purchasing. Firstly, locally purchased PDS commodities which will both increase their grains are more likely to accord with local dietary viability and increase the likelihood of being open preferences, and hence be in greater demand. more days in a month. States such as Himachal Secondly, local procurement could spread the Pradesh and Gujarat are already moving in this economic benefits of the procurement subsidy direction, which is supported by the Planning from the current concentration in a few states Commission in its PDS report; (iv) ensuring (two of which are very well-off ) to farmers in that FPS have a minimum catchment area and all states. Thirdly, the costs of transportation turnover of grain which allows for sufficient scale and storage of grains are likely to be reduced to ensure viability. The Planning Commission considerably. A number of states have started to estimates that substantial share of FPS fail to meet move in this direction, including lagging states this benchmark. There is an obvious challenge such as Chhattisgarh and Orissa, though how far to enforce such a requirement in remote and this can advance before hitting resistance on the inaccessible areas, which are likely to be those supply side in traditional supply states such as most reliant on FPS. One option for "squaring the Punjab and Haryana remains to be seen. 20 SeeDevetal.(2007). CHAPTER-2: Improving Implementation: Protective Programs makingoptionsforhousehold-levelofftakefrom strengthening the use of Information and FPS more flexible. The most obvious reform in Communication Technology (ICT) in the PDS at this respect is obviously allowing, as a number the beneficiary end in order to promote more of states already do, for weekly drawing of the robust identification and in reducing leakage. household's allocation. The only constraint on This can take a variety of forms, some ­ such as this is the FPS being open on a more regular in Andhra Pradesh already ­ simple biometric basis, but that should be addressed through the identification but not fully integrated into a "smart" management reforms outlined above. A second system, others involving bar coding and other measure which may be more challenging from a applications. The range of options for greater ICT bureaucratic perspective ­ but seems desirable ­ use in the PDS system have been exhaustively would be allowing BPL and/or AAY households to reviewed in a report for the GoI Ministry of Finance carry over their monthly ration from one month financed by the World Bank, which also conducted to another in months when they had less need detailed feasibility assessments in Anand district for their full ration. Given seasonal fluctuations in Gujarat and Thane district of Maharashtra in in PDS to market prices, this could imply some 2007.21 In addition, the use of new technologies lumpiness. A third option would be allowing such as GPS for tracking movement of vehicles households a more flexible mix of grains and transporting PDS commodities. Funds for piloting other basic commodities up to the value of their this technology in Chhattisgarh, Delhi and Tamil ration subsidy, an approach which GoI plans to Nadu were sanctioned in 2007-08. In addition, pilot in the coming year (see below). computerization of TPDS operations have been strengthening monitoring of PDS operations. A initiated in several states. number of measures to increase transparency conductinganindependentreviewofFCI'spricing in the operations of PDS are feasible within structure, with an eye to reducing the economic the current framework and are indeed being costs of grain procurement and handling. It implementing in several states. For instance, one appears that FCI is inefficient in its handling of element of management reform may be more grains, and the costs of this are naturally borne by direct community oversight in PDS operations, e.g., the budget and the end beneficiary. Despite this, through community verification of PDS delivery previous reviews have not been very probing in quantities where they are not already operating their efforts to look at possibilities for improved the FPS and/or through the involvement of PRIs in efficiency in FCI. A truly independent review of vigilance committees to monitor FPS. Some states their cost structure with a prior commitment by GoI have made some progress in implementing a to implement its findings would seem desirable system of monthly certification by PRIs/vigilance (though the technical demands of "efficient" cost committees for delivery of food grains to FPS estimation in the face of such a dominant market and allocation to ration card holders on time. In position should not be under-estimated). addition, public display of BPL lists and of district anotheroptionisintroductionoffoodstampsor and FPS-wise allocations of food grains for public coupons,anapproachthatisprevalentinAndhra scrutiny as proposed under the nine point action Pradesh and Rajasthan, and was introduced in plan would improve transparency. The review of Biharin2007.The current food coupon approach BPL/AAY lists in 14 states as part of this process has involves coupons which are redeemable only in already led to the elimination of 100.51 lakh bogus/ the FPS network, though there is no reason not to ineligible ration cards. Concurrent evaluations of allow for a coupon which would be redeemable PDS performance by NCAER and IIPA have been also in approved private food retailers (see below). commissioned in recent years by the Department Coupons may have attractions as a tracking and of Food and Consumer Affairs. leakage-reduction tool if FPS owners are able to 21 SeeCal2Cal(2007)foraPDSsmartcardfeasibilitystudyproducedatrequestofMinistryofFinance. Social Protection for a Changing India: Volume I replenish their grain stock based strictly on the in the 2010 Economic Survey. While details remain to basis of redeemed coupons. In Andhra Pradesh, it be worked out, the initiative seems worth pursuing and is estimated that the introduction of coupons has evaluating.23 reduced leakage in the PDS by up to 25 percent. a more technically advanced form of food coupons The system has some obvious risks, including could be introduction of "smart cards" in the pds, forgery of coupons. Another issue may be the which could be redeemable also at approved private development of a secondary market for coupons traders and/or fps.24 A smart card system can facilitate (though how much of a concern this is if poor two key functions: individual identification and remote households place more value on the cash than transaction processing/storage. Smart cards have the grains is a question). The Bihar experience with ability to store and record a large amount of program food coupons has been closely assessed through and authorized biometric information (signature or a two round survey-based assessment.22 While fingerprint image) that can be matched to the actual only around 60 percent of eligible households fingerprint or signature of individual involved in a had been provided with food coupons in the transaction. In the context of the food ration system, first year of implementation, access among them the card can store information on the identity of the dramatically increased as a result of the reform, individual, eligibility for rations, quantity, price and rising from only 2 percent to around half of BPL time intervals at which he/she could be supplied households. Bar coded coupons/ration cards have rations, etc. Point of Service (POS) terminals are simple been introduced under TPDS in six states. machines that read the cards and have the capability the above options can be considered a minimalist of authorizing the transactions via phone lines or the approach to pds reform. the option of allowing grain internet or recording the transactions on the smart card purchases with coupons from approved private food itself. Box 2.1 highlights some of the features of smart retailers would represent a more bold form of pds cards useful in the application of food programs. reform which feasibility studies indicate is viable. smart card systems are not new to india or to south Some of the potential attractions of such an approach asia. Several experiments are already in operation, include competition between PDS and private traders and the Rashtriya Swastya Bima Yojana (RSBY) health (which could act as an accountability check and perhaps insurance program introduced by GoI in 2008 clearly incentivize efficiency improvements in FCI and SFCs), demonstrates that smart card applications are very greater frequency of availability in areas where FPS feasible for wide scale use even in poor and low capacity open irregularly, and possibly reduction in the transport settings, provided the right mix of institutional players and holding costs of PDS for the portion of grains is involved and there is rigor in standard setting and purchases from private traders. The United Progressive implementation. Indeed, there is discussion presently Alliance (UPA) Government in 2007 announced plans to of "piggy-backing" other programs on the RSBY cards, pilot such a reform in 20-50 districts, using coupons for and this is technically possible. There has already been beneficiaries which can be redeemed in neighborhood progress with respect to MGNREG in this regard. Another stores other than FPS ("kirana" stores), though there notable small scale private initiative is that of Swayam appears to have been limited progress. In addition, Krishi Sangam (SKS) in operation in one of the poorest beneficiaries would be allowed to have a more flexible districts of Andhra Pradesh (in Medak). The card is being form of ration, allowing for purchase of any mix of used essentially as electronic passbook to record all grains, pulses or other household basics up to the value the transactions for micro-finance loans. Recently, GoI of the coupon. This reform option was also mentioned has provided in the 2008 and 2009 budgets funds for 22 SeeVashishtetal.(2009)whichanalyzesurveysfromapre-reformbaselineandafollow-upsurveyjustoverayearaftertheintroductionoffoodcoupons. 23 Times of India, July 3, 2007, "Food coupons to end PDS mess?", see http://timesofindia.indiatimes.com/news/india/Food-coupons-to-end-PDS-mess/ articleshow/2165884.cms,lastaccessedonSeptember22,2009. 24 GoIhaslauncheditspilotofthisapproachinHaryanaandChandigarh.AndhraPradeshhasalreadygonesomewayinthisdirectionbyrecordingbiometric(iris) identificationofallBPLrationcardholdersinacentraldatabase.Thisallowedforsignificantreductionsinduplicateandghostrationcardholders.SeeCal2Cal (2007)foradetaileddiscussionofthetechnologicaloptionsandfeasibilityofsmartcardsinPDS. CHAPTER-2: Improving Implementation: Protective Programs Box 2.1: Smart cards in food programs existing systems in other developing countries make use of smart cards and PoS in the following way: the individual beneficiary receives the card from the welfare/Ministry office where it is "recharged" with the relevant information and the amount of rations he/she is entitled to. once the individual goes to the shopkeeper ­ public or private - with the card, the transaction is promptly recorded both on the card and on the POS device that each shop keeper maintains. the transaction is backed up on the handheld device (Point of Service - POS) for upload on the central database and for being transmitted to the bank to reimburse the shopkeeper. Such duplicate storage is to ensure that data is not lost in the interim period. Such mechanism allows for a decentralized processing of transactions when there is no online access to the main database as would be the case in much of India. once every week or fortnight, the shopkeeper would take the handheld device (or the information contained in it) to a local agency (e.g., a bank or the concerned Ministry office) to upload all the transactions to the centralized system and to be compensated for the transactions undertaken during that period, preferably transferring money to the shopkeeper's bank account. Smart card systems are not new to India or to the region. Several experiments are already in operation, and RSBY is a major case of apparent success. For example, ICICI has instituted a smart card system for health insurance, and the Army uses smart cards for its health cards. One notable small scale private initiative is that of Swayam Krishi Sangam (SKS) in operation in one of the poorest districts of Andhra Pradesh (Medak). The card is being used essentially as electronic passbook to record all the transactions for micro-finance loans. Andhra Pradesh is also piloting smart cards in its social pension program, Kerala operated a PDS smart card pilot in Trivandrum during the first half of the 2000s, and states such as Gujarat already use smart cards on a wide scale for purposes such as drivers' licenses. In neighboring Bangladesh, smart cards have been introduced by various institutions, notably Grameen Bank and BRAC, largely for channeling micro- finance activities, but also for other activities. In Pakistan, the National Identity Card is serving also as a smart card as it is used not only for casting votes, but for purposes such as scholarships. The information flow of smart card use in PDS is reflected in the graphic below from the Cal2Cal report: FPS OWNER's Smart Card (1) Update Records, Calculate Demand FPS OWNER (2) Generated Challan for Grain upliftment Database at Taluka (3) Payment to Bank FPS OWNER's Smart Card FPS OWNER's $ Smart Card (4) Permit Generation for Stock upliftment Bank (5) Card brought in for Grain upliftment Godown FPS OWNER's Smart Card Source: Cal2Cal (2008). (6) Card updated with stock issued piloting of a smart card-based reform in Haryana and the worrying condition of pds as reported by goi, Chandigarh which would also allow access to authorized national researchers and this report, suggests private dealers. however that a more fundamental reform of pds is 25 See,forexample,RadhakrishanandSubbarao(1997). Social Protection for a Changing India: Volume I warranted which would introduce the option of stocks of grain and perhaps their distribution cash transfers.25 The following paragraphs outline in situations or areas where they were needed. two variants of a fundamental reform option for PDS: Finally, to the extent that specific groups or (i) switching to a cash transfer for the poor, or offering areas continued to receive PDS grains, FCI could options for poor households between food and cash; continue to perform that distribution function and (ii) switching to a conditional cash transfer, in order in coordination with SFCs. to leverage improved human capital outcomes from the if procurement reform could be achieved, huge spending on PDS.26 Neither option would eliminate substantialresourceswouldbefreedupforusein the need for food buffer stocks, nor for the continued acashtransferprogramforthepoor.In essence, use of food-based transfers for specific situations (e.g., public funds that are now spent on the large food where relief aid is needed due to climactic or other subsidy bill of GoI would be freed up to be used for disasters) or specific areas (e.g., remote or dry land direct cash grants to the poor. The analysis of this areas), and possibly specific population groups (e.g., report shows that regular cash grants are subject those noted in the Supreme Court order above, which to less leakage than food in nearly all cases, are far largely conform to the AAY category presently). Despite easier to administer, and are highly valued by the the ongoing debate around the Food Security bill, poor. There is also no solid or systematic evidence Indian policymakers appear to be willing to explore such from field work of the concern that cash grants options, as evidenced by the recent announcement by are drunk or smoked by the men in recipient the Government of Delhi of a "cash for ration" pilot in households, though of course that cannot be one district which would provide ` 1,100 per month to discounted as a possibility. women in poor households (an amount which would there are several obvious challenges and issues in purchase around 30 kg of rice at market price as of mid- such a proposal. they include: 2009).27 The 2010/11 Economic Survey suggests that the GoI is considering the introduction of food coupons for likely strong resistance from the stakeholders households with a lumpsum entitlement (rather than outlined above in the discussion of political specific amounts for rice, wheat, sugar, etc.) that can be economy constraints. This is natural. The main encashed at a PDS store of their choice.28 way of managing this risk is to have a strategy for "reinvention" of the FCI along the lines outlined, the elements of a transition from a food to cash so that it becomes an active player in the new based pds could be the following: system, with important residual functions like reformwouldhavetostartattheprocurement buffer stock management, rather than simply a end of the system if it is to be feasible, and "loser" in the reform process. involve a reorientation of FCI's functions. This resistance from FPS owner groups. Given the essentially involves a reduction in government existence of over 400,000 FPS owners, thought controls over grain markets and procurement would need to be given to how to manage this operations. Even in such a reformed system, risk. The first element of a strategy would be FCI could still be expected to play important continuing transfer of FPS functions to PRI/CBOs roles. Firstly, it could compete with private who are not "sole purpose" organizations in the players in the market, relying on the economies way that FPS owners would be, and hence are less of scale in operations, existing infrastructure, likely to resist changes that may be supported distribution networks and other advantages to by their communities. Secondly, a sub-set of FPS be competitive. Secondly, and very importantly, would continue to be needed for the continued FCI could retain a role as manager of India's buffer PDS functions which would continue even in a 26 In essence, this is the strategy that Mexico followed in its transition from the so-called "tortilla subsidy" to the CCT program Progresa (now called Opportunidades). 27 See Hindustan Times, August 27, 2009: Pro-poor schemes get the thumbs-up from plan panel, see http://www.hindustantimes.com/Pro-poor-schemes-get-a- thumbs-up-from-plan-panel/H1-Article1-447365.aspx,lastaccessedonSeptember22,2009. 28 GoI(2010). CHAPTER-2: Improving Implementation: Protective Programs reformed system. Thirdly, the government could as grains for emergency and special situations; (ii) the necessary support transitional livelihoods support recent expansion of midday meals may for children for FPS owners who lost their businesses as a result provide a caloric floor (see below); and (iii) it is proposed of reform (though this has not proven necessary to that AAY continue to provide food for the poorest, as date in states which have transferred FPS ownership would Annapurna for a share of the elderly destitute; from private individuals to community groups). and (iv) ongoing efforts to improve the performance legalimplicationswithrespecttoexistingSupreme of the nutritional program under ICDS could ­ if Court decisions and the proposed Food Security effective ­ provide improved coverage of poor infants Bill.This is an important issue, as any reform must and pregnant/lactating women. Cumulatively, these by be consistent with the law of the land, more so no means suggest a wholesale withdrawal from direct when it flows from constitutional provisions. One provision of food for the poor. reading of the SC order is that Government may the second variant of a cash-based reform of pds not be constrained if it provided sufficient cash would be introducing a conditional cash transfer transfers to the identified groups to allow them (cct) rather than a simple cash grant as outlined to purchase food. A more demanding reading above. The basic arguments for such an approach ­ and suggests that a legal obligation directly to provide the political economy and legal constraints ­ are similar food may apply to the groups noted. At the to those for a simple cash grant, though conditionalizing same time, the expansion of midday meals and transfers may face more legal complexities. The types Integrated Child Development Scheme (ICDS), of conditions that could be considered would vary together with the existence of other programs according to household characteristics, but could for the destitute such as Annapurna (and of include registration of girl births and school attendance course social pensions) goes some way towards for households with children. For other household meeting such an obligation if supplemented by types, conditionality may not be appropriate, especially a cash transfer. Clearly, however, this would need those in the categories outlined above. The obvious close consideration of the legal issues and their attraction of a CCT approach relative to a simple cash implications for a reform strategy. Another way of grant would be that PDS spending could be used to approaching this may be to offer households the leverage improved human capital outcomes, or other option of grains or cash and letting them decide. socially desirable goals such as better treatment of girl This would presumably meet the state's legal children. The additional challenges would include the obligations while offering choice to households administrative demands of operating a CCT, but the in exercising their rights. Janani Suraksha Yojana (JSY) institutional birth grant the existence of areas where food insecurity is and other state-specific experience in India suggests chronic. Despite the aggregate move to food that such demands can be dealt with. surplus, there is a natural concern about ensuring in light of various constraints and given the food security in these areas. It may be that fundamental nature of such a reform, it would be PDS continues in those areas until there is an advisable to experiment with a cash-based pds, perhaps assessment of the impact of transition to cash in focusing on more food secure states/districts first. It other areas. would also be sensible to ensure that the groups covered aggregate evidence indicates that caloric intakes under the Supreme Court order continue to receive are falling in india, even among the very poor.29 In grains, possibly in addition to a cash transfer. Such a light of this, moving to cash for PDS may seem counter- pilot would need careful monitoring and evaluation to intuitive. However, the counter-balances to that in the assess impacts and ensure that food security was not above proposal would include: (i) buffer stocks remain compromised, but for poorer states in particular seems an important part of the system, possibly with a "buffer a more promising way of ensuring (albeit in an indirect stock plus" to allow a more generous provision for manner) the right to food. 29 SeeDeatonandDrèze(2009). 6 Social Protection for a Changing India: Volume I thereisaneedinanumberofstatesforbetter SoCial PenSionS educationofofficialsandotherinvolvedinsocial the evidence suggests that social pensions are a pension administration on eligibility policies. reasonably effective part of the indian sp system, Field work in several states finds either partial and their enhancement in coverage and central knowledge or problematic interpretations financing in recent years is well directed. Nationally, of previous eligibility criteria on "destitution" the targeting of social pensions across wealth levels (now modified to BPL) and even the reforms and social category was progressive in 2004-05, with under NSAP are likely to face some continuing particularly good performance in relative terms among problems of identifying the poor. Following a the poorest quintile and among SC and ST people. In review of policy, a more thorough awareness terms of benefit incidence, both elderly and widow social raising and perhaps development of pensions are also progressive, though somewhat less so implementation guidelines could help improve than coverage alone due to the higher average benefits the situation. of recipients in the richest quintile, and other castes. morebroadly,asprogressismadeonexpansion This is illustrated in Table 2.3, which shows coverage of social security to the unorganized sector, it and benefit incidence of social pensions in 2004/05. willbecriticalforthosemanagingsocialpension In light of this, the reform options for social pensions policy development to be involved in thinking are more of an incremental nature, both in terms of through options for pension expansion, and the relative spending/coverage priority, and in terms of complementarities with social pensions as a improvements in current policies and implementation. possible "zero pillar" of any contributory system The main recommendations are: fortheunorganizedsector. Table 2.3: household coverage rates and benefit incidence of social pensions by wealth, location and social category, 2004/05 (%) annapurna widows' noaPS - 65+ noaPS-benefit annapurna benefit widows benefits DP benefit coverage incidence (%) coverage incidence (%) coverage incidence (%) incidence (%) Poorest 14.8 31.1 4.7 37.9 10.9 32.8 27.6 Q2 8.6 19.5 2.4 26.9 5.9 18.2 16.5 Q3 7.8 15.4 0.9 11.2 5.6 19.4 19.9 Q4 7.0 15.6 1.1 22.6 4.9 17.2 11.2 Richest 6.4 18.4 0.1 1.4 2.7 12.5 24.8 Rural 9.4 86.2 2.0 92.0 6.2 70.4 88.1 Urban 4.6 13.8 0.7 8.0 5.5 29.6 11.9 OBC 7.0 34.6 1.9 49.6 6.0 38.2 48.9 SC 15.0 34.4 2.8 25.3 7.7 25.5 21.7 ST 11.6 5.4 3.6 11.3 10.3 10.9 6.4 Other 5.9 20.8 0.6 13.7 3.7 20.7 19.3 All India 8.3 100 1.7 100 6.0 100 100 Source: Ajwad (2006) based on the 2005 IHDS data. Note: Coverage rate for NOAPS among households with member 65 and above, for widows as share of households with a widow, and for disabled, as share of all households. Note: Disability pension coverage calculated from survey-based coverage for whole population and census-based state rate of disabled people. Note that the other social group category excludes Brahmins. CHAPTER-2: Improving Implementation: Protective Programs centralmonitoringofNSAPperformanceshouldbe TaRgeTeD houSing PRogRamS furtherstrengthened,despitetherelianceonACA ratherthanCSSfinancingmode.Social pensions targeted rural housing programs are a significant are one of the few major national programs for element of the indian safety net. The main targeted which simple consolidated reporting on various rural housing program is IAY, which has been performance indicators is not available in annual implemented as a stand-alone program since 1996, reports of the Ministry of Rural Development. At having been a sub-component of public works schemes a minimum, this would be desirable. A welcome prior to that. It is estimated that on an average about 23 recent initiative is the computerization of lakh houses are built every year under various schemes, NSAP beneficiaries that significantly increases with IAY accounting for two thirds of the total, and other transparency and enables the central Ministry assistance provided by Housing and Urban Development to monitor outcomes. States are currently in the Corporation (HUDCO), National Housing Bank, State process of moving to a full-fledged MIS for NSAP. Housing Boards and Commercial Banks the remainder. As importantly, the central Ministry could act as a The variation in the design of the various housing more effective conduit for sharing of good state- programs and targeting approaches requires detailed level experience in different aspects of policy and program-specific recommendations. Nonetheless, some implementation. board suggestions include: experience suggests that the previous fund flow attempt to develop and implement mechanisms modelofsendingsocialpensiontransfersdirectly in states for minimizing the significant rent- to DRDA level is preferable to routing through seeking that appears to be happening in IAY. state treasuries, and that its reintroduction This is inherently challenging so long as benefits should be considered. The strongest argument involve large lump sums. However, the nature of for this is evidence of even rich states such as rural housing needs and behavior among the poor Gujarat diverting social pension transfers for suggest that the program can be better adapted other purposes, something that is less likely with to needs. DRDA routing. In addition, delays in on-payment ensure that safeguards in current guidelines by state treasuries could be avoided with such are actually enforced. The recent introduction a model. However, this potentially entails a of "permanent waiting lists" based on the BPL policy decision to make the program a centrally list and the requirement of displaying these sponsored scheme. waiting lists in a public area (e.g., the wall of theverificationprocessforcurrentbeneficiaries the panchayat building) is the first step in bystatesneedstobemaderegular,andaprocess increasing transparency in the program. In this forremedialactiondeveloped.Presently, simple respect, options such as social audits seen in the checks such as comparison of census and Mahatma Gandhi National Rural Employment beneficiary information by district is typically Guarantee Scheme may offer an additional not done, and has proven very informative where mechanism. A second obvious improvement has been done in identifying outliers on the up would be to provide for direct transfers to and downsides (e.g., in Karnataka). This would households via the banking system or post allow a more targeted process of performance offices. Such a reform in IAY in Bihar has been audit. In addition to state departments, there introduced recently, and field visits indicate may be a potential role in such an enhanced significant reductions in leakage of funds due process for PRIs. to the reduction in intermediation by officials in areviewofpaymentsystemsforsocialpensions the benefit payment process. wouldbedesirableinanumberofstates,aswould conductadetailedstudyonpracticesamongthe athroughefforttoreconcilesometimesdivergent rural poor in housing improvement, to explore locallevelandstatelevelreportingonbeneficiary options for better matching scheme design with numbersandotherinformation. needsandpractice. Social Protection for a Changing India: Volume I a longer term option for targeted housing reform include access to credit in order to meet the funding gap may be exploring possibilities for more market-led between the IAY subsidy and the cost of housing as well provision of housing, particularly in urban areas. as access to environmentally sustainable technologies Experience in some metros may provide guidance here, and building materials and services to assist people in and exploring the role of the private sector as financier construction. and constructor but with subsidies to households the more fundamental question on housing programs seems warranted. There are a range of challenges in market-based solutions which are particularly acute for the poor is the extent to which they should for the informal and self-employed sectors of the remain as standalone css, or might more usefully be workforce due to difficulties in credit assessment, the allowed for within an sp (or generalized) block grant need to mitigate risks for lenders, and transactions costs. system.31 The JNNURM approach of having an option Nonetheless, small scale experiences of Micro Finance within a larger program but requiring more pro-active Institutions (MFIs) such as Swadhaar, Ujjivan and BASIX, proposal development and management on the part and interest from small and medium housing finance of local authorities in order to use central funds for low- companies indicate both interest in non-traditional income housing seems worth exploring in the context market players in serving the urban poor for housing of IAY also. This would be more consistent with giving upgradation needs. Initial assessments indicate that states/cities greater local determination in use of CSS market-based solutions may be possible for households resources. Whatever the approach, it would certainly with monthly incomes in the range of ` 4,500-8,000.30 In seem that innovation is needed in the area of public addition, there is a need to integrate housing delivery subsidies for housing for the poor. It is also important to under IAY into a larger process of facilitating access view these programs in the context of the larger housing to safe, sustainable and adequate housing. This could and habitat policy for the country. 30 SeeMonitorGroup(2007)forausefulmarketassessmentofbothdemandandsupplysidesoflowcosturbanhousingoptions. 31 AproposalalongtheselineshasbeenmadebyKapuretal.(2008)usingIAYandSGSYfundsaspartofanenhancedPRIblockgrant. CHAPTER-2: Improving Implementation: Protective Programs Chapter­3 Improving Implementation Public Works and Promotional Programs both public works and promotional social protection commitment to trying to "make the program work". programs have received increased political and Examining the implementation experience of MGNREG budgetary priority in recent years. This seems a sensible in the last four years suggests some lessons for effort to get greater leverage on poverty reduction and improving the delivery of the program in states that human capital formation from the safety net. Given that are not doing as well as others. It also identifies some significant spending on these programs, particularly areas that warrant increasing attention as the program MGNREG and mid-day meals, can be expected to matures. Within the first year of its implementation and continue, it will be increasingly important to ensure that covering just 200 districts, 38 million rural households the desired equity and public expenditure efficiency had been issued with a job card (see Table 3.1). By objectives are achieved. The following sections provide 2008/09, this figure has more than tripled to 101 million some recommendations in this respect. rural households registered. In the same year, about 45 million households ­ a third of rural households ­ were provided employment. PuBliC woRkS the variable implementation experience across states many of the appropriate reforms of public works policy offers several valuable cross-state learning. One are already reflected in the guidelines of mgnreg, of the biggest challenges in implementing MGNREG is which in several ways represents the most serious to match the expression of demand with the supply of effort to date to address many of the institutional worksites and employment opportunities. It is vital to and implementation problems encountered in previous address the constraints ­ formal and informal ­ on this works (and indeed several other) programs. In many process. At the broadest level, this goes to the heart of states there has been greater political and institutional what a rights-based, demand-driven approach means in CHAPTER-3: Improving Implementation: Public Works and Promotional Programs Table 3.1: Coverage of mgnReg using administrative data, 2006/07 to 2008/09 2006-07 2007-08 2008-09 Phases i i ii i+ii i ii iii i+ii+iii Households issued job cards (mn) 38 44 21 65 47 25 27 100 Households demanded employment (mn) 21 ­ ­ 34 ­ ­ ­ 45 Households provided employment (mn) 21 23 11 34 22 12 12 45 % Rural households provided employment 39% 43% 33% 39% 40% 35% 23% 33% Number of person days emp. generated (mn) 905 1087 350 1437 1131 509 523 2163 Number of person days per HH employed 43 47 32 42 52 44 45 48 Number of person days per rural household 17 20 11 22 21 15 10 16 % Registered households provided emp. 56% 53% 52% 52% 46% 46% 43% 45% HHs provided 100 or more days of emp. (mn) 2 3 1 4 3 1 2 7 % participating HHs provided 100 or more 10% 13% 5% 11% 15% 10% 18% 14% days of employment Source: MoRD administrative data from the state-wise Monthly Progress Reports (www.nrega.nic.in), last downloaded in January 2010. Data on number of rural households from 2001 Census. practice. Some states have done better at establishing Leapfrogging technical manpower constraints systems to improve the responsiveness of supply to the (e.g.,theshortageofengineersattheblocklevel) demand for work (See Box 3.1). This has typically involved by developing detailed technical specifications attention to or innovations in the following areas: of MGNREG works for different geo-climatic Establishing the implementation structure conditionsasapreparatorystage.This minimizes early in the game and ensuring adequate staff the technical input required at the block and GP with the appropriate orientation and skills. This level at the planning stage and while starting includes serious and sustained efforts at building a worksite. This can be done without the aid of capacity at all levels of the delivery process, technology (e.g., as in Madhya Pradesh) or with often in partnership with the State Institute for technology as an integral part of a transactions- Rural Development. Under the Act, a portion of based Management Information System (e.g., as funds are available for capacity building of those in Andhra Pradesh). involved in MGNREG implementation, including Streamliningtheflowoffundsinvariouswaysso PRIs. Using these funds effectively will be a critical astopreventfundingdelaystoconstrainopening element of program success over time. of worksites or payment of wages. For instance, Generating awareness of the rights and some states (e.g., MP) make available advance entitlements under MGNREG as the first step funds (linked to the volume of MGNREG work) towardsestablishingarighttowork.Over time, with GPs that makes it easier to open worksites there has been some evolution of IEC campaigns in response to demand. In addition, some states in terms of moving from the dissemination of have reduced delays in payment of wages from rights to an emphasis of the need to and the the GP to worker post office accounts (e.g., by means by which individuals can demand that placing a "float" with post offices to make wage right. It is also necessary to make communities payments while waiting for funds transfer; and aware of the unemployment allowance by mandating that the GP MGNREG account and provision in the Act for the guarantee function accounts of MGNREG households to be in the to be credible. It is vital to deepen awareness same branch). raising efforts on MGNREG entitlements, in Revisingtheruralscheduleofrates(SoRs)through close collaboration with civil society and using detailed time and motion studies for different strategies that are tailored to a largely illiterate localesandgroupstoenablea"normal"workerto audience. earntheminimumwageatMGNREGworksites. Social Protection for a Changing India: Volume I Box 3.1: Some state-level innovations in implementing mgnReg Rajasthan According to official statistics, 90 percent of rural households in Rajasthan were provided MGNREG employment in 2008/09 of which 41 percent were provided 100 days of employment. While official figures may overestimate the coverage of the scheme, Rajasthan is also well known for implementation of various transparency safeguards ­ a fact corroborated by many localized surveys. Muster rolls are present at most worksites, daily attendance is taken in front of workers, wages are paid based on group work and measurement and job cards are updated at the time of payment. Awareness of entitlements and processes is high. An active civil society played an active role in the campaign for the right to work and the right to information and has strongly promoted community monitoring through social audits. In addition, the state government has put in considerable effort to improve worksite management practices. Mates (work site supervisors) are trained to maintain muster rolls; they assign tasks to workers; record their output; and ensure worksites facilities are available. All such activities help improve productivity and increase transparency, allowing the program to be scaled up. Some problems persist ­ e.g., Rajasthan continues to have a poor record on payment of minimum wages and has not yet revised its Schedule of Rates to make it MGNREG- friendly. On the whole, however, Rajasthan's success could be attributed to the long history of public employment programs in the state and more importantly to an active civil society that has for years worked on other related movements like the Right to Information. andhra Pradesh The movement here is driven by the government which has undertaken significant efforts to innovate and improve the delivery of the program, setting up administrative machinery and systems in readiness for MGNREG. Some of the best practices adopted by the government include a focus on monitoring and accountability by using ICT tools and relying on communities. The former included the development of a web-based Management Information System with a local language interface that handles registrations, work estimates, muster rolls and wages to ensure correct and timely payment of wages and allows open access to reliable, timely and comparable information from the field. AP was the first state to institutionalize social audits as early as 2006, with a focus on follow-up action by the administration in the aftermath of such audits. AP also undertook several time and motion studies to revise the rural SORs to reflect the higher labor intensity and regional variation in MGNREG work. In addition, AP was among the first states to introduce payment of wages directly into workers' post office or bank accounts (opened in the name of the women within the household). Tamil nadu The state of Tamil Nadu has used administrative monitoring effectively to increase transparency under MGNREG. In some districts, a daily audit is done of the nominal muster rolls (NMRs). All NMRs are closed by 11 am each day and the information is passed from village to block and then to the district level monitoring office through an SMS. Inspection officers visiting worksites then check details with entries in the NMRs. Regular monitoring in this way has helped reduced the scope for `ghost workers'. Similarly, while only 50 percent of MGNREG works are mandated to be undertaken by the Gram Panchayat, Tamil Nadu makes it compulsory that all works are undertaken by the village body. Finally, the state (along with Kerala) has the highest proportion of women participating in MGNREG ­ about 4 out of every 5 beneficiaries are women, a number that is also confirmed by many social audits. However, lack of childcare facilities at the worksites continues to remain a problem. Partneringwithcivilsocietyorganizationstowork and relevance of assets created under mgnreg is assupportagencieson a variety of areas, including warranted as the program matures. This is critical if orientation and capacity building of MGNREG staff, MGNREG is to have any long-term impact on the rural awareness generation and mobilization among economy and future livelihoods. In addition, the creation workers, promoting participatory planning of of appropriate, durable and productive assets could works, and enhancing accountability. potentially help garner the support of non-MGNREG participants for the program and a stake in improving Emphasizing the commitment to transparency program outcomes. There are many elements to this and accountability. While the design of increased focus on the second objective of the Act: MGNREG contains many safeguards in terms Explore options for a wider range of works of transparency and accountability, actual implementation on this front has been highly authorized under MGNREG to reflect variable variable. This includes institutionalizing social needs and to dovetail with other programs so accountability mechanisms, making the MIS up- as to contribute towards a coherent village development plan. The list of eligible works to-date, and a continued emphasis on monitoring needs to be flexible enough to incorporate and community mobilization. seasonality, differences in geo-climatic in addition, increased attention by policy-makers conditions and the needs of specific groups, and implementing agencies on improving the quality particularly those not capable of hard manual CHAPTER-3: Improving Implementation: Public Works and Promotional Programs labor. As experience grows, this would be worth of different types of works) to the gram sabha looking at from several perspectives, some of during the planning process and development which are currently under discussion. The first is of shelf of works. Similarly, monitoring of the the range of works that could be implemented quality and durability of assets created will in flood-prone, water-logged, heavily forested increasingly become important. In this respect, or mountainous areas. The second is the range MGNREG could draw on international experience of possible works which could be offered to all (e.g., Bangladesh's Food For Work program) on MGNREG workers, and whether some "softer" developing cost effective methods for estimating work options ­ e.g., related to provision of social rates of return on assets. In addition, the use of welfare or community services for vulnerable technology such as GIS in both planning and populations ­ could be introduced which have monitoring would be. positive social externalities. The third is looking an additional issue for consideration is whether at the specific needs of sub-groups for whom any element of direct human capital formation can special efforts may be needed to provide be factored into mgnreg as it matures. Presently appropriate work, e.g., disabled people who there is no provision under MGNREG for skill formation may not be able to carry out hard physical labor. among workers. This may be something that could be The fourth is exploring options for MGNREG considered in due course with the view of enhancing to finance the labor component while the not just current but also future livelihoods. One option community (or other line departments) co- to consider is the South African public works program financing works that may not be on the approved which provides for two days training per month of list of MGNREG works but are part of the larger work for those undertaking public works. While such village development plan. an approach obviously requires a supply side agency ­ Revitalize Gram Sabhas and institutionalize the probably on a contracted-out basis ­ which can provide directinvolvementofcommunitiesinidentification useful training, it seems a useful option to consider in ofworksundertakenunderMGNREGinawaythat future development of MGNREG. isintegratedwiththelargervillagedevelopment a final issue is that public works for the poor remain plan.This has to date been the weakest element in restricted to rural areas. Recently, policy-makers the chain, largely because gramsabhas are often have started to discuss the possibility of designing a not held. If the Act's objective of empowering self-targeted public works programs for the urban poor. communities and strengthening grassroots Such programs already exist in the works schemes of democracy is to be achieved, it will be important a number of developing countries such as Ethiopia, to ensure that the role of gramsabhasanticipated Liberia, Colombia, and some other African and Latin under the Act is made a reality. This includes American countries. Drawing on the experience ensuring gramsabhas are held regularly, building of these countries, for example the role of urban the capacity of gram sabhas in participatory communities in identification of beneficiaries, planning planning, community oversight and other and execution of works, and oversight, would be useful relevant areas and the mobilization of groups in designing an urban public works program for Indian such as SHGs and CBOs to have their priorities cities and towns. In fact, one of the north eastern states reflected through the gramsabha process. is planning to introduce an employment guarantee for Establishsystemsforprovidingin-timetechnical urban areas as a state-funded scheme. Combining such inputsforassetplanningandevaluation,beyond a program with vocational or technical training would the currently mandated technical supervision enable young participants to upgrade their skills and during asset creation. This includes providing also compete in the labor market. An example of such technical inputs (e.g., through village-level resource an approach is being developed in Kenya for youths mapping to ascertain the technical feasibility living in urban slums.32 32 SeedelNinnoetal.(2009). Social Protection for a Changing India: Volume I are also more likely to enforce repayment, reducing PRogRamS To PRomoTe rent-seeking opportunities seen presently, and movemenT ouT oF PoveRTy in provide appropriate support services to their members. MFIs often have savings as an integral The ShoRT anD long Run element of their relationship with clients, so that credit provision is reinforced by savings that can Targeted rural credit act as cushions against household shocks. At the same time, a significant issue would be the relative the government has recently undertaken a significant terms of SGSY lending and those of most MFIs to overhaul of the sgsy in the form of the national their existing clientele, and such an option would rural livelihood mission. The main reasons for SGSY's demand some degree of harmonization between and predecessor programs' weak performance strongly MFI financial, reporting and other procedures and suggested the need for a fundamental reform that went those of government. beyond marginal improvements. In many ways, the where local labor markets are stagnant and/or restructuring of the existing program into NRLM goes a long way in doing this. migrationisalreadysignificant,financingsupport services for poor migrant workers which would the nrlm moves away from the precisely defined credit reducesomeoftheeconomicandsocialcostsof program for the poor as exemplified by sgsy and irdp migration, and increase its benefits. There are and instead includes a range of livelihood support already interesting small-scale examples of such options for the poor. This is consistent with the options initiatives, e.g., in southern Rajasthan with workers in the SP block grant proposed within the "3+ block" migrating to Gujarat. Some of the services that outlined in the Executive Summary. The rationale behind could be provided include: (i) reliable remittance such a restructuring and reorientation is necessary for a mechanisms; (ii) support for children of migrating variety of reasons: (i) the nature of labor markets across workers either in situ or in destination sites to and within states varies sufficiently that a "one size fits ensure that they do not drop out of school; and all" credit program seems increasingly inappropriate; (iii) provision of reliable information on labor (ii) the livelihood support needs of individual groups market conditions in destination areas, probably and poor households that go beyond credit are also through a contracted-out service provider diverse, and uniform CSS have failed to respond to this; contract. (iii) the growing penetration of both commercial banks and other non-bank players such as MFIs make the challenge for the poor making them "bankable" rather School stipends than being the sole source of formal credit. while the evidence on school stipends suggests that they such an approach would require greater effort by are not as well targeted as many safety net schemes, states to develop state specific poverty reduction their objective is distinguishable. The position of this strategies for the effective use of central subsidies report is that they will continue to be an intervention for livelihoods promotion. The NRLM design gives worth expanding, though with serious thought about states a fair degree of flexibility in trying different some design elements. The more pertinent concerns approaches to livelihood support; some further options with school stipends seem to be two-fold: (i) in their could be explored in this regard: current form, where stipends are based on enrollment using reputable MFIs as a channel for credit and not attendance and thus with no assurance that the delivery where they have a presence. MFIs have intended outcome is being promoted, stipends are less a strong interest in developing a sustained likely to achieve the goal of improved human capital relationship with BPL clientele, and more diverse acquisition among the poor; and (ii) stipend schemes and community-based sources of information do not provide choice for households in schooling, on borrowers, allowing for a more informed being linked to enrollment only in government and assessment of risk in the lending transaction. They aided schools. This may reduce their potential welfare CHAPTER-3: Improving Implementation: Public Works and Promotional Programs impacts not only for the household, but also for the where the conditions are appropriate, or perhaps in education system, by increasing the marginal costs of areas in selected states where the participation in private private schooling and reducing the accountability of the schooling by poor households is more pronounced (e.g., public system that might otherwise be encouraged by in urban areas where the experience of a pilot in urban households "voting with their feet". Delhi was fairly positive).33 there seem solid arguments for exploring ways in which to make stipend receipt conditional on a specified level midday meals of actual attendance rather than simply enrollment, which in itself may not contribute to human capital like mgnrega, the mid- day meals program is also investments. The obvious challenge that such a transition conceived as a universal right rather than a would present is operating an effective system to record targeted program. Mid-day meals are a universal and verify school attendance. However, evidence from entitlement for all children enrolled in government or a growing number of countries which have introduced government aided schools. With the recent expansion, conditional cash transfers based on a specified level of midday meals have become an increasingly important school attendance indicates a range of positive effects part of the Indian safety net. While the national level on attendance, and other household welfare indicators. impacts of midday meals in educational, nutritional Though several central and state-specific CCT programs and other dimensions remains to be understood in exist in India, these operate more as cash transfers depth, the evidence available suggests that MDM rather than conditional cash transfers. Key challenges have had positive effects at least on enrolments. As in the effective implementation of these programs as a result, the MDM program provides an interesting CCTs include the monitoring and enforcement of the example of a major demand side SP intervention conditionality and a weak institutional framework for which has great potential. In this context, a stronger such cross-sectoral programs. In addition, supply-side focus on monitoring and evaluation is warranted. This constraints in the provision of services, particularly in requires establish systems to monitor the performance rural areas, could also play a role. in the field with respect to inputs (such as already being done for example for school infrastructure for the arguments on introducing a demand side element to providing meals), outputs (besides administrative stipends through either expansion to private unaided data on children availing of MDM) and outcomes. The schools or use of education vouchers redeemable in latter requires conducting more widely representative private schools are more complex. It is probably not studies on the various impacts of midday meals, in possible to think about any wholesale shift to systems particular nutritional impacts. In addition, while several like vouchers which would be relatively new in the Indian concerns on coverage and implementation have been context, and one where international experience ­ addressed through the recent expansion and revised particularly in developing countries ­ is far more limited. guidelines, more can be done to reduce the variability However, this should not preclude piloting in states in performance across states. 33 CMSSocial(2009).SeealsoShahandBraun-Munzinger(2006)foracriticalreviewoftheexperienceofelevencountrieswitheducationvouchers,withadiscussion oflessonsforIndia. 6 Social Protection for a Changing India: Volume I Chapter­4 Social Security Closing the Coverage Gap in addition to social assistance programs aimed at about how to expand pension and health insurance alleviating existing poverty, many social protection coverage to the vast majority of India's unorganized labor systems insure against a range of shocks that can force. Closing the "coverage gap" is an important policy often lead to poverty.34 These social security schemes objective in India and many developing countries.37 generally include provisions for old age, disability india's unorganized labor force is vast and and death of the breadwinner under the umbrella heterogeneous and this reality must be taken into term, pensions.35 Many countries have also tied health account in any attempt to extend coverage of insurance coverage to membership in social security social security programs. One important distinction schemes which require contributions or premia while is between households that are either too poor to others have opted for general revenue financing.36 This contribute or have already experienced the shocks section is about the schemes that operate in India today that could otherwise be insured through contributory for both organized and unorganised sector workers. In schemes. In these cases, social assistance i.e., cash addition, based on recent experience, it outlines thinking transfers on a means-tested basis are the appropriate 34 Otherimportantsourcesofincomeprotectionsuchascropandlivestockinsurancearenottypicallycoveredbysocialinsuranceprograms,butarecriticalinterms ofprotectionagainstcovariateshocksintheruralsectorincountrieslikeIndia.Itisalsoworthnotingthatlumpyexpendituresforweddingsarealsoimportantin theIndiancontext. 35 Unemploymentandcashbenefitsformaternity(asopposedtomedicalinsurance)areoftencoveredbygovernmentsponsoredsocialinsuranceschemes.There aremoralhazardproblemsinbothcases,especiallywithregardtounemployment.Moreover,thedefinitionandmonitoringofunemploymentforunorganised sectorworkersisdifficulttoadminister.ESISoffersanunemploymentbenefit. 36 SeeWagstaff(2007)forasummaryoftheongoingdebatebetweenthesemodels. 37 Foradetaileddiscussionofextensionofsocialinsurancecoverageinthecontextofpensions,seeHolzmann,RobalinoandTakayama(2009). CHAPTER-4: Social Security: Closing the Coverage Gap intervention. At the same time, a large proportion of provide policymakers with information ranging from households would benefit from ex ante interventions the factors affecting voluntary participation to data that allowed for risk pooling and were made more that could help with actuarial calculations of cost.38 affordable through direct subsidies. Among these Implementation lessons might include estimates of the households, a subset is already participating in a number costs of specific transactions, such as processing a claim of uncoordinated attempts ­ mostly through group or issuing a statement and the potential savings from arrangements ­ to provide protection against a range the scale economies usually found in administration of life-cycle risks. Some are sponsored by government, and recordkeeping operations. Comparing notes across such as welfare funds while others are NGO-based existing schemes might yield useful information about initiatives that often involve microinsurance. Table 4.1 how to efficiently use technology or how to set up presents a range of programs, by no means exhaustive, processes to certify eligibility and verify claims. In some aimed at the unorganized sector. The total coverage cases, there may be evidence that supports government is not likely to exceed ten percent of the unorganized action through better regulation or direct provision of labor force for any given type of insurance. public goods. The case of unique identifiers, already mentioned, is likely to be one such case. the lessons from some of the schemes that already exist in india should be distilled and applied in the process many of the existing schemes use a form of the of adopting a new national policy for extending partner-agent model and this approach has several social protection coverage. These experiences could advantages over the alternative, the creation of a new Table 4.1: Selected insurance and pension programs of the unorganized sector estimated Type of risk name of program membership (000s)** covered Government Universal Health Insurance 1000 Health Central Welfare funds (5)* 4500 (est.) Health, education, housing, other Kerala Welfare funds (55) 4900 Varies, all kinds Karnataka Labor Welfare fund 675 Life, health Andhra Pradesh Labor Welfare fund 1000 Life Tamil Nadu construction worker welfare fund 631 Life, health, pension, other Tamil Nadu Voluntary Health Service 125 Health Maharastra Mahadi workers fund 150 Life, health, other West Bengal Provident Funds (2)*** 1800 Old age Non-governmental**** LIC ­ JBY scheme 3570 Life UTI ­ pension scheme 100 Old age Yashivini ­ Karnataka 2100 Health Karuna Trust ­ Karnataka 14 Health Spandana 386 Life Shepherd 15 Life SEWA Gujarat 100 Life, health, pension, other People's Rural Health Promotion Scheme 75 ASA 66 Life and Health * includes beedie, mica, limestone, iron ore and cine workers funds. ** memberships are double counted in some cases since both groups and providers are shown here. *** includes both urban and rural provident funds. **** list is not exhaustive and excludes, among others, life and health insurance for ICICI clients. Sources: Irudaya Rajan (2004); Roth et al., 2005; LIC 2006; NCEUS 2006. 38 Unorganised sector workers and subsets therein will exhibit mortality and morbidity patterns that may differ greatly from the typical clientele of insurance companies.Forexample,thelifetablesusedbyLICarebasedonannuitantsmostofwhomarehigherincomeindividualswithmuchlowermortalityratesthan thegeneralpopulation.Adatabasethatsystematicallycollectedthisinformationcouldbeusedtoproduceactuarialtablesthatwouldserveasabenchmarkfor assessingcostswhendesigningtheschemeaswellassupervisingprovidersoncetheschemewasoperational. Social Protection for a Changing India: Volume I layer of government bureaucracy with potentially supervision, some common standards would lakhs of employees. In particular, the PA model has have to be developed, particularly in the area become increasingly relevant in India in recent years ofrecordkeeping.A good example is a universal as financial sector reforms have resulted in competitive standard for identification of covered workers markets for insurance and asset management and have that, in itself, would be a public good with many led to the creation of specialized regulatory institutions. other uses. Another is a ratings system for SHGs This favorable situation should be exploited in order to and other groups based on objective criteria. reduce costs and preempt the problems observed with second, appropriate contribution and insurance monopoly, quasi-state entities that cover formal sector premia would be calculated based on rigorous workers. The key question is whether this `bottom up' actuarialcalculationsthatwereadjustedovertime approach can be successfully scaled up with government to reflect experience. This would help ensure that support. Answering this question could begin with a unfunded liabilities (for example, those that arise series of meetings that could bring together potential when guarantees are offered) did not arise and group participants (SHGs, MFIs, coops etc.), insurance compromise financial sustainability. It would also companies, asset managers, regulators, government make any subsidy involved explicit and transparent. ministries and researchers. direct government subsidy is the third element initially targeting existing groups such as shgs and of successful coverage expansion. In order to mfis is recommended for several reasons including encourage voluntary take up among low income for reducing transaction costs, achieving effective segments of the unorganised labor force, the risk pooling39 and ensuring a minimum critical mass required premia and contributions would have to of voluntary take -up in the early stages of the be subsidized. This subsidy would have to be set program. However, there are tradeoffs involved in at a realistic level given budget constraints.42 such a strategy. First, while the number of such groups the rashstriya swasthya bima yojana (rsby) scheme has been increasing rapidly in recent years, coverage provides a model of coverage expansion that is still relatively low and regionally concentrated effectively encompasses these elements to provide (predominantly in the Southern states).40 Second, any catastrophic health insurance coverage to tens of subsidies involved in such a scheme should not be millions of unorganized sector workers and their expected to mainly reach the very poorest households. families. The scheme is notable for its scalability and Various studies have shown that membership in groups relative transparency achieved through a combination tends to be concentrated in the second and third quintiles of standardized processes and innovative use of rather than the bottom quintile.41 As mentioned above, technology. By contracting out service provision, it for many of these households, the condition that would has allowed competition to set the premium level have been insured already exists (e.g., life insurance for and enough flexibility to adjust this over time. It has widows). In these cases, ex-post transfers in the form of also defined a targeted subsidy which appears to be social pensions seem the appropriate policy response. sustainable in the broader fiscal context. All of these at least three measures are required if these initiatives features make it a good practice example for further are to be successfully scaled up. progress in reducing India's coverage gap. first, in order to take advantage of economies the targeted health insurance scheme rsby now of scale, to ensure portability and to facilitate provides insurance for hospitalization for more than 39 Thesegroupsare,forexample,inamuchbetterpositiontoensurethatallmembersparticipateinahealthinsurancescheme,reducingadverseselectionproblems. 40 AsGhate(2006)reportshowever,thegrowthinthenumberofSHGslinkedwithbankshasincreaseddramaticallyandregionaldisparitiesareshrinkingsomewhat. 41 Seeforexample,BasuandSrivastava(2005)fortherelationshipbetweenincomelevelandmembershipinSHGsinAndhraPradesh.Inthesamevein,Ghate(2006) concludesthat"Microfinanceisbestsuitedtoreachtheeconomicallyactivepoor,whichmayexcludesomeinthelowestdecileortwoofthepopulationthatsuffer fromoldage,illhealthordisability." 42 TheGoIalreadysubsidizesmembersoftheEPFOwithanannualcontributionof1.16percentofthecoveredwagebill.Inaddition,favorabletaxtreatmentof superannuationproductsandthePersonalProvidentFund(PPF),amediumtermsavingsinstrument,resultsintaxexpendituresofanunknownamountthat mostlyaccruetohigherincomeworkerswhopayincometax.Itcouldbearguedthatamatchingsubsidyofthekinddescribedherewouldbebothmoreprogressive thanandhaveamorepositiveimpactfromapublicpolicyperspectivethanexistingsubsidies. CHAPTER-4: Social Security: Closing the Coverage Gap forty million poor people and is growing rapidly. achieving widespread coverage in an effective manner is The RSBY may be the first social sector program in India not possible without the development of information that simultaneously takes into account the perspective systems that allow the goi to track members of these of the poor, focuses on getting the incentives of the programs and the financial flows (contributions, various players that have to deliver the benefits right premia and benefits) efficiently. Innovative use of and encourages changes over time based on evidence. technology may be part of the answer, but in order to The experience of the first year or so has been positive, keep costs down, existing infrastructure such as post particularly in terms of demonstrating that the target offices and banks will have to be harnessed. In addition, population can be reached (despite the poor quality and especially during the first phase of implementation, of the BPL list). However, in no country has such a large the recordkeeping that already exists for groups such as health insurance scheme operated without the oversight SHGs and MFIs should be utilized and, where necessary, of a specialized agency. Setting up this agency is the key upgraded so that it is possible to `plug in' large numbers of short run challenge for the RSBY. participants in a cost effective manner. Both governmental and external assistance could be made available to in addition to the rsby, a number of important groups willing to participate and meeting recordkeeping changes to the social security landscape appear to be standards (including compliance with the unique ID unfolding both in terms of program design as well as system) should be a condition for receipt of subsidies. A delivery. The 2010 Budget includes a budget to finance centrally managed recordkeeping system is one option, a matching contribution of `1000 per annum to those but common standards that allow supervision entities to workers that voluntarily choose to contribute at least monitor effectively are a minimum prerequisite. The time that amount. This incentive, combined with the kind of and resources required to design and construct a national outreach typical of the RSBY program, could generate system of this kind should not be underestimated but a significant increase in pension coverage for the first getting the implementation machinery right at the time in India. beginning will avoid bigger problems down the line. At overall fiscal constraints, along with the need to the same time, India is a world leader in MIS applications so keep transaction costs low and to establish the that state of the art solutions are possible if policymakers credibility new initiatives, suggest that new social accord the issue the importance it merits. security programs be phased in carefully and finally, as noted above, there are many disparate and gradually. This kind of sequencing will inevitably disconnected initiatives in progress by central and imply tradeoffs. For example, as experience in India state governments in india that should be brought already shows, it is easier to implement cash-based under a consolidated national policy framework. benefits covering risks such as death and old age The passage of the Social Security Act at the end of than it is to provide health insurance due to supply 2008 is a positive step towards establishing such a side constraints and the complexities of monitoring framework. It now requires implementation. The Social providers. Add to this the problems of adverse Security Board envisioned under this act can serve as a selection and moral hazard and it becomes clear that coordinating body bringing various efforts under one health insurance is much more difficult to design and umbrella, spell out a national policy complete with implement than pensions. Yet, medical care is likely target benefit levels, costing, subsidy and strategy for to be a greater priority for most unorganised sector phased implementation. In light of the importance of workers and the members of the households that implementation issues and, especially recordkeeping, depend on them for income.43 Nevertheless, extending a special advisory group to make recommendations coverage for other risks in a shorter time frame could on these aspects with the best available technical prevent millions of households from falling into support from public - private sector partners in India poverty in the meantime. could be formed. 43 Interestingly, some surveys, (e.g., Madheswaran et al. 2005a show that unorganised sector workers rate old age pensions higher than insurance for sickness orhealth.However,thedataonactualshocksexperiencedsuggestthathealthshocksaremoreimportanttomosthouseholds,atleastonashorttermbasis. Furthermore, there is evidence that many workers do not value the benefit of health insurance if they do not make a claim and consider the premium `lost'. Pensions,ontheotherhand,aredeferredincomethat,atleastinprinciple,willeventuallybereceived(atleastbyasurvivorincaseofdeath). 0 Social Protection for a Changing India: Volume I Chapter­5 Financing and Institutions for Social Protection like other public interventions, effective social protection systems rely on a mutually supportive FinanCing oF SP PRogRamS web of appropriate policies, capable and empowered broadly speaking, india's share of public spending institutions for implementation, and transparent and on safety nets is reasonable, and indeed quite high adequate financing. This section provides an overview as a share of gdp by international standards of low of financing and institutional aspects of SP programs, key and middle income countries. Its main challenges are determinants of SP system effectiveness in India. It first therefore fourfold: explores financing sources, mechanisms, and patterns in sustaining roughly the current share of public recent years for the major centrally sponsored schemes of spending as overall spending rises. social protection, before examining the rapidly evolving adjusting the composition to spending to greater institutional framework for SP program delivery. emphasis over time on ex ante risk mitigation (i.e., it is clear that social protection is in an exciting social insurance programs for the unorganized phase in terms of policy evolution, financing levels, sector) and promotional programs (including and institutional arrangements. At the same time, those linked to human capital formation). the situation presents an unfinished agenda which in increasing the flexibility of funding from the some ways lacks a coherent vision for the system which centre to states in terms of how it can be used for is informed by the socio-economic developments and different SP interventions, while strengthening institutional capacities. Looking at the financial and the emphasis on spending outcomes. institutional aspects of SP programs covered in this deepening a range of administrative and chapter, some conclusions and recommendations are as institutional reforms in SP service delivery which follows: can contribute to greater expenditure efficiency. CHAPTER-5: Financing and Institutions for Social Protection the notable exception is the area of social insurance, as JNNURM. However, these requirements have not where the share of public spending can be expected been strongly enforced in practice. There is also no to increase notably as india enters middle income obvious mechanism for the Planning Commission to status, and where the imbalance between social monitor performance of specific CSS under NCA, and security spending on the organized and unorganized for ACA only where responsibility is given to a central sectors would be expected to shift in favour of the Ministry. latter. In the medium term, international experience overall, an improved transfer system for sp css and social expectations in India would suggest would need to balance need, capacity and fiscal and significantly increased spending on social insurance administrative effort of states. This could involve for the large uncovered share of workers. It will be several elements, including: important that this increased expenditure priority not be at the expense of social safety net spending, but a first step towards such a system would be rather is financed from a combination of reallocation moving to towards a more outcome based from non-merit spending, growth in aggregate fiscal funding method. Such an approach would, resources, and contributions from workers themselves. however, require a clearer set of outcome In practice, expanding social security to the indicators against which state performance could unorganized sector is likely to require not-insignificant be measured, and a stronger planning function public subsidies to incentivize participation, as one at state and district levels. This approach is one sees for example with RSBY and certain pension that is already being used in India in some donor schemes.44 In addition, effective social insurance programs which are results or outcome-based. programs can in part be expected to be self-financing a second step in such a process may be in two ways: (i) they should help control additional allowing for sanctioning of allocations for demands on the safety net that might otherwise states which stretch across two to three budget arise due to factors such as population ageing; and years, which could lessen current incentives (ii) international evidence suggests that effective social to spend SP allocations inefficiently (or simply security systems can actually contribute to growth in parking them in accounts), and also assist a variety of ways, from enabling higher risk/higher with programs which are subject to cyclical return productive activities to cushioning the impacts demand ­ such as public works ­ which is not of growth-enhancing reforms for those who lose out presently synchronized with the budget planning from them in the short run.45 and release cycle. there are pros and cons of different possible methods a third step could be the block grant for SP of more flexible central funding for sp programs. programsoutlinedabove. Firstly, there would be natural reluctance from central an alternative approach which could be Ministries to simply transferring SP CSS resources implementedevenintheabsenceofmoreserious to Normal or even Additional Central Assistance, as financingreformsisthecreationofanincentive evidenced by the failure to transfer several CSS to fundforstatesforSPprograms.An SP incentive states as per the 1999 Planning Commission list fund could either be stand-alone or a window of of schemes. More specifically, as Normal Central broader proposal for a decentralization incentive Assistance is based on population and poverty fund. Alternatively, a central innovation fund under the Gadgil formula and not on performance, for social protection could be created which incentives for states to improve performance on could allow states to access central funds on specific SP programs would be relatively weak. For a proposal-driven basis for innovations in SP Additional Central Assistance, there are examples of program delivery, or experimentation with new linking transfers to state reform performance, such initiatives. 44 Forinternationalexperienceonmatchingsubsidiestoincentivizeparticipationinpensionprogramsforinformalsectorworkers,seeHolzmannetal.(2009). 45 SeeWDR,(2006),foradiscussionofinternationalevidencethatthereisnonecessarygrowth-equitytrade-off. Social Protection for a Changing India: Volume I inSTiTuTional RoleS FoR SP cases where concurrent responsibilities arise for programs where DRDAs and/or PRIs have specific PRogRamS responsibilities assigned to them under CSS guidelines. Where such concurrent responsibilities the most fundamental institutional challenges are apparent, further dialogue between the in sp css continue to be delineating clear lines of states and centre would be needed to agree accountability in service delivery, and supporting the whether CSS guidelines need to provide more authorized actors with adequate staff and finances. flexibility to states on institutional arrangements This will require first and foremost greater proactivity for programs, or whether states need to be on the part of states to approve policies and put into encouraged to move more actively on state- practice the PRI/ULB decentralization provided for under the 73rd and 74th constitutional amendments. With specific assignments which are consistent with notable exception of Kerala, and incomplete examples CSS programs (with Kerala providing a good such as Rajasthan and Karnataka, most states have yet to example of such a proactive role by states). Such define the framework for decentralized service delivery discussions could be guided by both public in a sufficiently operational manner. finance criteria for assigning responsibilities, and basic management principles for enhancing this would need to be followed by a process-intensive accountability.46 reconciliation of central guidelines, state-level havingdeterminedanappropriateassignmentof stances on service delivery decentralization, and functions to different levels, a fuller assessment capacities at sub-state levels to perform the required is needed of the personnel and financial implementation functions in sp programs. This is not implications of carrying out required functions. a process which will generate a single "right" answer Where enhanced personnel capacity is needed, on the assignment of activities to different actors at this would then need ­ as is the case with different levels of the system. What it could usefully MGNREG ­ to include the financing of needs achieve however is a more considered assessment by in program costing, and the capacity building both centre and states of what is the chain of activities requirements at different levels. from top to bottom required to deliver effective SP programs, and of the realistic potential of different graduallyinstitutionalizingrolesforcommunities actors to deliver on their proposed responsibilities. This inbothselectedelementsofCSSdelivery,andin could in time improve the alignment of functions, funds community oversight of program functioning. and functionaries in SP programs. Such efforts would Again, the model of MGNREG provides a need to focus in particular on elements of the service useful precedent. This is also likely to involve delivery chain at block level and below. The process partnerships with NGOs to build local capacity could involve several steps: for effective social audit, and the more general "unbundling"eachcoreSPCSStoitsconstituent obligations of the state for disclosure of program functions or services and specific activities in information, as has proved effective for example different programs, as has been done for the in Rajasthan. The RSBY scheme also provides MGNREG and RSBY guidelines. While implicit in useful precedents on the role of NGOs and other guidelines of some other schemes, such a simple grassroots organizations in SP service delivery exercise would be a useful building block for a and demand side mobilization. principled division of functions across levels. taking lessons from the emerging experience in forallstates,producingaconsolidatedmapping India and beyond in public-private partnerships of the current assignment of sectors and SP in different aspects of SP service delivery. program-specific functions, both de jure and Increasingly, the private sector has been de facto. This exercise would clearly identify playing different roles in the SP service delivery 46 SeealsotherecommendationsoftheEmpoweredSub-CommitteeoftheNationalDevelopmentCouncil(NDC)onFinancialandAdministrativeEmpowerment ofthePRIsJuly2008. CHAPTER-5: Financing and Institutions for Social Protection chain. RSBY is the most advanced example, envelopes for programs for the following fiscal with involvement of private insurers, private year in order to facilitate lower level planning hospitals, private sector smart card providers and and budget management; and (ii) ensure that outsourced software development, as well as states which have not already done so appoint roles for grassroots organizations noted above. District Planning Committees, and ensure However, many other programs ­ particularly adequate financing for technical support at state level ­ have been experimenting with to DPCs. outsourcing of different functions. In some cases, associalsecurityexpands,theroleoftheprivate this involves partnerships on technology, such as sector (as insurers) and a range of member- the role of TCS in managing MGNREG databases based organizations such as MFIs, NGOs and in AP, or smart card provision by commercial firms workers associations is already becoming in a number of pilots. In others, there is a more increasingly important, and demands new involved role for the private sector, such as in modes of engagement and partnership form Bihar where rural informatics service centres for the public sector. The biggest constraint on RD programs at block level have been assigned expanding social security to the unorganized following a tender process, in which for-profit sector has been developing delivery mechanisms and not-for-profit organizations operate the which can deal with the transactions costs of information and database management of RD reaching unorganized workers. This requires programs on behalf of the state Government. intensive engagement with intermediary in addition to the above needs on institutional roles, partners between government/insurers and specific suggestions include: unorganized workers, as well as learning from at both central and state levels, formation of efficient insurance distribution channels of an inter-departmental Task Force or Authority public and private insurers. The RSBY provides for Social Protection, which would promote an excellent model of partnership, as do more coordination across programs targeted towards localized initiatives such as UTI partnerships similar populations, and promote more coherent with both state governments and organizations strategy development on the medium term such as SEWA, and the roles of trade unions and policy mix and priorities in social protection. employer organizations in some of the welfare The cases of Mission Convergence in Delhi funds around the country. and the Safety Nets Authority in UP provide for M&E, develop a disaggregated picture of interesting models, which could be adapted by potentialandcapacitiesatdifferentlevelsofthe other states. systemformonitoringandevaluation,and align forprogramplanning,severalinitiativeswould program guidelines in that light. The proposal be useful, including: (i) earlier notification to establish a national Independent Evaluation to states and DRDAs of estimated funding Office is a welcome step with respect to M&E. Social Protection for a Changing India: Volume I Chapter­6 Social Protection Program Administration with a myriad of programs and plans to introduce new schemes, expand coverage and consolidate awaReneSS anD ouTReaCh existing schemes, it is an important time to assess while program awareness and outreach is an relevant experiences and identify both good and bad inherently difficult process in a country of india's administrative practices. While India may not have size and diversity, experience from states and for the advantage of other countries of running a well- specific programs such as mgnreg indicates that much organized centralized machinery of administration can be done if there is sufficient will. An improved of public benefits, some strategic priorities could awareness and outreach strategy would likely involve be defined to achieve better benefit delivery and several elements: transparent operation. In particular, policies seeking developing a better picture of what are the harmonization, portability, and transparency in key information sources of the poor on public benefit provisions, and otherwise ensuring minimum programs, including what types of information operational standards, should be designed, endorsed, theygetfromwhichchannels.The limited survey and promoted. Capacity to regulate and supervise information indicates that typical government various benefit providers and their intermediaries media campaigns, web-based information, and should be gradually built. Furthermore, a firm stand information from administrative officials are not could be taken on the policy of registration and the channels through which the poor find out tracking of beneficiaries of the public programs. about programs. From the discussion above, and from the insights of many GoI and independent studies on program providing in SP program budgets for sustained performance of CSS SP programs, some more specific awarenessraisingbythirdpartieswherepossible. recommendations emerge: Field work for this report indicates that program CHAPTER-6: Social Protection Program Administration awareness dissemination is not a one-time aPPliCaTionS PRoCeSS activity, but a product of repeat contacts and review program eligibility criteria on several local sources of reliable information. This tends not to be the approach of most IEC campaigns for key programs with a view to simplification of SP programs. eligibilityproofandunderstandingofthepublic. One aspect of this would be exploring avenues developingamorediverserangeofIECstrategies for reliable third party verification of certain facts forprogramawarenessraising.This would involve where documentary evidence is not available or not only a more diverse range of actors as tools costly to gather. of information dissemination (including NGOs, proactive exploration of how SP programs can SHGs, youth groups, social and religious leaders), reducetransactionscostsofprogramapplication but also a more diverse set of information tools throughlinkingtotherangeofICTinitiativessuch (including visual media suitable for non-literate as rural business kiosks and other village-level audiences, television and radio campaigns connectivity initiatives. The emerging examples which more creatively engage audiences rather in other contexts such as spreading availability of than simply presenting program guidelines, land records through rural E-kiosks (e.g., Bhoomi in use of community, etc.). Box 6.1 highlights the Karnataka) and availability of market information community monitoring experiences in Rajasthan (e.g., ITC's E-chaupal initiative) suggest that and Andhra Pradesh. concerted effort between SP departments and deepening the use of social audits not only as a their ICT department colleagues could pave the tool for program monitoring, but as a source of way for a major contribution to simplification programinformationdissemination. of program applications, and significant cost Box 6.1: Community monitoring of social programs: experience from Rajasthan and aP MKSS (Organization for the Power of Workers and Farmers), a Rajasthani NGO, organized a series of junsunwais or public hearings on performance of public programs targeted to the poor. The meeting is an open forum which aims to include community members, social activities, lawyers, media and public officials. At the meeting, public documents on program performance are read out, and participants are encouraged to ask questions and give examples of their own experience in program operation in reaction to the official records. Initially, this approach was resisted by many officials, who objected that official documents could only be audited by official auditors. In some cases, court orders were sought to avoid sharing information through such an extra-judicial mechanism. While the junsunwais meeting has no official mandate and hence sanction authority, it has proved a useful tool for "naming and shaming" in order to improve program performance. Some officials have returned funds, others have quit or been suspended, and arrests were made in some cases. On the policy side, the process resulted in amendments to the Rajasthan Panchayati Raj Act to allow public access to all documents under anti-poverty programs, and the development of social audit guidelines. The process has also now been extended to some urban areas such as Delhi. The methodology has also been used intensively through "padyatris" on the MGNREG, and MKSS has conducted two trainings for participants from other states in the social audit methodology. Building on the Rajasthan experience and with the mandate of the MGNREG guidelines, the state of AP has taken a proactive role in promoting social audits in the districts where MGNREG is operational. The Department of RD and Panchayati Raj set up a social audit wing, which trained district resource people, who are training village level organizers. Initial social audits have now been documented in all 13 districts in the state where MGNREG is implemented. This has also involved widespread NGO participation. Training has been provided for village level workers in social audits processes. For example, in Anantpur district, 1200 workers were organized in team of 10-13 members covered 38 mandals in a 10 day period, and then conducted a mandal-level "social audit forum" to discuss main findings. The social audit process involves several steps after training: (i) teams are given a checklist of key implementation issues; (ii) key financial reports, muster rolls and other documentation are procured from local officials under the RTI Act; (iii) a household level survey is done; (iv) visits are carried out at work sites, and a village meeting is held to share information and discuss problems found; and (v) a mandal level social audit forum is called where officials and the community attend and officials are asked to explain discrepancies in implementation. While managing these processes has been challenging, the interaction between communities, PRIs and officials is generally considered useful, and has resulted in dismissal of lower level field staff in a number of cases. At the same time, the social audit has generally been better at dealing with small level grievances than systemic issues, and it remains to be seen how sustained the process and its impacts will be as implementation continues. Sources: OHCHR/UNDP workshop; Samji and Aiyar. 6 Social Protection for a Changing India: Volume I reductions for applicant households (not to as part of strengthening the accounting mention lower opportunities for undesirable and financial reporting framework, it will be middlemen). increasingly important in SP CSS which route encourage­ifnecessarywithpublicsubsidyona through DRDAs to develop standard financial contracting-outbasis­NGO,SHGandotherCBO reporting rules for societies, which would intermediationtofacilitateprogramapplications, subsequentlybereflectedintheGFRsforGoIand and increase the use of camp approaches to thestates.This work would most sensibly be led registration by the administration itself. Given by CAG and ICAI. that the culture of reliance on middlemen is addressthebackloginexternalauditsofSPCSS, so prevalent, it seems sensible to encourage and a more competitive process of selection of the efforts of middlemen (or more likely third party accountants responsible for auditing "middlewomen") who are more likely to have the societies. All Ministries implementing SP CSS interests of the applicant at stake. should also post the findings and actions taken in terms of program oversight, it seems sensible on audits on websites. to target IAY and SGSY for particular scrutiny, equally ­ and more challenging in terms of includinguseofsocialaudits. bureaucratic culture ­ there is a strong need to sharetheexperiencesofstateswhicharepiloting deepen the uses to which financial information biometricandotherICTadvancestoreducefraud on programs is put, and hence to move away and human error in the beneficiary recording from the simple input/output culture of financial process. reporting which prevails in most CSS. finally, the positive development of increased citizen accountability for SP funds use seen in FinanCial managemenT MGNREG should be institutionalized over time some of the needed improvements are in the in all SP programs, with basic initiatives like domain of states, and they will need to follow posting of all program releases and uses, the lead of recent reformers in areas like public greater reliance on social audits, and posting expenditure management rules and expansion of beneficiary lists and program rules in plain ofICTinreleaseandtrackingoffunds.They will language. A number of these are natural also need to facilitate sustained FM capacity corollaries of the Right to Information Act, but development in PRIs if the intentions of their full potential remains to be exploited in decentralization of SP programs are to be realized. most states of India to date. This will also require in most states a more elaborated financial accountability framework for PRIs and sub-state implementation agents. PaymenT SySTemS anD other reforms ­ such as accounting for SP CSS resources as "spent" when they have not been ReCoRD keePing and application of accrual accounting ­ will reforms of payment systems can take a range of require coordinated efforts of the centre and forms, both technology-based, and where that is not statesonreportingprocessesthatrequirereliable possible, with community monitoring of payments. information on physical and other outcomes of Some of technological the options include: "spending".The example of MGNREG reporting in some states provides a good model which should low cost ATMs developed at a fraction of cost of be institutionalized. A first step in coordinated the conventional machines, equipped with finger effort between the centre and states could be print identification and long-life batteries, can clear agreement on the necessary skills needed facilitate cash distribution in remote areas. for FM at different levels of the system for SP point-of-service (POS) devices installed in local programs (and more broadly), and agreement on shops and gas stations can use regular telephone action plans for ensuring adequate skills. lines to process on-line cash disbursement CHAPTER-6: Social Protection Program Administration transactions, or ­ in the case of PDS ­ facilities for encourage greater cross-program information debiting the monthly ration. exchange for programs with common elements special mobile branches could make conventional such as being food-based or child-focused. banking more accessible, enabling regular and as a condition of CSS receipts, the centre could schedules visits in the remote communities. insist that a computerization strategy and roll-out finally, mobile phone banking is an emerging plan for SP programs be developed, including a phenomenon that utilizes comprehensive training plan. This seems a bare minimum for penetration of the new communication networks. movement towards a modern system of record keeping. more generally, cost recovery mechanisms of different encourage states to be more proactive in exploring operational alternatives to the conventional models outsourcing possibilities on development of of service provision should be further studied. program record-keeping software. India offers While some models are quite promising, their financial a particularly promising environment for such viability as localized stand-alone solutions remains a efforts, though there would remain an important concern. Clever solutions may simply need to be scaled role for the central government in ensuring up in order to reach the break-even point of economic consistency in basic design features, and thus operation. Furthermore, strategies enabling synergies comparability of data from different states. across multiple programs should be further explored. For example, while the smart card technology may be a costly solution if utilized only by a single benefit moniToRing anD evaluaTion program, using it as a common platform for multiple products (e.g., various benefit and insurance schemes) ensure that any major SP program has a pre- may well help to make its application a sound economic program baseline done, and that impact evalua- tions also include control areas where feasible. proposition. explore replicating the model of MGNREG with with respect to record keeping, the experiences of more provision for more robust research and evaluation progressive states such as karnataka offer lessons financed from the program budget. for others. Some of the issues for attention include: on monitoring: (i) review the current set of training (and subsequent monitoring and monitoring indicators for major programs to assess enforcement of compliance) for GPs and blocks in their utility and gaps in key program indicators; maintaining appropriate registers of beneficiaries. (ii) if necessary on a contracted-out basis or As one of the challenges in this work with be under special units (e.g., as Orissa has developed capacity constraints at both levels, it could be under its Poverty Monitoring Agency), conduct useful to explore options for supplementing regular basic analysis of consolidated program this in non-costly ways, such as providing skilled monitoring information at state and central levels; workers from MGNREG as temporary assistants to and (iii) explores institutional mechanisms in the gram sewak. states and at the centre to use the analysis of such at the state and district level, development of units for annual review of program performance simple verification exercises which will allow and policy implications. program oversight to focus on high-risk areas. building on the social audit experience in some Even available monitoring data often throws up states, mainstream social audits as a standard obvious anomalies, but is typically not used for practice in all SP programs. While the experience this purpose. is relatively new on any scale, social audits seem a at central and state levels, improve cross- useful tool for increasing community knowledge departmental coordination on a range of record of programs and providing a vehicle for redress keeping issues, starting with a strategy for where needed. However, in the absence of an convergence of beneficiary identification numbers. authorizing environment in program guidelines Even where systems remain parallel for the short (such as under MGNREG), the potential of social to medium term, Collectors and BDOs should audits will remain limited. Social Protection for a Changing India: Volume I Chapter­7 Targeting Mechanisms the analysis in the report suggests there is major scope distribution of social protection resources, with the to improve targeting systems for public programs in "bottom-up" information on the characteristics india. At the same time, there are several generic issues of the poor which might do a better job of ranking which must be taken into account in reforming targeting households at the grassroots level. Table 7.1 in SP programs: the distribution of households exhibits Table 7.1: Type of targeting by SP programs considerable clustering around the poverty line Program Type of targeting nationally, making fine-tuned targeting design PDS grain Ration card inherently challenging. Annapurna grain Ration card there is considerable diversity across states in Rural credit (SGSY) BPL list the factors that are correlated with poverty, so Rural public works Self-targeting that reliance on standard national indicators in (MGNREG, SGRY, FFW) targeting systems has inherent weaknesses. Rural housing support (IAY) BPL list community level beneficiary identification has IGNOAPS Categorical (age) + BPL list attractions in such an environment. However, Disability pension Categorical (disability) its strength is within-community targeting at a Widow pension Categorical (widowhood) very localized level in relative terms rather than Subsidized health BPL list the kind of absolute measure of poor people insurance (RSBY) necessary for comparisons across space. Scholarship Categorical (social group, gender) Sources: Program guidelines. Note that NOAPS was earlier targeted using a key challenge therefore is how might the system state-specific definitions of "destitution" in IGNOAPS; these have now been marry the "top down" targeting necessary for spatial substituted by BPL status. CHAPTER-7: Targeting Mechanisms describes major social protection programs and their geographic targeting and the "backbone" BPL method, targeting approaches. There appear to be several before a discussion of more substantial reform elements of a potential strategy. These are discussed options. below, first presenting more modest reform proposals, and then presenting an option which would imply more substantial reform. imPRoving geogRaPhiC international evidence on targeting outcomes TaRgeTing provides useful insights in thinking about an with respect to geographic targeting of central sp appropriate targeting mix. Three observations emerge allocations, it would be useful to generate sub- from a review of targeting methods and outcomes in state estimates of poverty using poverty mapping 122 targeted programs in 47 developing and transition techniques, and use these as the basis for future countries: spatial resource allocation.48 Poverty mapping some methods have better targeting outcomes allows for reliable small area estimates of poverty than others when taken across a wide range of below the state level by combining information from countries. the NSS household survey data with unit record combining targeting methods generally results in data from the Census. Since the late 1990s, detailed improved outcomes. For example, a combination "poverty maps" have been prepared for a growing of three methods improves targeting outcomes by number of developing countries. These maps provide around 30 percent. This potential improvements estimates of poverty and inequality at the local level ­ needs to be traded off however with additional such as the district, sub-district, and even village level. administrative costs and demands, and the risks Such information is not commonly available because of too much complexity introducing possibilities household surveys are typically too small in sample for manipulation. size to permit sufficiently fine disaggregation. at the same time, there is also strong variation Yet, with ongoing efforts to apply detailed spatial across countries in targeting outcomes within targeting of public interventions, or to realize the each method, pointing to the importance of gains from decentralization and community-centered country specificities and implementation capacity development, there is a pressing need for information in considering options. Across the sample of on distributional outcomes at the local level. programs, around 80 percent of the variation in in india, this could reliably generate poverty estimates targeting outcomes is accounted for by within at block level. While progress on this front would not method variation, and around 20 percent by address the issue of household level targeting, it would between method variations. One important significantly reduce issues of targeting across space dimension of this is community "voice" in the within states. In India, a pilot effort to produce poverty society, which internationally improves targeting maps in three states - West Bengal, Orissa and Andhra outcomes by around 23 percent. Pradesh ­ is ongoing. Once that is complete, it would be international evidence therefore clearly suggests a more precise basis for allocations of CSS SP resources that no single targeting method will ever be across space. In particular, these poverty maps can sufficient, and that the policy question is whether potentially be an important part of a strategy to marry a more effective mix of methods can be employed "top down" targeting (essential for fiscal allocations of for sp (and other programs).47 This would include resources across space) with "bottom-up" targeting of improvements in methods for each type of targeting, households or individuals (e.g., through community- and potentially a different mix of methods. The based methods that rely on local knowledge but are discussion below focuses initially on improvements in not comparable across space). 47 SeeCoadyetal.(2004)forausefuldiscussionofdifferenttargetingmethodsandcombinationsindevelopingcountries. 48 SeeElbersetal.(2003)fordiscussionofthepovertymappingmethodologyandWorldBank(forthcoming-a)foradiscussiononthepilotsinIndia. 0 Social Protection for a Changing India: Volume I imPRoving houSeholD-level share of non-agricultural workers. Finally, these block- level estimates would be used to generate GP-level TaRgeTing quotas for BPL households on the basis of population estimates. Estimating these disaggregated sub-district in addition, there is a major need to improve india's thresholds as well as choosing alternative rules to household level targeting systems, though the range generate GP-level quotas could be left to the discretion of options varies between urban and rural areas, and of the state government or district authorities. by program type. This section looks at three possible reforms in the BPL methodology as well as the potential identifying poor households: The basic principle role of other methods, including community-based and behind the methodology being proposed is to ensure self-targeting methods. None of them provide a "magic the inclusion of groups that are regarded as particularly bullet" for all programs, but are suggestive of options for vulnerable (e.g., workers in low income or highly improvement which may contribute to a more effective vulnerable occupational categories, households where mix of targeting methods. earning capacity is severely curtailed by external constraints, etc.) and/or groups that are historically reforming the bpl method. given the concerns over subjected to social exclusion. The proposed method widespread exclusion and inclusion errors in the 2002 of identifying households has the following three bpl method, an expert committee has suggested elements: significant changes in design of the proposed 2009 bpl census (as described in the Saxena Committee report).49 Automatic exclusion of visibly non-poor house- One, the method proposes the automatic exclusion holds of visibly non-poor households and the automatic Automatic inclusion of the poorest and most inclusion of the most vulnerable households, with a vulnerable households survey and scoring only of the remaining households. Scoring of the remaining households (except Two, the new method overlays geographic targeting in districts with poverty above the specified criteria by specifying district, block and GP-level quotas threshold ­ 80 percent - where all households, with respect to the proportion of BPL households. except those automatically excluded, are In districts that have a very high proportion of BPL identified as poor without a survey). households (over 80 percent), all households (except the visibly non-poor) would be considered to be Automatic exclusion of households that are poor and automatically included in the BPL list. This meet certain criteria and are identified as non- design reduces administrative demands and cost to poor: The intention is to exclude households some extent by reducing the scope of the survey. The that are visibly non-poor, but whose position of underlying principle of the proposed methodology is economic, social or political privilege makes it to minimize errors of exclusion, without worrying over- possible for them to get (wrongly) included in BPL much about errors of inclusion. The elements of the lists. The exclusion criteria include the following: proposed method are described below. (a) households with double the land of the district average of the agricultural land per agricultural setting quotas for the distribution of bpl households household if partially or wholly irrigated (three across space: District-level thresholds for the proportion times if completely unirrigated); (b) households of BPL households could be set using the ratio of SC/ who have two-wheeled (or more than two ST population in the district to that in the state, the wheeled) motorized vehicles; (c) households who inverse of agricultural production per rural person and have at least one mechanized farm equipment; agricultural wage rate of the district.50 These could then (d) households who have any person who is be used to estimate block-level proportions of the poor drawing a salary of over ` 10,000 per month in using any one or a combination of indicators on soil and non-government/private organizations or is irrigation quality, road connectivity, female literacy and employed in government (including parastatals) 50 SaxenaCommitteereport(2009). 51 ThisisthestandardformulausedforfiscalallocationsforRuralDevelopmentprograms. CHAPTER-7: Targeting Mechanisms on a regular basis with pension or equivalent criteria: (a) caste and religious affiliation ­ SC/ benefits; (e) income tax payers.51 These criteria ST (3 points), denotified tribes and designated are an improvement over those used in the `Most Backward Castes' (2 points), Muslim/ 1997 BPL method as (i) they allow for some local OBC (1 point); (b) any one household member variation to a limited extent (e.g., land holding is engaged in the following occupations ­ landless assessed relative to the local average instead of agricultural worker (4 points), agricultural the all-India threshold of two hectares previously) laborer with some land (3 points), casual and (ii) focus only on high-value assets that workers (2 points), self-employed artisans or may be more successful in separating the rich fisher folk (2 points); (c) no adult above the age from the poor. of 30 with schooling up to grade five (1 point); Automatic inclusion of certain categories of (d) any household member with TB, leprosy, households that are considered to be among mental illness or HIV/AIDS or disability (1 point); the poorest and most vulnerable: These include and (e) households headed by an old person of the following categories: (a) designated Primitive age 60 and above (1 point). Since the bunching Tribal Groups; (b) designated most discriminated of a large number of households is possible at against SC groups (called Maha Dalit Groups), certain scores, the method proposes a ranking if so identified by the state; (c) single women of households with the same score, with those in headed households; (d) households with disabled the special category group such as SC/ST at the person as bread-earner; (e) households headed top, followed by landless agricultural laborers by a minor; (f ) destitute households that are and so on. dependent predominantly on alms for survival; (g) this proposal is a modest approach to reform in homeless households; and (h) households where that it proposes continuing with the bpl system with any member is a bonded laborer. However, there some improvements. The proposed methodology is is some confusion in the treatment of households an improvement over the 2002 BPL method in some and individuals while operationalizing these ways: (i) The indicators chosen are likely to be highly criteria. While the report focuses for the most correlated with poverty for the most part (though not part on households (i.e., a joint family that resides necessarily for the elderly).52 Some of these indicators under a common roof and eat from a common (gender of household head, education, occupation) kitchen) and nuclear families, some of the specific were among a wider set of indicators used by Jalan categories noted above relate to individuals. In this and Murgai (2007) in their augmented regression case, the report suggests treating these groups model that performed much better than the 2002 BPL as separate households (e.g., single women with method. However, while the reduction in the number of no major son, elderly couples or individuals, etc.). indicators increases simplicity in field processes, it may However, it is not clear how to score the remaining make it more difficult to separate the rich from the poor household members. Also, not all of these criteria and the poor from the poorest; (ii) Weights have been are easily measurable or verifiable in the field ­ assigned to the indicators as noted above. However, e.g., a functional assessment of disability requires weights have not been applied across states; and several detailed questions and highly trained (iii) The use of the geographic, automatic inclusion and investigators. exclusion criteria reduce the scope of the survey and Grading of the remaining households (identified hence administrative demands and costs. Subjecting as poor) in order to prioritize programs and this methodology to the test using NSS data as done services to the poorest among these households: with the 2002 BPL method would yield interesting The proposed scoring system ranks households insights into how well the new de jure targeting design on a scale from one to ten using the following would perform. 51 Thesecriteriaapplytotheentirejointfamily­i.e.,thefirstcriteriaofhigherthanaveragelandownershipwouldapplyeventothesonofalargefarmereven thoughhemaynotactuallyhavelandregisteredinhisname. 52 SeePalandPalacios(2008)foracomparisonofpovertyratesamongtheelderly. Social Protection for a Changing India: Volume I however, several drawbacks of the previous bpl method regression models for greater targeting power. remain, particularly with respect to the imposition While the proposed 2009 BPL methodology does of central criteria across diverse local contexts, include criteria such as caste affiliation that have cardinality of indicators, and the same process of been found to be strong correlates of poverty, aggregation. In addition, there are likely to be reporting the preferred method for such an exercise is to issues with some of the indicators (e.g., chronic health use the NSS or other representative national problems, disability). The adoption of this methodology data to generate a set of indicators that provide will also have significant fiscal implications. The inclusion more targeting power, and which could be easily criteria are defined on the basis of nuclear families and verifiable at reasonable cost. individuals who are considered as separate households whatever indicators are used, they should have for the purpose of this exercise. This would lead to the some weighting ­ preferably on a state-specific number of BPL households increasing significantly, basis. The basis for such weights and a more implying possible rationing within these households if sensible ranking between levels of each indicator program budgets do not rise adequately. should be the NSS data, or other representative national data where relevant. In contrast, as a result, there is still scope to move to a more the proposed BPL methodology and Kerala's developed form of proxy means-test, using methods Kudumbashree use a set of weighted indicators which are good practice in developing countries, for for the identification of poor households, but the both rural and urban areas. Box 7.1 summarizes some weights do not appear to be based on regression international experiences with proxy means testing. analysis. These are likely to be assigned by There are several possible elements in such as reform: committee or, in the case of Kudumbashree, evenifstandardnationalBPLcriteriaareretained, developed by communities in a participatory these should be determined using rigorous manner. Box 7.1: international experiences with proxy means testing Targeting on the basis of proxy means test like the BPL is becoming more common in developing countries. Generally such methods are used for large benefits and/or for multiple programs. Current examples include use of PMT for cash transfers (Armenia, Colombia, Mexico), targeting food subsidies and rations (Indonesia, Turkey), rationing entry for subsidized health insurance schemes (Colombia) etc. PMTs are also currently being designed and piloted in Bangladesh and Pakistan. In general, PMTs are relatively insensitive to quick changes in welfare and require time to design, pilot and set up systems for implementation, monitoring and redressal. As a result, PMTs are best suited for targeting the chronic poor in stable situations and not as a response to crises. From reviews of international experience with PMT, several common features emerge which can be considered good practice. India in its BPL system relies on some of these but not others: Design:Typically a PMT is designed using regression models of total household income or consumption on the selected variables, often separately for different regions of the country. This process, usually iterative, should yield: l Indicators that are the best possible proxies to predict poverty in rural and/or urban settings. l Indicators that are easily observable and not easily manipulated by households. l A weighting across the indicators, with the weights derived from the regression model. l Not too many indicators to be used in the PMT. Around two dozen variables are used typically when one looks at programs internationally. l Piloting before finalizing the PMT allows validation of the tool against other indicators of household welfare using current data. Implementation: The use of PMT requires institutional capacity for collection of household-level information and for subsequent database management. l Governments or project teams may decide to collect information through a door-to-door census type exercise or through targeting centers (combined with outreach and communication strategies to minimize exclusion). l Some countries combine the use of PMT with home visits or other methods for ensuring both that those identified through the PMT are actually poor, and to check on others. While desirable, this needs to be trade off with additional administrative costs and capacities. l In some countries, the scoring system is made public. l There is often an appeals process to mitigate the negative impacts on some poor households of the mechanical nature of the PMT formula. CHAPTER-7: Targeting Mechanisms a preferred approach beyond the above would administrative demands and avoiding multiple be to let the indicators in the BPL methodology targeting criteria. The Saxena Committee draft vary by state, or perhaps groups of states. As report makes this recommendation. However, in the purpose of BPL is increasingly ranking of states where the two do not presently coincide, households rather than determining aggregate political economy may make convergence numbers of poor people (which remain controlled challenging, particularly where BPL ration cards through the linkage to Planning Commission significantly exceed the numbers on BPL lists. aggregates for states), there seems no inherent no comparable central guidelines for a census need to insist on standard national indicators. As of poor households exists for urban areas. part of a process to generate indicators, it would be worthwhile to simulate state or region-specific Typically, the identification of poor households is indicator sets and test their power in ranking of carried out separately by different departments, such households. as the Food and Civil Supplies Department for PDS ration cards. However, methods differ across states piloting the proposed method would allow and departments and there is little systematic an assessment of how well these indicators information on this process. Notable exceptions are capture household welfare, measured using Delhi and Kerala. More recently, Delhi has defined a other accepted measures such as per capita common process of identification of the poor across consumptionand/orassetindices. programs. This defines a set of thematic indicators BPLlistsshouldbesubjecttolocalizedverification capturing residential location, social deprivation by communities, using gram sabhas or other and occupational vulnerability to identify vulnerable mechanisms. In principle, this should happen, households. The underlying principle of promoting and does in some states (e.g., HP) and/or for inclusion and several of the specific indicators are similar specific programs. However, the process is not to those proposed in the rural 2009 BPL methodology. systematic and made more complicated by the A survey is currently underway to collect information fact that gram sabhas are held infrequently and on households in poor localities, with the intention of participation is often low in most states.53 If it covering other areas over time. The list of vulnerable were to become more standard, it may be useful households so generated would be used by the nine in some areas to have the verification process state departments that are engaged in delivering facilitated by NGOs or other third parties where programs or services to the urban poor. This is a very there are concerns of elite capture. Verification positive step towards generating a common beneficiary and finalization of the BPL list by the gramsabha database for multiple programs, thereby reducing is one of the suggestions made by the Saxena administrative costs and increasing transparency. This, Committee draft report. however, does not necessarily mean that all programs build in systems for dynamic updating of BPL would need to target the same groups. Programs such listsinbetweencensuses.The Saxena Committee as educational scholarships that target SC/ST children draft report suggests holding a census once could use the information in the common database every ten years, combined with a system for to continue targeting on caste affiliation rather than updating the lists every two years by registering vulnerability status. changes in household circumstances. However, while the above reforms could significantly improve the report does not specify the implementation the bpl system, international and indian evidence arrangements for doing this. suggests that indicator-based targeting ­ even requirestatestohavecommonBPLlistsandBPL where generated robustly from reliable survey ration card aggregates, preferably consistent data ­ will struggle to explain a significant portion also at the household level. Several states of variations in living standards across households. already do this, and it has the benefit of saving This is true in a static sense, where such methods rarely 53 Eveninthefoursouthernstates,only20percentofhouseholdsreportedattendedagramsabha(Besleyetal.2005). Social Protection for a Changing India: Volume I explain more than half the variance in household can be mitigated through a stronger community role in consumption.54 identifying beneficiaries. as happens presently with community wealth ranking, oTheR ReFoRm oPTionS the process would benefit from being framed within general criteria for ranking households. From an while reform of the bpl system is highly desirable, implementation viewpoint, there is a tension between there may be additional options in rural areas of more localized guidelines and minimizing intensity of some states for community-based targeting to play process and costs in developing the guidelines. However, a stronger role in sp programs. As the centre enforces experience from India (e.g., Kerala's Kudumbshree) convergence on aggregate numbers of poor people and from other countries which have formalized between Planning Commission estimates and the BPL community identification into their formal SP systems system, possibilities for more significant reforms of (e.g., Uzbekistan), suggests that this is a surmountable targeting systems could be considered in rural areas challenge. (though perhaps not in urban, where an enhanced PMT whether the modest or more fundamental reform would seem more feasible). options are pursued, self-targeting (as happens in once a poverty map is available at block level, public works) would continue to be a useful tool reliance on community-level wealth ranking becomes for programs where it is suitable. This approach is a feasible option as a tool within the formal system most effective when used to target goods or services for identifying sp beneficiaries. While not an ideal that are more heavily consumed by the poor than the match, the availability of aggregate numbers to block non-poor, and for programs where monitoring costs level and community ranking at GP/village level comes associated with verification of eligibility are high. close to the "top-down" and the "bottom-up" meeting. Programs such as public works are amenable to self- To the extent there remains a gap, solutions such as targeting approaches through the wage rate and assuming even poverty rates within the block, or some types of work offered. Others such as subsidized credit simple indicators such as population share (as is being lend themselves less readily to self-targeting. For cash proposed in the Saxena Committee draft report) or SC/ benefits, the possible role of self-targeting will depend ST share or landless share in different villages might on benefit levels, ease of accessing programs and other be used to allocate SP resources within a block. The factors. Despite these obvious limitations, the empirical precedent of Andhra Pradesh is instructive, where a list results in Chapter 4 highlighting the superior targeting of poor household generated entirely by community performance of public works suggests that "cutting wealth ranking has replaced the administratively out the middleman" in targeting of SP programs generated BPL list across the state for the main remains an important tool for programs where the anti-poverty programs administered by the Rural nature of the self-targeting requirement or of benefits Development Department. This may not be feasible offered permits. This suggests that self-targeting in all states (e.g., where caste fragmentation is high should continue to play a role in programs where it is and risks of local elite capture more pronounced), and suitable. An important additional factor supporting would need facilitation by competent NGOs. However, this conclusion is that self-targeting may minimize the an evaluation of the AP experience, and well-evaluated political costs of clear designation of target groups, by pilots in other states seem warranted to see whether allowing policymakers to describe such programs as some of the shortcomings of even a well-designed PMT "open to all". 54 Forexample,Egypt'sPMTforitsfoodrationingsystemcapturesonly43percentofthevariationinconsumptionsacrosshouseholds,andArmenia'sonlyaround onequarterofthevariation. CHAPTER-7: Targeting Mechanisms Chapter­8 Political Economy of Social Protection Reform the political economy of sp policy reorientation is and more effective as a tool for promoting poverty complex, and will require intensive efforts to build reduction and inclusive growth include: consensus on reforms. In particular, it will be important as in many areas of policy reform in India, to ensure that the interests of perceived "losers" of SP consolidation and reform of the SP system and broader economic reforms are taken into account. within a coherent strategy will run counter to While reforms that involve expanded coverage or new the past experience of scheme-driven initiatives types of interventions are unlikely to be controversial, by a plethora of Ministries, and the observed there are strong interests in preserving the status quo tendency of each new government at both in SP programs among a range of actors, including centralandstatelevelstowantnewSPprograms administrators, politicians, contractors and others. clearly distinguishable from their predecessors. Simply cutting programs or excluding certain groups of Reducing these natural bureaucratic and political beneficiaries or institutional players is therefore unlikely tendencies will be very challenging. A first step is to be successful unless incentives for institutions and obviously having an integrated SP strategy which households which will be affected by reforms can be is driven by the top politicians and bureaucrats part of the reform package. The political economy of SP at central and state levels, with strong inputs reform is challenging in all countries, and governments from civil society in its development, including in India would benefit from more innovation in their opposition parties. However, even if such a efforts to create a broader societal understanding of the strategy process can be developed, it will be need for and benefits of reforms. important for it not to become a "one shot" exercise, but to have institutional coordination some of the political economy challenges that the mechanisms in place which explore program sp system confronts if it is to become more coherent duplication and exploit synergies. CHAPTER-8: Political Economy of Social Protection Reform givingstatesamoreflexiblehandinuseofcentral capacity), and the extent to which panchayats SPresourceswillbeachallengingtransformation effectively promote accountability in SP service both for central administrators (whose past delivery or are captured by local social, political tendency has been to define the parameters for and administrative elites. use of central funds quite tightly) and politicians a more nascent, but powerful, element in the (who not unexpectedly seek political attribution politicaleconomyofSPreformisthepolicyshift for centrally-financed schemes implemented by towards a rights based approach. Government states). The first of these challenges in perhaps of India is increasingly operationalizing such an easier to address through development of more approach in a number of areas through legislation outcome-based monitoring systems. The second and specific policies and programs. For instance, is more difficult in a democracy. the Right to Information Act was passed in 2005 in a number of programs, there are presently and mandates the government to release timely significantrent-seekingopportunitiesforarange information demanded by citizens. It has been ofactors.Such opportunities are facilitated by the widely hailed as one of the most important current complexity of the SP program mix, but drivers of governance reform and transparency also by the number of intermediaries who often in India. The Right to Food and Right to are involved in the interactions of poor people Livelihood movements are led by civil society, with the SP system. The generic identity of such but have managed to influence government so official intermediaries and unofficial middlemen that the National Rural Employment Guarantee is generally well-understood, but minimizing the Act, (now renamed the Mahatma Gandhi Rural potential avenues for their continued roles has only Employment Guarantee Act) was passed in recently become a more explicit goal of SP policy 2005. Other similar Acts include the Right to design. While it is too early to say, even apparently Education Act (2009), the Scheduled Tribes and naïve blanket bans on certain actors in legislation Other Traditional Forest Dwellers (Recognition of and/or guidelines (such as the ban on contractors Forest Rights) Act (often called simply the "Tribal under MGNREGA) do appear to help. However, a Rights Act", 2006) while legislations such as for more comprehensive approach will require a more food security are on the anvil. thorough modernization of SP business processes. a consequence of the above is the increasingly Examples where such approaches already appear to be making headway include greater reliance on prominent role of communities and civil society direct transfers to beneficiaries through banking in promoting more effective poverty reduction and postal systems, and innovations in use of ICT outcomes from spending. In this respect, the in SP program delivery. strengthening of the "authorizing environment" for communities in SP service delivery in recent amorerecentandfluiddevelopmentinthepolitical years is encouraging. This is both cross-cutting, economyofSP(andmuchother)servicedeliveryis through reforms such as the Right to Information howincreaseddecentralizationofresponsibilities Act, and program specific, such as the anticipated to panchayats ­ in particular GPs ­ generates role of social audits in MGNREGA, and new roles different patterns of contention, cooperation for community groups such as SHGs in delivery of and collusion between newly elected panchayat some SP services (e.g., running Fair Price Shops). officials and traditional loci of influence among However, there is no guarantee of "trickle down" administrators and higher level politicians such as to citizens in terms of awareness of their emerging MLAs and MPs. An essential first step in promoting entitlements. The role of NGOs, media and other decentralization of SP service delivery as a tool for actors in this respect cannot be under-stated, contestability and hence accountability will be as various political and administrative actors getting a better empirical understanding of the at local level may not have strong incentives diversity and evolution of experience. This would to promote such citizen-based accountability include how the gradual increase in the role of mechanisms. Notable examples such as MKSS in panchayats is proceeding (and what factors ­ Rajasthan demonstrate the potential impacts of such as limited control of resources and very low such partnerships. Social Protection for a Changing India: Volume I References Aakella, K. V. and S. Kidambi (2007a). "Challenging Afridi, F. (2005). "Mid-day Meals in Two States". Economic Corruption with Social Audits". Economic and Political andPoliticalWeekly. Vol. 40(15): 1528-1534. Weekly. Vol. 42(5): 345-347. Afridi, F. (2007). "Child Welfare Programs and Child Aakella, K. V. and S. Kidambi (2007b). "Social Audits in Nutrition: Evidence from a Mandated School Meal Andhra Pradesh: A Process in Evolution". Economic and Program in India". Department of Economics, Syracuse Political Weekly. Vol. 42(47): 18-19. University. Acharya Akash and Kent Ranson (2005) `Health Care Agarwal, B. (1990). "Social Security and the Family: Financing for the Poor: community based Health Insurance Schemes in Gujarat', Economic and Political Coping with Seasonality and Calamity in Rural India". Weekly. Vol. 40 (38) pp. 4141- 4150. JournalofPeasantStudies, Vol. 17(3): 341-412. Action for Food Production (2009). "Infrastructure Ahmed. A. and A. Narain (2010). "India's employment Development and Beyond: exploring the scope for challenge: Creating jobs, helping workers". Oxford sustainable livelihood support under NREGA in Chainpur University Press. Block, Gumla District, Jharkhand". A study commissioned United Nations Development Programme (UNDP) Ahuja, R. (2005). "Health insurance for the poor in with the support of Ministry of Rural Development, India: selected issues". Journal of Insurance and Risk Government of India. management. Vol. 6(7): 89 -114. Adhikari, A. and K. Bhatia (2010). "NREGA Wage Payments: Aiyar and Samji (2006). "Improving the effectiveness of Can We Bank on the Banks?". Economic and Political National Rural Employment Guarantee Act". Economic Weekly. Vol. 45(1): 30-37. andPoliticalWeekly.Vol. 41(4): 320-326. References Ajwad, I. (2006). "Coverage, Incidence and Adequacy of Ban, R., M. Das Gupta and V. Rao (2008). "The Political Safety Net Programs in India". Prepared as a background Economy of Village Sanitation in South India: Capture paper for Social Protection for a Changing India, or Poor Information?". Policy Research Working Paper World Bank. Number 4802, World Bank. Alam, M. (2004). "Ageing, Old Age Income Security Bardhan, P. and D. Mookherjee (2000). "Capture and and Reforms: An exploration of Indian Situation". governance at local and national levels". American Economic and Political Weekly. Vol. 39(33): 3731-3740. Economic Review. Vol. 90(2): 135-139. Papers and August 2004. Proceedings of the One Hundred Twelfth Annual Meeting of the American Economic Association, May Alderman, H. (2002). "Do local officials know something 2000. we don't? Decentralization of targeted transfers in Albania," JournalofPublicEconomics, Vol. 83(3): 375-404, Bardhan, P. and D. Mookherjee (2006). "Pro-poor targeting March, 2002. and accountability of local governments in West Bengal". JournalofDevelopmentEconomics. Vol. 79(2): 303-327. Alkire, S. and S. Seth (2008). "Multidimensional Poverty and BPL Measures in India: A Comparison of Basu, P. and P. Srivastava (2005) `Exploring Possibilities: Methods". Working Paper 15, Oxford Poverty & Human Microfinance and Rural Credit Access for the Poor in Development Initiative. India', EconomicandPoliticalWeekly, 40(17). Ambasta, P., P. S. Vijay Shankar and Mihir Shah (2008). Benabou, R. (2000). "Unequal Societies: Income "Two years of NREGA: The Road Ahead". Economic and Distribution and the Social Contract". AmericanEconomic Political Weekly. Vol. 43(8): 41-50. Review, Vol. 90(1): 96-129. Amis, P. (1997). "Indian Urban Poverty: Where are Benjamin, S. (2000). "Governance, economic settings and the levers for its Effective Alleviation". IDS Bulletin, poverty in Bangalore", Environment and Urbanization, Vol. 28(2): 94-105. Vol. 12(1): 35-56. Angelini, J. and K. Hirose (2004). "Extension of Social Berman, P. and R. Ahuja (forthcoming). "Changing Security Coverage for the Informal Economy in utilization and expenditure patterns of health care in Indonesia". ILO Subregional Office for South-East Asia India", manuscript. and the Pacific Working Paper. December 2004. Besley T., R. Pande, L. Rahman and V. Rao (2005). "The ARC (2006). "National Rural Employment Guarantee Act, Politics of Public Good Provision: Evidence From Indian Government of India, New Delhi". Local Governments". Journal of European Economic Association, Vol. 2(2-3): 416: 426. Badiani, R. S. Dercon, P. Kishnan and K. P. C. Rao (2006). Besley, T., R. Pande and V. Rao (2005). "Participatory "Changes in Living Standards in Villages in India democracy in action: survey evidence from South 1975-2004". CPRC Working Paper 85. Prepared as a India". Journal of European Economic Association. background paper for Social Protection for a Changing Vol. 3(2-5): 648-657. India, World Bank. Bhandari, L. and S. Shresth (2003). "Health of the Poor Badiani, R. S. Dercon and P. Krishnan (2006b). and their Subgroups in Urban Areas". Report prepared "Development Programmes, Caste and Capture in for World Bank by Indicus Analytics. Villages in India 1975-2004", published paper. See http://www.isid.ac.in/~planning/PramilaKrishnan.pdf, Bhatia, B. and J. Drèze (2006). "Employment Guarantee last accessed on February 17, 2009. in Jharkhand: Ground realities". Economic and Political Weekly. Vol. 41(29): 3198-3203. Balachander, J., P. V. Dutta, P. O'Keefe (2009). "Jharkhand: Social Protection". Prepared as a background paper Bhatty, K. (2006). "Employment Guarantee and for Social Protection for a Changing India, South Asia Child Rights". Economic and Political Weekly. region, World Bank. Vol. 41(20): 1965-1967. 0 Social Protection for a Changing India: Volume I Bhide, S. and A. K. Mehta (2004). "Chronic Poverty in (Gujarat)". Ministry of Finance, Government of India and Rural India: issues and findings from panel data". Journal World Bank. December 2007. ofHumanDevelopment, Vol. 5(2): 195-209. Calvo C. and S. Dercon (2005). "Measuring Individual Blue, J. (2005): The Government Primary School Mid- Vulnerability." Economics Series Working Papers 229. day Meals Scheme: An Assessment of Programme University of Oxford. Implementation and Impact in Udaipur District, Sewa Mandir, Udaipur. CBGA (2006). "Draft Report on Implementation of NREGA in Andhra Pradesh, Chattisgarh, Jharkhand and Madhya BRAC (2004)."Stories ofTargeting: Process Documentation Pradesh". New Delhi. of Selecting the Ultra poor for CFPR/TUP Programme". CFPR Working paper Series No. 1. BRAC, Dhaka. CDA (2006). Concurrent Monitoring of National Rural Employment Guarantee Act in Guajarat, Centre for Breman, J. (1985). Of Peasants, Migrants, and Paupers. Development Alternatives, Ahmedabad. Delhi: Oxford University Press. Center for Budget and Governance Accountability Breman, J. (1996). FootlooseLabour:WorkingintheIndian (2006). "Report on implementation of NREGA in Andhra Informal Economy. Cambridge: Cambridge University Pradesh, Chhattisgarh, Jharkhand and Madhya Pradesh". Press. CBGA: New Delhi. Brugere, C. and L. John (2003). "Irrigation deficits and Centre for Institute of Fisheries Education (2009). "A Study farmers' vulnerability in Southern India", Agricultural report on appraisal of NREGA programme in Thane and Systems, Vol. 77 (1): 65­88. Akola districts of Maharashtra". Buckley, R. M., J. Kalarickal, M. Singh (2005). "Strategizing Centre for Management Development (2000). "Quick Slum Improvement in India: A Method to Monitor and Evaluation Study of National Social Assistance Refocus Slum Development Programs". Draft World Programme". Study submitted to the Ministry of Rural Bank note. See http://www.worldbank.org/urban/ Development, Government of India. November 2000. symposium2005/papers/buckley.pdf, last accessed on February 18, 2010. CGAP. 2009. "Banking the Poor via G2P Payments". Focus note no. 58. December 2009. CGAP, Department for CAG (2003a). "Report of the CAG on the Union International Development. December 2009. Government". Chapter 3: Rural Housing. Comptroller and Auditor General of India. Chakraborty, P. (2007). "Implementation of Employment Guarantee: A preliminary Appraisal". Economic and CAG (2003b). "Report of the CAG on the Union Political Weekly. Vol. 42(7): 548-551. Government". Chapter 2: Swarnjayanti Gram Swarozgar Yojana. Comptroller and Auditor General of India. Chathukulum, J. and K. Gireesan. (2006). "NREGA: Absence of Ownership". Economic and Political Weekly. CAG (2008). "Performance Audit of implementation Vol. 41(31): 3338, 3340. of NREGA". Office of the Principal Director of Audit, Economic and Service Ministries, New Delhi. Comptroller Chaudhuri, S. (2000). "Empirical Methods for Assessing and Auditor General. Comptroller and Auditor general. Household Vulnerability to Poverty", mimeo, Department of Economics, Columbia University: New York. CAG (2008). "Report No. 13- Performance Audit of National Programme for Nutritional Support to Chaudhuri, S., J. Jalan, and A. Suryahadi (2002). "Assessing Primary Education (Midday meal scheme)". Comptroller household vulnerability to poverty: A methodology and Auditor General of India, Government of India, and estimates for Indonesia". Department of Economics New Delhi. Discussion Paper No. 0102-52. New York: Columbia University. Cal2Cal (2007). "PDS Technical and Feasibility reports. For the pilot of smart card public distribution system Chen, S. and M. Ravallion (2008). "The developing world at Thane district (Maharashtra) and Anand district is poorer than we thought, but no less successful in the References fight against poverty". Policy Research Working Paper Datt, G. and M. Ravallion (1994). "Transfer Benefits from 4703, World Bank. Public-Works Employment: Evidence for Rural India". EconomicJournal. Vol. 104(427): 1346-69. Chopra, K. (2001). "Wastelands and Common Property Land Resources". Seminar, Vol. 499: 24-31. De, A., C. Noronha and M. Samson (2005). "Towards more benefits from Delhi's midday meal scheme". CORD ­ Christiaensen, L. J., and K. Subbarao (2005). "Towards Collaborative Research and Dissemination, New Delhi. an Understanding of Household Vulnerability in Rural October 2005. Kenya". Journal of African Economies, Vol. 14(4): 520-58. de Haan, A. (1999). "Livelihoods and Poverty: The Role of CIESEN (2009)."In Search of Shelter: Mapping the Effects of Migration ­ A Critical Review of the Migration Literature". Climate Change on Displacement and Migration". CIESIN, JournalofDevelopmentStudies, Vol. 36(2): 1-47. United Nations University, and CARE International. de Neuborg (2002). "Incentives and the Role of CMS Social (2009). Delhi voucher project first assessment Institutions in the Provision of Social Safety Nets". Social report, Centre for Media Studies. Protection Discussion Paper Series No. 0226. Social Coady, D. and R. Harris (2004). "Evaluating Transfer Protection Unit, Human Development Network, World Programs within a General Equilibrium Framework". Bank. September 2002. EconomicJournal, Vol. 114(498): 778­99. Deaton, A. and V. Kozel (2005). TheGreatIndianPoverty Coady, D., G. Margaret and H. John (2004). "Targeting of Debate. Delhi: Macmillan India Ltd. Transfers in Developing Countries: Review of Lessons Deaton, A. and J. Drèze. (2009). "Nutrition in India: and Experience". World Bank, Washington DC. facts and interpretation". EconomicandPoliticalWeekly, Conning, J. and M. Kevane (2002). 'Community Based Vol. 44(7): 42-65. February 2009. Targeting for Safety Nets: A Critical Review", World del Ninno C., G. Vecchi and N. Hussain (2006). "Poverty, Development, Vol. 30(3): 375-394. Risk and Vulnerability in Pakistan". Prepared as a Coudouel, A., S. Marnie and J. Micklewright (1998). background paper for "Social Protection in Pakistan: "Targeting Social Assistance in a Transition Economy: The Managing Household Risks and Vulnerability". World Mahallas in Uzbekistan". Innocenti Occasional Papers, Bank and Centre for Research in Poverty and Income Economic and Social Policy Series No. 63, UNICEF. Distribution (CRPRID). CSE (2008a). "An Ecological Act: A backgrounder to the del Ninno, C., Subbarao, K. and Milazzo, A. (2009) How to National Rural Employment Guarantee Act (NREGA)". Make Public Works Work: A Review of the Experiences. Natural Resource Management and Livelihood Unit. SP Discussion Paper No. 0905. Social Protection and Centre for Science and Environment. Centre of Science Labour, Washington, D.C.: World Bank. and Environment. del Rosso J. (1999). "School Feeding Programmes: CSE (2008b). "NREGA: Opportunities and challenges". Improving Effectiveness and Increasing the Benefit to Natural Resource Management and Livelihood Unit, Education. A Guide for Programme Managers". Centre for Science and Environment, New Delhi. 2008. Dercon (2002). "Income Risk, Coping Strategies, CSE (2008c). "An Assessment of the Performance of The and Safety Nets". The World Bank Research Observer, National Rural Employment Guarantee Programme in Vol. 17(2):141-166. Terms of its Potential for Creation of Natural Wealth in Dercon, S. (2005). "Vulnerability: a micro perspective", India's Villages". Centre for Science and Environment. unpublished manuscript. Das, M. (2009). "South Asia: Jobs in the time of the crisis". Desai, S., A. Dubey, B. L. Joshi, M. Sen, A. Shariff Unpublished manuscript, World Bank. and R. Vanneman (2010). Human Development in Das, M. (2010). "The Below Poverty Line List: A note on India: Challenges for a society in transition, Oxford Database Administration". Unpublished manuscript. University Press. Social Protection for a Changing India: Volume I Deshingkar, P., and D. Start (2003). "Seasonal Migration Dror (2006). "Health Insurance for the Poor: Myths for Livelihoods in India: Coping, Accumulation and and Realities". Economic and Political Weekly. Exclusion". Working Paper 220, Overseas Development Vol. 41(43 & 44): 4541-4544. Institute, London. Duflo, A. (2005). "Health Shocks and economic Deshpande, R. S. (2002)."Suicide by Farmers in Karnataka". vulnerability in rural India: break the vicious EconomicandPoliticalWeekly, Vol. 37(26): 2601-2610. circle". Centre for Micro Finance Research Working Paper, IFMR. Dev. M, C. Ravi, B. Viswanathan, A. Gulati, and S. Ramachander (2004). Economic Liberalisation, Dutta, B. and Ramaswami, B. (2001), "Targeting and Targeted programmes and Household food security: Efficiency in the Public Distribution System: Case of A case study of India. Markets Trade Institutions Andhra Pradesh and Maharashtra", EconomicandPolitical Division discussion paper 68. International Food Policy Weekly, Vol. 36(18), Pages 1524-1532, May 05 - May 11, Research Institute, Washington, D.C. 2001. Dev, S. M. (2002). "Pro-poor Growth in India: What do Dutta, K. (2008). Study of Labor Market Interventions we know about the Employment Effects of Growth for Disadvantaged Youth in India, report prepared for 1980­2000?". Working Paper 161, Overseas Development the World Bank. Institute, London. Dutta, P. V. (2005). "Accounting for Wage Inequality Dev, S. M., K. Subbarao, S. Galab and C. Ravi (2007). in India". Indian Journal of Labour Economics, "Safety net programmes: Outreach and effectiveness". Vol. 48(2): 273-295, 2005. Prepared as a background paper for Social Dutta, P. V. (2006). "Poverty, inequality and vulnerability Protection for a Changing India, South Asia region, in India". Prepared as a background paper for Social World Bank. Protection for a Changing India, World Bank. Drèze J. and A. K. Sen (1989). HungerandPublicAction. Dutta, P. V. (2008). "The Performance of Social Pensions Oxford University Press. in India: The Case of Rajasthan". Social Protection Drèze, J., P. Lanjouw and N. Stern (1992). "Economic Discussion paper no. 0834, World Bank. Mobility and Agricultural Labour in Rural India: A Case Elbers, C., T. Fujii, P. Lanjouw, B. Ozler and W. Yin (2007). Study" IndianEconomicReview, Vol. 27 (special number "Poverty alleviation through geographic targeting: in memory of Sukhamoy Chakravarty): 25-54. How much does disaggregation help?". Journal of Drèze, J. and P. V. Srinivasan (1997). "Widowhood DevelopmentEconomics, Vol. 83(1):198-213. and Poverty in Rural India: Some Inferences from G. B. Pant Social Science Institute (2007). "NREGA in Household Survey data", JournalofDevelopmentStudies, Orissa: Ten Loopholes and the Silver Lining". Interim Vol.54(2): 217-234. Survey Report, 21 October. Drèze, J. and A. Sen (2002). India Development and Gaiha, R. (1988)."Income Mobility in Rural India". Economic Participation.Oxford University Press. Development and Cultural Change, Vol. 36(2): 279-302. Drèze, J and C. Oldiges (2007). "Commendable act". January 1988. Frontline. Vol. 24(14). Jul. 14-27, 2007. Gaiha, R. and A. B. Deolalikar (1993). "Persistent, Drèze, J and C. Oldiges (2009). "Work in progress". Expected and Innate Poverty: Estimates for Semi-Arid Frontline. Vol. 26(4). Feb. 14-27, 2009. Rural South India". Cambridge Journal of Economics, Vol. 17(4): 409-421. Drèze, J and R. Khera (2008). "Banned but still there". Frontline. Vol 26(1). 3-16 January 2008. Gaiha, R. and Imai, K. (2004). "Vulnerability, Shocks and Persistence of Poverty: Estimates for Semi- Drèze, J. and R. Khera (2008), The battle for employment Arid Rural South India". Oxford Development Studies, guarantee, Frontline, Vol. 26 (1). Jan. 03-16, 2009. Vol. 32(2): 261-281. References Gaiha, R., S. Shankar, R. Jha (2010). "Targeting Accuracy Alleviation, Government of India. Oxford University of the NREG: Evidence from Rajasthan, Andhra Pradesh Press: New Delhi. and Maharashtra." Australia South Asia Research Centre Government of India (2010). "Economic Survey". Working Paper 2010/03, revised January 2010. Goyal, A. (2005)."Making the Politician and the Bureaucrat Galasso, E. and M. Ravallion (2003). "Social protection in Deliver: Employment Guarantee in India". Indira Gandhi a crisis - Argentina's Plan Jefes y Jefas," Policy Research Institute of Development Research. Working Paper Series 3165, World Bank. Grosh, M., C. Del Ninno, E. Tesliuc, and A. Ouerghi Galasso, E. and M. Ravallion (2005). "Decentralized (2008). "For Protection and Promotion: The Design and targeting of an antipoverty program". JournalofPublic Implementation of Effective Safety Nets". Washington Economics,Vol. 89(4):705-727. DC: World Bank. Gangopadhyay, S., B. Ramaswami and W. Wadhwa. Gubbels, J., D. Snelbecker and L. Zezulin (2007). "The (2005). "Reducing Subsidies on Household Fuels Kosovo Pension Reform: Achievements and Lessons". in India: How will it affect the Poor?". Energy Policy Social Protection Discussion Paper No. 0707, April 2007. Vol.33 (18). pp 2326­36. World Bank. Garand, D. (2005). Vimo SEWA, India (Case study No. 16). Guhan, S. (1994). "Social Security Options for Developing CGap Working Group on Microinsurance, World Bank, Countries". InternationalLabourReview,Vol. 133(1): 36-53. Washington, DC. Gupta, I., and M. Trivedi (2005). "Social Health Insurance Garg, C. and A. Karan (2008). "Reducing out-of-pocket Redefined: Health for All through Coverage for All". expenditures to reduce poverty: a disaggregated Economic and Political Weekly. Vol. 40(38): 4132-4140 analysis at rural-urban and state level in India". Health PolicyandPlanning. Vol. 24(2):116-128. Haberfeld, Y., R.K. Menaria, B.B. Sahoo and R.N. Vyas (1999). "Seasonal Migration of Rural Labour in India". Gentilini, U. (2005). "Mainstreaming Safety Nets in the PopulationResearchandPolicyReview, Vol. 18(4): 73­89. Social Protection Policy Agenda: A New Vision or the Same Old Perspective?". Manuscript, United Nations Haddad, L., M. T. Ruel and J. L. Garret. (1999). "Are urban World Food Programme. Mimeographed document. poverty and undernutrition growing? Some newly assembled evidence". Food Consumption and Nutrition Ghate, Prabhu 2006, "Microfinance in India: A State of the Division Discussion Paper No. 63. International Food Sector Report, 2006", Microfinance India, New Delhi, and Policy Research Institute, Washington, DC. "Indian Microfinance: The Challenges of Rapid Growth, Sage, New Delhi. Hammer, J. S., S. Salimah and A. Yamini (2006). "Bottom's Up: To the Role of Panchayati Raj Institutions Gopal, K. S. (2009). "NREGA Social Audit: Myths and Reality". in Health and Health Services". Social Development Economic and Political Weekly. Vol. 44(43): 70-71. Papers, South Asia Series, Paper No. 98, World Bank, Washington, DC. Government of Himachal Pradesh (2005). "Evaluation Study of Beneficiaries under Old Age, National Old Harriss, J., K. P. Kannan and G. Rodgers (1990). Urban Age and Widow Pension Scheme". Project Report, LabourMarketStructureandJobAccessinIndia:AStudy Department of Economics and Statistics, Government ofCoimbatore.International Institute for Labour Studies, of Himachal Pradesh. ILO, Geneva. Government of India (2005). "Financing and Delivery Heltberg, R. (2007). "Helping South Asia Cope Better of Health Care Services in India". National Commission with Natural Disasters: The Role of Social Protection". on Macroeconomics and Health, Ministry of Health and DevelopmentPolicyReview, Vol. 25(6): 681-698. Family Welfare, New Delhi. Himanshu (2007). "Recent Trends in Poverty and Government of India (2009). "India Urban Poverty Inequality: Some Preliminary Results". Economic & Report 2009". Ministry of Housing and Urban Poverty PoliticalWeekly, Vol.42(06): 497-508. Social Protection for a Changing India: Volume I Himanshu (2009). Cheaper grain's only one part of a Food Indian Institute of Management (2009). "Appraisal of Security Act, Live mint, Fri. Jul 24 2009, see http://www. NREGA in the states of Meghalaya and Sikkim". Rajiv livemint.com/Articles/2009/06/23195210/Cheaper- Gandhi Indian Institute of Management. grain8217s-only-one.html, last accessed on February Indian Institute of Management Bangalore (2008). 18, 2010. "NREGA Surveys in Anantapur, Adilabad, Raichur and Hirway, I. (2003): "Identification of BPL Households for Gulbarga (2007-08)". Study Commissioned by Ministry Poverty Alleviation Programmes". Economic & Political of Rural Development and UNDP. Weekly, Vol.38(45): 4803-38. Indian Institute of Management Calcutta (2009). Hoddinot, J. and A. Quisumbing (2003). "Methods for "National Rural Employment Guarantee Act". Draft Microeconometric Risk and Vulnerability Assessments". report. Social Protection Discussion Paper No. 324, World Bank. Indian Institute of Management Lucknow (2009). Holzmann, R. and S. Jorgenson (2000). "Social Risk "Quick Appraisal of 5 districts under NREGS in Management: A New Conceptual Framework for Social Uttar Pradesh". Centre for Food and Agribusiness Protection and Beyond." Social Protection Discussion Management, Indian Institute of Management Paper Series No. 0006, World Bank. Lucknow. Holzmann, R., D. Robalino and N. Takayama (2009). Indian Institute of Sciences Bangalore (2009). ClosingtheCoverageGap:RoleofSocialPensionsandOther "Environment Services, Vulnerability Reduction and Retirement Income Transfers. World Bank, Washington Natural Resource conservation from NREGA activities". D.C., June 2009. Institute of Development Studies (2008). "Evaluation of Hou, X. and R. Palacios (2010). "Hospitalization of NREGA in Rajasthan". BPL Households in RSBY: Preliminary Evidence", draft Institute of Human Development (2006). "Evaluation paper. and Impact Assessment of National Rural Employment Howes. S. and S. Jha (1992). "Urban bias in Indian public Guarantee Scheme in Bihar". Institute for Human distribution system". Economic and Political Weekly, Development. New Delhi. Vol. 27(19), pp 1022-30. International Institute of Population Sciences (IIPS) and IAMR (2007). All India Report on evaluation of NREGA: A Macro International (2007). "National Family Health survey of twenty districts". Institute of Applied Manpower Survey (NFHS-3) 2005-06". Mumbai: IIPS. Research, Planning Commission of India. New Delhi. International Labor Organization (2004). "India: The IHD (2006): "Evaluation and Impact Assessment of Welfare funds' experience". Technical paper series National Rural Employment Guarantee Scheme in Bihar". 1, June 2004. Institute for Human Development, New Delhi. International Labor Organization (2005a). "Insurance IIT Madras (2009). "Evaluation of National Rural products provided by insurance companies to the Employment Guarantee Act". Rural Technology and disadvantaged groups in India". Working paper, series: Business Incubator, Indian Institute of Technology Special studies, International Labor Organization Madras. 2005. IIT Roorkee (2009). "System and process review and International Labor Organization (2005b). CaseStudyof impact assessment of NREGS in the state of Uttrakhand". YeshashviniHealthInsuranceScheme, New Delhi: ILO. Indian Institute of Technology Roorkee. IPCC (2007). "Climate Change 2007: Impacts, Adaptation India Centre for Research in Rural and Industrial and Vulnerability". Contribution of Working Group II to Development (2009). "Appraisal of impact assessment of the Fourth Assessment Report of the Intergovernmental NREGS in selected districts of Himachal Pradesh, Punjab, Panel on Climate Change Cambridge University Press, Haryana". Cambridge, UK. References Irudaya Rajan, S. (2001). "Social Assistance for Poor for Social Protection for a Changing India, South Asia Elderly: How Effective?". Economic and Political weekly, region, World Bank. Vol. 36(8): 613-617. February 2001. Jayaraman, R. and P. Lanjouw (1999). "The Evolution Irudaya Rajan, S. (2004). "Welfare funds in India: of Poverty in Indian Villages". The World Bank Research an overview". Centre for Development Studies, Observer,Vol. 14(1): 1-30. Thiruvananthapuram, Kerala, India. Jenkins, R. and A.M. Goetz (1999). "Accounts and ISWSD (2006). "Monitoring and Evaluation of National accountability: theoretical implications of the right-to- Rural Employment Guarantee Scheme with Special information movement in India". ThirdWorldQuarterly, Focus on Gender Issues", Indian School of Women's Vol. 20(3): 603­622. Studies Development. Jha, R. R. Gaiha and S. Shankar (2008). "Reviewing the ISWSD (2008). "Impact of National Rural Employment National Rural Employment Guarantee Programme". Guarantee Scheme on the living and working conditions Economic and political weekly. Vol. 43(11): 44-48. of women in rural India", Indian School of Women's Studies Development. Jha, R., S. Bhattacharya and R. Gaiha (2010). "Social Safety Nets and Nutrient Deprivation: An Analysis of the Iversen, V., K. Sen, A. Verschoor and A. Dubey (2009). National Rural Employment Guarantee Program and the "Job recruitment networks and migration to cities Public Distribution System in India." Australia South Asia in India". Journal of Development Studies, Vol. 45(4): Research Centre draft, February 2010. 522-543. Jha, R., S. Bhattacharya, R. Gaiha and S. Shankar (2008). Jacob, A. and R. Varghese (2006). "NREGA Implementation- "Capture of Anti-Poverty Programs: An Analysis of the I: Reasonable Beginning in Palakkad, Kerala". Economic National Rural Employment Guarantee Program in and Political Weekly. Vol. 41 (48): 4943-4945. India". Australia South Asia Research Centre working paper 2008/07. August 2008. Jacob, A. and R. Varghese. 2006."NREGA implementation-I: Reasonable Beginning in Palakkad, Kerala". Economicand Jha, S. and P. V. Srinivasan (2001). "Taking the PDS to the PoliticalWeekly, Vol. 41(51): 4943-45. December, 2006. poor: Directions for further reform",EconomicandPolitical Weekly, Vol. 36(39): 3779-3786. September 2001. Jacoby, H. and Skoufias, E. (1998). "Testing Theories of Consumption Behavior Using Information on Jhabvala, R., R. M. Sudarshan and J. Unni (2003). Informal Aggregate Shocks: Income Seasonality and Rainfall in economy centre stage: new structures of employment. Rural India". AmericanJournalofAgriculturalEconomics, Thousand Oaks, Calif.: Sage Publications. vol. 80(1): 1-14. Jodha, N. S. (1986). "Common Property Resources Jain, J. and M. Shah (2005). "Antyodaya Anna Yojana and and Rural Poor". Economic and Political Weekly, Mid-Day Meals in MP". Economic and Political Weekly. Vol. 21(26): 1169-81. Vol. 40(48): 5076-5088. Jodha, N. S. (1995). "Common Property Resources Jain, S. (2006). "Poverty, Migration & National Rural and Dynamics of Rural Poverty in India's Dry Regions". Employment Guarantee Scheme". See http://www. Unasylva, No. 180, 46(1):23-30. Online at http://www. righttofoodindia.org/data/ega_sahariya_sachin.doc; fao.org/docrep/v3960e/v3960e00.htm last accessed on March 11, 2010. Kannan, K. P (2002). "The welfare fund model of Jain, S. K. (2004). "Identification of the Poor: Flaws in social security for informal sector workers: The Kerala Government Surveys". Economic & Political Weekly, Experience". Working paper 332, Center for Development Vol.39(46): 4981-84. Studies, April 2002. Jalan, J. and R. Murgai (2008). "An Effective `Targeting Kapur, D., P. Mukhopadhyay and A. Subramanian (2008). Shortcut'? An Assessment of the 2002 Below-Poverty "More on Direct Cash Transfers". EconomicandPolitical Line Census Method". Prepared as a background paper Weekly,Vol. 43(47): 85- 87. November 2008. 6 Social Protection for a Changing India: Volume I Kartika, B. and A. Ranjan (2008). "Alternative to Migration". Krishnamurthy, J. (2006). "Employment Guarantee Frontline. Vol. 26(1), 3-16 January 2008. and Crisis Response". Economic and Political Weekly. Vol. 41(9): 789-790. Khan, R. (1992). "Federal India - A design for change". Vikas Publishing House Pvt. Ltd. Kuruvilla, S., Liu, M. and Jacob, P. (2005). "The Yeshaswini health insurance scheme for rural farmers and peasants: Khera (2006)."Employment Guarantee act and migration". Towards health care for all?". Mimeo, School of Industrial The Hindu. July 13, 2006. Relation Cornell University. Khera, R. (2002): `Mid-Day Meals in Rajasthan', TheHindu, Lakdawala Committee Report and NIUA (1993). "Expert November 13. Group on Estimation of Proportion and Number of Khera, R. (2006). "Mid-Day Meals in Primary Schools: Poor". Planning Commission, Government of India, Achievements and Challenges". Economic and Political 1989-1993. Weekly. Vol. 41(46): 4742-4750. Laxmaiah A., K. V. Rameshwar Sarma, D. Hanumantha Khera, R. (2008). "Pati Experience". Frontline. Vol. 26(1). Rao, Ch. Gal Reddy, M. Ravindranath, M. Vishnuvardhan 3-16 January 2008 Rao and K. Vijayaraghavan (1999). "Impact of mid day meal program on educational and nutritional status Khera, R. (2009). "Empowerment Guarantee Act". of school children in Karnataka". Indian Pediatrics. Economic and Political Weekly. Vol. 43(35): 8-10. Vol. 36(12): 1221-1228. Khera, R. (2009). "Right to Food Act: Beyond LIC (2006). "Booklet of Social Security group insurance Cheap Promises". Economic and Political Weekly, schemes". Life Insurance Corporation of India, Pension Vol. 44(29): 40­44. July 2009. and Group Schemes Department, Central office, Mumbai. Khera, R. and A. Vanaik (2008). "Rajasthan way ahead". Frontline. Vol. 26(1). 3-16 January 2008. Ligon, E. and L. Schechter (2003). "Measuring Vulnerability". Economic Journal, Vol. 113(486): Khera, R. and N. Nayak (2008). "What Works Against C95-C102. Women". Frontline. Vol. 26(1). 3-16 January 2008. Loughhead, S., O. Mittal and G. Wood (2001). "Urban Khera, R. and N. Nayak (2009). "Women Workers Poverty and Vulnerability in India: DFID's Experiences and Perceptions of the National Rural Employment from a Social Policy Perspective". Department For Guarantee Act". Economic and Political Weekly. Vol. International Development, London. August, 2001. 44(43): 49-57. Louis, P. (2006). "NREGA Implementation II- Birth Pangs Kochar, A. (1995). "Explaining Household Vulnerability in Bihar". Economic and Political Weekly. Vol. 41(48): to Idiosyncratic Income Shocks". American Economic 4946-4947. Review, Vol. 85(2): 159-64. Madheswaran, S., D. Rajasekhar and G. K. Karanth Kozel, V. and B. Parker (2005). "A Profile and Diagnostic (2005a). "Design and management of Social Security of Poverty in Uttar Pradesh". Chapter in Deaton, A. and benefits for unorganized workers in Karnataka". V. Kozel (eds), The Great Indian Poverty Debate. Institute for Social and Economic Change, Bangalore. New Delhi: Macmillan India Ltd. 2005. Submitted to GTZ/Micro-Insurance Project, New Delhi. Krishna, A. (2004). "Escaping Poverty and Becoming Poor: May 2005. Who Gains, Who Loses, and Why?". WorldDevelopment, Vol. 32(1): 121-136. Madheswaran S., D. Rajasekhar and K. G. Gayathri Devi (2005b). " A comprehensive study on the status of beedi Krishna, A. (2006). "Pathways Out of and Into Poverty in industry in Karnataka". Institute for Social and Economic 36 Villages of Andhra Pradesh, India". WorldDevelopment, Change, Bangalore. Submitted to the Department of Vol. 34(2): 271-288. Labor, Government of Karnataka. References Mander, H. (2009). "Living Rough Surviving City Streets: Mukherjee, N. (2005)."Political Corruption in India's Below A Study of the Homeless Populations in Delhi, Chennai, the Poverty Line (BPL) Exercise: Grassroots' Perspectives Patna and Madurai". Chapter 15 in India Urban Poverty on BPL in Perpetuating Poverty and Social Exclusion & Report 2009. Good Practice in People's Participation and BPL Exercise from Bhalki Village". Unpublished manuscript. Mathur, B., D. Hariprasad and P. Joshi (2005). "Situational Analysis of Mid Day Meal Programme in Rajasthan". Munshi, K. and M. Rosenzweig (2006). "Traditional Paper presented at the National Seminar on Girls' Institutions Meet the Modern World: Caste, Gender and education ­Towards Equality organized by the Department Schooling Choice in a Globalizing Economy". American of Education and UNICEF on 14-15 November 2005. EconomicReview, Vol. 96(4): 1225-1252. Mazdoor Kisan Samiti and Nari Shakti Sangathan (2006). Murgai, R. (2006). "Do Public Funds Reach the Destitute? "Fact finding report on the status of implementation Assessment of Leakages and Targeting of Social Pension of scheme under NREGA in Bengabad block of Giridih Programs in Karnataka". Prepared as a background paper district Jharkhand". September 2006. See http://www. for Social Protection for a Changing India, World Bank. righttofoodindia.org/data/mksnss06giridihnrega.doc Muthiah (2008). "A scene from the south". Frontline. Mehrotra, S. (2008). "NREG two years on: where do we Volume 26 - Issue 1, 3-16 January 2008. go from here? Economic and Political Weekly August 2, 2008. Naik, R. (2005): `Report on Akshara Dasoha Scheme of Karnataka', University of Dharwad. Mehrotra, S. and H. Mander (2009). "How to identify the poor? A proposal". Economic & Political Weekly, Nair, T. S. (1999). "Housing: the Missing Concerns".Economic Vol. 44(19): 37 ­ 44. May 2009. andPoliticalWeekly, Vol. 34(28): 10-16. July 1999. Mehta, A. K and A. Shah (2003). "Chronic Poverty in India: Narayanan, S. (2008). Employment guarantee, Women's Incidence, Causes and Policies". World Development, work and Childcare. Economic and Political Weekly. Vol. 31(3): 491-511, March 2003. March 1, 2008. Menon, S. V. (2008). "Right to Information Act and National Federation of Indian Women (2008). "A study NREGA: Reflections on Rajasthan". Retrieved March 11, on socio - economic empowerment of women under 2010 from http://mpra.ub.uni-muenchen.de/7351. National Rural Employment Guarantee Act (NREGA)". Ministry of Housing and Urban Poverty Alleviation, Nayak, R., N.C. Saxena and J. Farrington (2002). "Reaching Government of India. Oxford University Press: New Delhi. the Poor: The Influence of Policy and Administrative Processes on the Implementation of Government Mor, N. (2005). `Expanding access to financial Poverty Schemes in India". Working Paper 175, Overseas services ­ where do we go from here?'. Center for Development Institute, London. Microfinance Research Working Paper series, Institute for Financial Management and Research, Chennai. NCEUS (2006). "Report on social security for unorganized workers". Report, National commission for enterprises in Morduch, J. (1999). "Between the State and the Market: the unorganized sector. New Delhi. May 2006. Can Informal Insurance Patch the Safety Net?". World BankResearchObserver,Vol.14(92): 187-207. Noponen, H. (1991). "The Dynamics of Work and Survival for the Urban Poor: a Gender Analysis of Panel Data from Morduch, J. (2004). "Consumption Smoothing Across Madras". DevelopmentandChange. Vol. 22(2): 233-260. Space: Testing Theories of Risk-Sharing in the CIRISAT Study Region of South India". in S. Dercon (ed.) Insurance NSSO (2001). "Migration in India, 1999-2000". National againstPoverty,Oxford University Press. Sample Survey Organization Report No. 470, Government of India. MSSRF and WFP (2004). "Atlas of the Sustainability of Food Security in India". M.S. Swaminathan Research NSSO (2005a). "Situational Assessment Survey of Foundation and World Food Programme. Farmers: Indebtedness of farmer households". National Social Protection for a Changing India: Volume I Sample Survey Organization Report 498. Government Poorest Area Campaign Society (2007). "Status of NREGA of India. implementation 2006-07". Second monitoring report of PACS. PACS series. NSSO (2005b). "Household Indebtedness in India as on 30.06.2002". National Sample Survey Organization PRAXIS (1999). "Consultations with The Poor: India Report 501. Government of India. 1999". Prepared as a background paper for the World Development Report 2000-01, World Bank, O'Keefe, P. and R. Palacios (2006). "Evaluating the NCEUS social security proposals in light of international Washington DC. experience". Economic and Political Weekly, Vol. 41(32): PRIA (2006). "National Study: Phase II: Role of Panchayati 3483-3487, August 2006. Raj Institutions in Implementation of NREGA". ORG-MARG (1998). "Evaluation of National Social Participatory research in Asia. Assistance Programme in Selected States". Report PRIA (2007). "National Study: Phase II: Role of Panchayati prepared by the Operations Research Group for Ministry Raj Institutions in Implementation of NREGA". of Rural Areas and Employment, New Delhi. Participatory research in Asia. Pais, J. (2002). "Casualisation of Urban Labour Force: PRIA (2008). "National Study: Phase III: Role of Panchayati Analysis of Recent Trends in Manufacturing". Economic Raj Institutions in Implementation of NREGA". andPoliticalWeekly,Vol. 37(7): 631-652, February 2002. Participatory research in Asia. Pal, S. and R. Palacios (2008). "Understanding Poverty Pritchett (2005). "A Lecture on the Political Economy of among the Elderly in India: Implications for Social Targeted Safety Nets". Social Protection Discussion Paper Pension Policy," IZA Discussion Papers 3431, Institute for Series 0501. Social Protection Unit, Human Development the Study of Labor (IZA). Network, World Bank, Washington DC, January 2005. Pal, S. (2004). "Do Children Act as Old Age Security in Pritchett, L., S. Sumarto and A. Suryahadi (2002). Rural India? Evidence from an Analysis of Elderly Living Arrangements", unpublished manuscript. "Targeted Programs in an Economic Crisis: Empirical Findings from the Experience of Indonesia." SMERU Pal, S. and J. Kynch (2000). "Determinants of Occupational working paper, Jakarta, October 2002. Change and Mobility in Rural India". AppliedEconomics, Vol. 32(12):1559 ­ 1573, October 2000. Radermacher, R. N. Wig, O. Van Putten-Rademaker, V. Muller and D. M. Dror (2005). "Yeshasvini Trust, Karnataka Panagariya, A. (2008). India:TheEmergingGiant. Oxford India". CGAP Working Group on Microinsurance Good university press, 2008. and Bad Practices, International Labour Organisation, Pankaj, A. (2008)."Processes, institutions and mechanisms Geneva. of Implementation of NREGA: Impact assessment of Bihar Radhakrishna Committee (2009). Report of the and Jharkhand". Institute of Human Development. Committee on Credit Related Issues under SGSY, Planning Commission (2000). "Performance Evaluation Department of Rural Development Ministry of Rural of Sampoorna Grameen Rozgar Yojana." Program Development Government of India. Evaluation Organization, Planning Commission, Radhakrishna, R. and K. Subbarao (1997), with Government of India. S. Indrakant and C. Ravi. `India's Public Distribution Planning Commission (2005)."Performance evaluation of System: A National and International Perspective', World targeted Public Distribution System". Program Evaluation Bank Discussion Paper No. 380, Washington DC: World Organization, Planning Commission, Government of Bank. India. Ram, F., S. K. Mohanty and U. Ram (2009). "Understanding Planning Commission (2007). "Towards faster and more the Distribution of BPL Cards: All-India and Selected inclusive growth: An approach to the Eleventh Five Year States". Economic and Political Weekly. Vol. 44(7): Plan 2007-2012", Government of India. 66-71. References Ramanathan, R. (2005). Urban Poverty Issues in with Vikas Samvad. April 2007. See http://www. India ­ Challenges and Responses. Vikalp Alternatives, righttofoodindia.org/data/mdms_mp.pdf, last accessed Issue: "Urban Poverty in India", December 2005. on March 10, 2010. Ramaswami, B., S. Ravi and S.D. Chopra (2003). "Risk Rogaly, B., J. Biswas, D. Coppard, A. Rafique, K. Rana Management in Agriculture", Discussion Paper 03-08, and A. Sengupta (2001). "Seasonal Migration, Social Indian Statistical Institute, Delhi, June 2003. Change and Migrants Rights, Lessons from West Bengal". Economic and Political Weekly, Vol. 36(49): 4547­59, Ramji, M. (2009). "Financial Inclusion in Gulbarga: Finding December 2001. Usage in Access." Working Paper Series No. 26. Chennai: IFMR Centre for Microfinance. Roth, J., C. Churchill, G. Ramm and Namerta. (2005). "Microinsurance and microfinance institutions: Evidence Rani Si, A. and N. K. Sharma (2008). "An Empirical Study from India". CGAP Working Group on Micro insurance, of the Mid-Day Meal Programme in Khurda, Orissa". Good and Bad Practices Case Study No. 15 (Geneva, ILO EconomicandPoliticalWeekly. Vol. 43(25): 46-55. Social Finance Programme). Rao, C. H., S. K. Ray and K. Subbarao (1988). Unstable Saxena (2006)."Rural Poverty Reduction through Centrally Agriculture and Drought. New Delhi: Vikas Publishing Sponsored Schemes". Prepared as a background paper House. for Social Protection for a Changing India, World Bank. Rao, U. (1994). "Palamoor Labour: A Study of Migrant Saxena Committee Report (2009). "Identification of BPL Labour in Mahabubnagar District". C. D. Deshmukh Impact households in rural India". Draft report from the Ministry Centre, Council for Social Development, Hyderabad. of Rural development. Available online at http://rural. Ravallion (1999). "Are poorer states worse at targeting nic.in/latest/rpt_bpl_census2009.pdf, last accessed on their poor?". EconomicsLetters. Vol. 65 (3): 373-377. This January 14, 2010. is not as puja said. Scandizzo, P., R. Gaiha and K. Imai, (2007). "Does the Ravallion, M. (2002). "On the urbanization of poverty". Employment Guarantee Scheme stabilize the incomes JournalofDevelopmentEconomics, Vol. 68(2), pages 435- of households in rural India?", School of Economics 442, August 2002. Discussion Paper Series, Number 0706. Ravallion, M. (2003). "Targeted Transfers in Poor Sen, S. (2008). "Bihar: Social Protection". Manuscript, Countries: Revisiting the Tradeoffs and Policy Options". South Asia region, World Bank. World Bank Policy Research Working paper 3048, World Sen (2010) for a summary of the field studies on Bank, Washington D.C. educational related outcomes of MDM. These are largely Ravallion, M. and S. Chaudhuri (1997). "Risk and small-scale studies with the estimates of impact typically Insurance in Village India: Comment". Econometrica, based on the perceptions (typically of parents and/or Vol. 65(1): 171-184. teachers) or on school-level administrative information (such as registers, etc.) rather than survey-based data. Ravallion, M., S. Chen and P. Sangraula. 2007. "New As a result, generalizations are difficult and point to the Evidence on the Urbanization of Global Poverty". importance of rigorous assessments of performance Population and Development Review, Vol. 33(4): and impact. 667-702. Shah, A. and A. K. Mehta (2008) ."Experience of the Ravi, S. and M. Engler (2009). "Workfare in Low Income Maharashtra Employment Guarantee Scheme: are there Countries: An Effective Way to Fight Poverty? The Case lessons for NREGS?". Chronic Poverty research center. of India's NREGS", manuscript. Working paper 118. September 2008. Robinson, N. (2007). "Madhya Pradesh: A Report on the Shah, A., S. Kumar Nayak and B. Das with Joshi, H. (2005). Implementation of the Mid-Day Meal Scheme in Four "Remoteness and Chronic Poverty in a Forest Region in Districts". Jawaharlal Nehru University in association Southern Orissa: A Tale of Entitlement Failure and State's 60 Social Protection for a Changing India: Volume I Apathy". Paper presented at CPRC-IIPA seminar on Swaminathan, M. (1995). "Aspects of Urban `Chronic Poverty: Emerging Policy Options and Issues'. Poverty in Bombay". Environment and Urbanization, Vol. 7(1): 133-144. Shah, M. (2007). "Employment Guarantee, Civil Society and Indian Democracy". Economic and Political Weekly. Swaminathan, M. and N. Misra (2001): Errors in Vol. 42(45): 43-51. Targeting­Public Distribution of Food in a Maharashtra Village (1995-2000)". Economic & Political Weekly, Shah, P. J. and C. Braun-Munzinger (2006). Education Vol. 36(26), June 30 - July 06 2001. vouchers: Global Experience and India's Promise, Policy review No. 1, Centre for Civil Society, New Delhi. Swarup (2009). "Marketing of the Rashtriya Swasthya Bima Yojana". Unpublished manuscript. Sharma et al. (2009), Evaluating performance of National Rural Employment Guarantee Act, NCAER-PIF Tesliuc, E. and K. Lindert (2002). "Vulnerability: A study, National Council of Applied Economic Research, quantitative and qualitative assessment". Guatemala New Delhi. Poverty Assessment Program, World Bank, Washington, DC. Siddhartha and A. Vanik (2008). "CAG Report on NREGA: Fact and Fiction". Economic and Political Weekly. Townsend, R. M. (1994). "Risk and Insurance in Village Vol. 43(25): 39-45. India," Econometrica, Vol.62(3): 539-591. Sinha, F. (2003). "Understanding and assessing Umali-Deininger, D.L. and K. Deininger (2006). "Targeted poverty: multi-dimensional assessment versus Public Distribution System: Review of Performance". `standard' poverty lines". Paper presented at the Prepared as a background paper for Social Protection EDIAIS conference, University of Manchester, UK, 24- for a Changing India, World Bank. 25 November 2003. Unni, J. and G. Raveendran (2007)."Growth of Employment Sivakumar, S. K. (2006). "Walking with a purpose". (1993-94 to 2004-05): Illusion of Inclusiveness?". Economic Frontline. Vol. 23(9). May 2006. andPoliticalWeekly, Vol. 42(3): 196-199. January 2007. Sjoblom, D. and J. Farrington (2008). "The Indian National Vanaik, A. (2008). "Accounts of Corruption". Frontline. Rural Employment Guarantee Act: Will it reduce poverty Vol. 26(1). 3-16 January 2008. and boost the economy". Project briefing. Overseas Vanaik, A. (2008). "NREGA and the Death of Tapas Soren". Development Institute. January 2008. Economic and Political Weekly. Vol. 43(30): 8-10. Spagnolo, G. (1999). "Social relations and cooperation Vanik, A. and Siddhartha (2008). "Bank Payments: End of in organizations". Journal of Economic Behavior & Corruption in NREGA?". Economic and Political Weekly. Organization, Vol. 38(1): 1-25 January 1999. Vol. 43(17): 33-39. Sun, C. (2010). Patterns of enrolment in RSBY: Preliminary Vashisht, P., C. Ravi and K. Subbarao (2009). "Evaluation Evidence from the MIS", manuscript. of food coupon program in rural Bihar: An analysis of baseline and end line surveys", manuscript. Sundaram, K. (2003). "On Identification of Households Below Poverty Line in BPL Census 2002: Some Comments Vijay Shankar, P. S., R. Rao, N. Banerji and M. Shah on the Proposed Methodology", EconomicandPolitical (2006). "Government's Schedule of Rates working Weekly, Vol. 38(9): 896-901. March 2003. against Rural labor". Economic and political weekly. Vol. 41(17): 1616-1619. Supriti, S., M. Barnhardt and R. Ramanathan (2002). "Urban Poverty Alleviation in India: A General Assessment Wagstaff, A. (2007). "Social health insurance reexamined," and A Particular Perspective". Ramanathan Foundation, Policy Research Working Paper Series 4111, World Bank. Bangalore, India. Walker, T. S. and G. R. James (1990). VillageandHousehold Swami, K. (2008). "All is not well with the Wells". Frontline. Economies in India's Semi-air Tropics. Baltimore: Johns Vol. 26(1). 3-16 January 2008 Hopkins University Press. References 6 Weigand and Grosh (2008). "Levels and Patterns of Safety World Bank (2006c). "World Development Report 2006: Net Spending in Developing and Transition Countries". Equity and Development". World Bank, Washington DC. Social protection discussion paper 0817, World Bank, World Bank (2006d). "Inclusive Growth and Service June 2008. Delivery: Building on India's Success". Development World Bank (1999). "India Food grain Marketing Policies: Policy Review, South Asia Region. Reforming to Meet Food Security Needs". Volume 1, World Bank (2007a). "India 2025: Inputs for an Urban Main report. Report No. 18329-IN, Rural Development Strategy". Presentation to the Planning Commission. Sector unit. South Asia region, World Bank, August 17, World Bank. 1999. World Bank (2007b). "Rajasthan, India: An Assessment World Bank (2001), "India: The Challenge of Old Age of the Mid-Day Meal Scheme in Chittorgarh District". Income Security", World Bank, Washington DC. Social accountability series, South Asia Sustainable World Bank (2004). "World Development Report 2004: Development Department. Making Services Work for Poor People". World Bank, World Bank (2008a). "India: Accelerating Growth and Washington DC. Development in the Lagging Regions of India". Report World Bank (2005a). Bihar, Towards a Development No. 41101-IN, South Asia Region. Strategy. A World Bank Report, World Bank, World Bank (2008b). "Moving out of Poverty: The Promise Washington DC. of Empowerment and Democracy in India". World Bank: World Bank (2005b). "World Development Report 2005: Palgrave Macmillan. A Better Investment Climate for Everyone". World Bank, World Bank (2009a). "People with Disabilities in India: Washington DC. From Commitments to Outcomes". South Asia Region. World Bank (2005c). "India: Unlocking Opportunities for World Bank (2009b). "China: From Poor Areas to Poor Forest-Dependent People in India". Report No. 34481-IN, People, China's Evolving Poverty Reduction Agenda". South Asia region. East Asia and Pacific Region. World Bank (2006a). "Overcoming Drought: Adaptation World Bank (2011). "Perspectives on Poverty in India: Strategies for Andhra Pradesh". World Bank, Stylized Facts from Survey Data". South Asia Region. Washington DC. Yamini Aiyar and Salimah Samji (2006). "Towards World Bank (2006b). IndiaRuralGovernmentsandService Ensuring the Success of the National Rural Employment Delivery. Oxford University Press. Guarantee Act". Economic and Political Weekly. Vol. 41(4): 320-326. 6 Social Protection for a Changing India: Volume I India's economic growth and the expansion in public spending on the social sector have created new possibilities for its social protection system. While India spends over 2 percent of GDP on core safety net programs, the reduction in poverty and improvement in livelihoods of the vulnerable have not reached full potential. This report represents a first comprehensive review of the performance of India's key anti poverty and social protection programs, including the Public Distribution System, Mahatma Gandhi National Rural Employment Guarantee scheme (MGNREG), Indira Awaas Yojana (IAY), Swarnajayanti Gram Swarozgar Yojana (SGSY) and others, as well as programs to expand social security coverage to the unorganized sector such as the Indira Gandhi National Old Age Pension Scheme and the growing Rashtriya Swasthya Bima Yojana (RSBY) health insurance program. The review draws on new empirical analysis of primary and secondary data sources, including several rounds of the National Sample Survey data, a special Human Development Profile of India survey, dedicated state-level household surveys on associated themes and a rich body of analysis on program performance and impact by national researchers and Government agencies. The report concludes with suggestions for future directions in reform to help India get the most from its social protection system as it enters the second decade of the 21st century. Volume I highlights the main conclusions and recommendations, while Volume II contains the full report with all analyses and findings in detail. human Development unit South asia