Poverty to vulnerability: Rethinking social protection

India is no longer largely chronically poor; it is now more unequal and vulnerable with pockets of deep poverty. Its future shared prosperity will depend to a large extent on how its social protection system evolves and catches up with its diversity and demography. World Bank economists weigh in.

India brought 271 million out of poverty between 2005-16, similar to China: UNDP-Oxford report — When social protection schemes were created in India after Independence, most of the country was reeling from famine, de-industrialisation and multiple deprivations. (Express photo by Oinam Anand)

By Shrayana Bhattacharya, John Blomquist & Rinku Murgai

A steady, safe, well-paid job is the best protection against economic hardship. But when this ideal situation is not possible, social protection programs help people become more resilient to risks. Typically, a comprehensive social protection system requires three types of instruments to work together.

* First, promotional instruments invest in the ability of families to survive shocks on their own — by enhancing productivity, access to job opportunities and incomes through human capital infrastructure, wage legislation, labour policies, skills training and livelihood interventions.

* Second, preventive instruments aim to reduce the impacts of shocks before they occur by enabling households to use their savings from good times to tackle losses in tough times. This is mainly done through social insurance programs.

* Third, protective instruments mitigate the impacts of shocks after they have occurred through tax-financed redistribution from the non-poor to the poor. These programs would classically be called anti-poverty measures as they target social assistance or safety net programs to the poor or destitute, whether in kind or cash.

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