The problem

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BY most accounts, the reforms process initiated in the early 1990s has placed India on a higher, and hopefully stable, growth path. It was also expected that in the process there would be a significant reduction in the proportion of people below the poverty line. We now know that has not happened. What is less recognized and acknowledged, however, is not only the simultaneous growth in inequalities – personal, communitarian and regional – but also the increased vulnerability of the labouring underclass. Both on grounds of equity and justice as also political stability, it is thus imperative to put into effect strategies and programmes to offer tangible protection to and create new opportunities for reducing the deprivation and vulnerability integral to the lives of millions of workers. Equally, that even in a market economy the primary obligation for instituting such measures falls upon the state, both the Union and state governments.

Designing and implementing viable social sector programmes even in propitious circumstances is a daunting challenge, in part because of the numbers involved and the bewildering variety of needs and contexts of proposed beneficiaries. The commitment of the political class towards genuine social security and welfare is also in doubt. Equally dampening has been the extant experience of a range of existing social sector programmes which continue to suffer from poor targeting and efficiency of delivery. Thus, while the need for an extension of social security benefits is widely recognized, there remains significant difference of opinion over the specifics of proposed schemes. Little surprise that the recent report of the National Commission for Enterprises in the Unorganized Sector (NCEUS) as also a draft national legislation to extend social security to unorganized workers, have engendered a heated debate.

In its effort to bolster up its aam aadmi orientation, the UPA regime has introduced a series of programmes – a National Rural Employment Guarantee Scheme, extension of rural health care through the National Rural Health Mission, making access to universal primary education a fundamental right, and so on. Reportedly, it plans to introduce a national social security bill in the coming winter session of Parliament. The extent to which the government may draw on the NCEUS draft is still not known, but that is the only comprehensive proposal it has on hand. Thus the possibility of a move in this direction makes it pressing to scrutinize the proposal and correct its possible infirmities.

The NCEUS draft bill does recognize the existence of some social security cover to informal workers through both government – union and state – and non-official efforts. However, this coverage extends to less than eight per cent of informal workers, leaving close to 300 million people without any meaningful protection. It has attempted to outline both the financial requirements as also discuss the possible mechanisms through which a national scheme might be operationalised. More importantly, it draws a distinction between protective security – based on legally binding arrangements for safeguarding income, health care and old age pension for workers and promotional security which are social assistance programmes for employment creation, poverty alleviation, public distribution and child development targeted on specific groups. For the moment, it has chosen to focus on the former, hoping that a national legislation would help set a floor below which no worker would be permitted to slide.

Critics, however, point out that in a global and national marketplace based on an escalating informality and flexibilisation of labour relations, insecurity is inherent in the logic of things. More so given competitive pressures to attract capital, increase efficiency and reduce labour costs. Protective security, they argue, is the outcome not the cause of improved living standards and productivity levels. To state it more sharply, it is averred that the Commission’s proposals place the cart before the horse, that unless more vigorous efforts are first made to increase the skill level of workers and competitiveness of enterprises, and strengthen institutions of workers – trade unions, cooperatives – such ambitious welfare schemes, though well-intentioned, are unlikely to work.

These, however, are debates over the logic and direction of modern capitalist development. At another level concern has been voiced over the proposed financial outlays on such a scheme as also the viability of implementation mechanisms. Despite the fact that the proposed national minimum social security would entail only half-a-percent of national income when all the 300 million workers are covered, some would argue that not only is the proposed outlay large in absolute terms, it needs to be seen in the context of other proposals for the social sectors. Where is the money to come from? Additional direct taxes are not only resisted by the power(ful) elite but also seen as undermining the attractiveness of the country as an investment destination. Additional revenue generation from public sector enterprises too does not appear hopeful. Finally, is there some possibility of a re-targeting of subsidies, not just those for the poor but more so those for the rich, be they industry tax breaks, for middle class consumption, or for workers in the organized sector.

In its essence these are as much political as economic concerns, reflective of the choice of our political elites. It is, for instance, pointed out that the additional burden on the central exchequer from the likely salary bill increases following the recommendations of the Sixth Pay Commission is likely to far exceed the burden of the proposed national social security. The state has to decide on its primary obligation.

Alongside is a genuine concern about the efficiency of expenditure. As is well recognized, only a small proportion of the moneys on these programmes actually reaches the intended beneficiaries. It is thus feared that more than contribute to welfare these resources serve as a patronage resource for the politically connected and divert moneys better spent on either infrastructure development or skill and capacity enhancement.

Concern about the efficiency of resource use is integrally linked to the quality of implementation and delivery mechanisms through which the programmes are expected to be delivered. Fortunately, the NCEUS proposals do not advocate still another national level bureaucracy. They expect respective state governments to both design and implement schemes, directly or through panchayat raj institutions and/or civil society organizations working among unorganized workers. The NCEUS has also argued that the proposals be based on contributions by the governments, workers, and employers (while ruling out contributions from BPL workers), giving the direct stakeholders (the workers) a greater stake in the functioning of the scheme. The benefits themselves are not to be directly paid out by the proposed social security boards, but rather the boards are to engage with agencies (such as public insurance companies or the post-office) on the principle that the workers ‘get the best possible deal’. These agencies would receive subscriptions through the central and state funds and arrange for payouts as and when required.

While the fate of these proposals is still uncertain – and some may say that it is unlikely that bureaucrats would relinquish control in the ways suggested – some thought has gone into the various elements of the proposal to make them deliver tangible benefits. None of this is panacea, however, given the marginalization of the poor and the propensity of the system to moral hazards of various kinds. Moreover, state governments show widely varying capacity for and commitment towards such programmes. There is thus apprehension about a significant mismatch between areas of need and the ability to successfully deliver.

The NCEUS has emphasized that the provision of national minimum security be backed by a national legislation, i.e. it be rights based. It is a fact that all over the world social security provisions have legislative backing. This has meant that these provisions have been subject to intense scrutiny whenever governments have desired to change them, and in many contexts has prevented slide-backs. Again, it remains to be seen whether, and to what extent, the intent of the proposal is retained by the government.

Finally, concerns have also been raised about Centre-state relations in the operationalising of centrally sponsored schemes. Not only are the state governments reluctant to share in the burden of such schemes, they are hostile to any effort at central monitoring and direction, seen as unwarranted intrusion in their jurisdiction. Such, at least, has been the experience of most previous centrally sponsored schemes.

What, however, is most disturbing is that many of these concerns, undoubtedly valid, serve in the current political and ideological climate to undermine and derail proposals to strengthen the life-chances of the underclass. Equally, just stressing the need for ameliorative action and bemoaning the iniquitous character of power relations does little to enhance social support for social security. More than esoteric debates on foundational principles, the challenge today is to advance better worked out proposals and schemes based on what works, to what degree, and in what conditions. The NCEUS proposals are a step in that direction. Not constructively engaging with them may only push us in a direction of Social Darwinism and escalated conflict.

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