Poverty to vulnerability: Rethinking social protection

The topic explained

  • Changing trends of poverty in India and the need to rethink and redesign the social protection measures to fight poverty in India according to the new trends.


About Poverty

  • Poverty can be, and is measured, in different ways by governments, international organisations, policy makers and practitioners.
  • Increasingly, poverty is understood as multidimensional comprising social, natural and economic factors.
  • When measured, poverty may be absolute or relative.
    • Absolute poverty refers to a set standard which is consistent over time and between countries. For example- Percentage of the population taking less than 2400 calories per day.
    • Relative poverty views poverty as socially defined and dependent on social context.
  • According to the Planning Commission of India, a poverty line was defined on the basis of recommended nutritional requirements of 2,400 calories per person per day for rural areas and 2,100 calories for urban areas.


Social protection system

  • A steady, safe, well-paid job is the best protection against economic hardship.
  • When this is not possible, government’s social protection programs help people become more resilient to risks.


Three types of instruments

Typically, a comprehensive social protection system requires three types of instruments to work together:

  • Promotional instruments: They improve the ability of families to survive economic shocks on their own by:
    • Enhancing productivity
    • Improved access to job opportunities and incomes
    • Wage legislation (like minimum income)
    • Labour policies
    • Skills training
    • Other livelihood interventions
  • Preventive instruments: They aim to reduce of impact of economic shock before it occurs.
    • For example, they enable using the savings from good times to tackle losses in tough times, like through insurance.
  • Protective instruments: They mitigate the impacts of economic shocks after they have occurred. It is done through-
    • Redistribution from the non-poor to the poor.
    • Example: Anti-poverty measures like cash tranfers, PDS and other social assistance


Protective instruments were more suitable when India just became independent

  • At the time of the Independence, India was suffering from many ills including chronic poverty, de-industrialisation, food deficit etc.
  • Therefore, social protection schemes in India during that time were focusedmainly on Protective instruments like anti-poverty measures such as PDS system, etc.


Issues in India in current time (based on 2012 data)

  • Chronic poverty
    • Despite the fall in households below the poverty line to 22%, the challenge of chronic poverty remains.
    • There are still pockets of deep poverty in India that are geographically clustered.
  • Inequality
    • Inequality in India across locations and demographic groups has increased.
    • The poverty rate of six of the poorest states in the country is twice that of other states.
    • Seven low-income states cater to nearly 62% of country’s poor.
    • Inequalities exist even within states among adivasis, women and other vulnerable sections.
  • Vulnerability
    • Majority of India is no longer chronically poor but they are vulnerable to slipping back to below poverty line.


New social protection measures must take into account current issues

  • As families move out of poverty and the middle class grows, social protection programs can no longer be singularly focused on chronically poor households.
  • Protective measures (focussed on chronically poor) like PDS and MGNREGS still constitute half of social protection spending in the country.
  • It’s also important that programs that help those who are vulnerable to poverty to anticipate and manage risks and shocks better through promotional and preventive instruments.
  • Effective safety nets can dramatically reduce the number of poor and the likelihood that poverty will be transmitted from one generation to the next.


  • Preventing vulnerable people from falling back into poverty through preventive tools:
    • Three types of portable tools are needed to prevent the new vulnerable class from falling back into poverty and debt traps:
      • Health insurance
      • Social insurance (in case of death, accident and other calamities)
      • Pensions


  • But the preventive tools has not been high:
    • Low adoption of preventive instruments: Data highlight major gaps in pension and health insurance coverage. In terms of social insurance, only 4% of households in India use government social insurance programs while use of private sources of insurance is higher at 27% (IHDS 2012 data).
    • High out of pocket expenditure: Most Indian households poor and non-poor rely on personal savings to deal with health, accidents, or climate shocks.


  • Recent policies have taken steps in the right direction:
    • There has been change in the trends of social protection from protective instruments like PDS to preventive instruments as follows:
      • The boost in crop insurance through PM FasalBimaYojana.
      • New pension plans for the elderly like Pradhan Mantri Vaya Vandana Yojana.
      • Rise in contributory pensions for those who have the wherewithal to save.
      • Coverage of health insurance programs like Ayushman Bharat Yojana, etc.


Way ahead

  • India is no longer a largely chronically poor country but a more unequal and vulnerable country with pockets of deep poverty. India’s future shared prosperity will depend to a large extent on how its social protection system evolves.
  • Mix of preventive and protective instruments: Because of the huge diversity in the economic profile of India’s states, a balanced mix of preventive and protective instruments is required.
    • Programs must ensure that those who’ve escaped poverty are able to sustain improvements. For this preventive tools of health insurance, social insurance and pensions are needed.
  • Flexibility to states: State governments should be allowed to choose the optimal mix of preventive and protective programs to suit their state’s needs within an umbrella social protection budget.
  • Strengthening delivery system of schemes: There is need to ensure targeted delivery of social protection benefits.


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