Budgeting Adequately for a Safety Net

In this post, we make some observations on the allocations for social welfare under the July 2019 Union Budget and highlight some concerns with respect to the proposed structure of social security administration.

The major changes in the 2019 budget are with respect to the allocations for health and labour welfare schemes. The Ayushman Bharat scheme (AB-PMJAY), which is intended to provide insurance against out of pocket expenditure for hospitalisation, has now been allocated Rs. 6400 crores, up from Rs. 2400 crores in the 2018 budget. Likewise, the Atal Pension Yojana (APY), which replaced the National Pension Scheme – Swavalamban (NPS-S) in 2015, has now been allocated Rs. 205 crores, up from Rs. 155 crore in the previous 2018-19 budget.

The new measures introduced this year include the PM Shram Yogi Maandhan (PMSYM) and Karam Yogi Maandhan (PMKYM). These provide for monthly pensions to workers over the age of 60 in the unorganised sector and to small retailers respectively. Contributions are to be made by applicants based on the age at the time of entry and would be matched equally by the government.  The government has also announced the Pradhan Mantri Kisan Samman Nidhi (PM-KISAN), which provides for a monthly pension of Rs. 6000 to small and marginal farmers who own less than 2 hectares of land. Additionally, the government has expressed an intention to consolidate India’s labour legislation into a comprehensive Labour Code, including a comprehensive (Draft) Labour Code on Social Security. In addition to the above, the Budget makes incremental changes to the allocation for some existing schemes, including the Mahatma Gandhi National Rural Employment Guarantee Scheme (MNREGA), the Pradhan Mantri Matru Vandana Yojana (PMMVY) and the Pradhan Mantri Fasal Bima Yojana (PMFBY).

We submit that the following concerns arise from the Union Budget with respect to the allocation for social security schemes.

First, social security in India is provided through piecemeal schemes created by notification under individual ministries, rather than a comprehensive system for social security. A large chunk of the social welfare budget has gone to reallocating resources from earlier schemes. For instance, APY has replaced the NPS-S, and the Rashtriya Swasthya Bima Yojana (RSBY)  has been replaced by Ayushman Bharat. What is the impact on this on existing rights, and to what extent has transitioned to the new schemes been facilitated? Similarly, to what extent is the budgetary allocation to be used for creating substantive rights for the parties, as opposed to merely supporting the machinery for the new schemes? Finally, as we noted here earlier this year, although the sum of Rs. 3000 per month seems attractive at present; it will translate into a very small amount once many of the intended beneficiaries cross 60 years of age. How has the government accounted for the long-standing issue of inflation indexing of pension benefits?

Second, to what extent will the increase in budgetary allocation to various schemes translate into improvements in social welfare? The Economic Survey of India 2018-19[1] states that there has been a consistent increase in social welfare expenditure over the past years. Simultaneously, it notes that India’s Human Development Index has increased significantly from 1990 to 2019. However, the Economic Survey does not break-down this expenditure into administrative and delivery-related heads. Such data will be necessary to understand whether greater expenditure on social protection leads to improvements in human development. This is particularly important, given that some states, such as Jharkhand and Chattisgarh, expend a large amount of social welfare without comparable improvements in HDI, while the opposite is true for Kerala and Maharashtra.[2]

Finally, will the provision of social security be confined to schemes framed by the executive, or is there now a move towards comprehensive legislation? For instance, the government has stated its intention to enact a Labour Code to consolidate the existing labour legislation. If enacted, the Labour Code on Social Security would bring workers in the unorganised sector within the ambit of a formal social security net. In what manner would this impact pre-existing executive schemes for citizens in different sectors? In particular, how would this affect proposed schemes such as the PMSYM and PMKYM? As it stands, the Union Budget leaves several questions unanswered.

In conclusion, we argue that there is a need for more data on the manner of allocation of resources within the budget, and the extent to which the budgetary allocation will translate into a direct improvement in social progress. This, in turn, will shed light on the efficacy of scheme based budgetary allocations and changes to earlier social welfare schemes.

Notes:

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Bibliography

National Health Agency. (2019). About PMJAY. From Pradhan Mantri Jan Arogya Yojana: https://pmjay.gov.in/about-pmjay

Budget Speech 2019-20. (2019, July 04). From Union Budget: https://www.indiabudget.gov.in/budgetspeech.php

Press Information Bureau. (2019, February 01). 01-February-2019 13:36 ISTPress Information Bureau Government of IndiaMinistry of FinanceGovernment proposes to launch mega pension yojana ‘Pradhan Mantri Shram-Yogi Maandhan’ for unorganisedsector workers with monthly income upto rs. 15,000; 10 Crore Lab. From Ministry of Labour: https://labour.gov.in/sites/default/files/Budget_Speech.pdf

Ministry of Labour and Employment . (2018, March 01). Draft Labour Code on Social Security. https://labour.gov.in/sites/default/files/Letter_of_Social_Security_Code_2018.pdf.

Ministry of Rural Development. (2019, July 12). From National Rural Employment Guarantee Act: https://www.nrega.nic.in/netnrega/home.aspx

Ministry of Women and Child Development. (2017, October). Scheme Guidelines for the Pradhan Mantri Matru Vandana Yojana . From https://wcd.nic.in/sites/default/files/PMMVY%20SCHEME%20GUIDELINES%20HINDI%20web.pdf

Ministry of Agriculture and Farmer Welfare. (2019). Pradhan Mantri Fasal Bima Yojana . From https://pmfby.gov.in/

Narayanan, S. (2019, July 10). Social protection in the Union Budget 2019. Retrieved July 11, 2019 from Ideas for India: https://www.ideasforindia.in/topics/human-development/social-protection-in-the-union-budget-2019.html

Government of India. (2019, July 04). Expenditure Budget 2019-2020. https://www.indiabudget.gov.in/doc/eb/allsbe.pdf.

Press Information Bureau. (2018, March 21). Cabinet approves Ayushman Bharat – National Health Protection Mission. Retrieved July 27, 2019 from Press Information Bureau: http://pib.nic.in/PressReleaseIframePage.aspx?PRID=1525683

National Pension Scheme Trust. (2015, September 10). Frequently Asked Questions – Atal Pension Yojana. Retrieved July 27, 2019 from NPS Trust: http://npstrust.org.in/sites/default/files/atalpension/APYFAQs10092015.pdf

Government of India. (2019). Economic Survey of India 2018-19. New Delhi: Ministry of Finance.

Ministry of Agriculture and Farmer Welfare, Government of India. (2019, June 21). OPERATIONAL GUIDELINES Of “Pradhan Mantri KIsan SAmman Nidhi (PM-KISAN)” . From PM Kisan Samman Nidhi: https://pmkisan.gov.in/Documents/Revised%20Operational%20Guidelines%20-%20PM-Kisan%20Scheme.pdf

[1] Economic Survey of India, 2018-19 Volume II at Page 257. (Government of India, 2019)

[2] RBI Handbook of Statistics on Indian States,