India a poor spender of social safety net at 0.72% of GDP: Developing countries' 1.6%

By Rajiv Shah
Contrary to the notion spread by free market economists close to Prime Minister Narendra Modi, who believe huge state funds are being “wasted away” on social safety net programmes meant to benefit the poor, a World Bank report says, India spends just about 0.72 per cent of the Gross National Product (GDP) on them.
As against this, the report states, “developing countries spend an average of 1.6 per cent of GDP on social safety net programmes”, adding, “Low-income and middle-income countries devote approximately the same level of resources to social safety nets (1.5 and 1.6 percent of GDP, respectively), while richer countries spend 1.9 percent of GDP on average.”
The report – which identifies India as a “lower middle income group” country – finds that all other BRICS countries, except China, spend a higher proportion of funds on social safety net. Thus, Brazil spends 2.42 per cent, Russia 3.30 per cent, China 0.70 per cent, South Africa 3.51 per cent, and South Africa 3.51 per cent of GDP.
Interestingly, even the two of India’s neighbours – Pakistan and Bangladesh – spend a higher proportion on social safety net, 1.89 per cent and 1.09 per cent.
The report says, “Despite having fewer resources for social safety nets, some lower-income countries allocate considerably more funds than the 1.6 percent average for developing countries”. Thus, despite being lower income, Sierra Leone spends 4.8 per cent, and Lesotho 6.6 per cent.
The report, titled “The State of Social Safety Nets, 2015”, says, the coverage of social safety net “is particularly acute in Sub-Saharan Africa and South Asia, where most of the global poor live”, the report adds, “In these regions, only one-tenth and one-fifth of the poorest 20 percent have access to social safety nets, respectively.”
Among the most important social safety net programmes of India, which the report identifies, are the Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS), covering 58 million beneficiaries, and school feeding programmes, covering 105 million beneficiaries.

Indian programmes

India’s other programmes included in the social safety net analysis are Janani Suraksha Yojana, Integrated Child Development Services, fee waiver for primary education and Indira Gandhi National Old Age Pension Scheme. The report, however, does not include the food public distribution system as a social safety net programme, in which India spends 0.6 per cent of GDP.
While the report says that though “India has a strong legal framework, including Right to Food and the Mahatma Gandhi National Rural Employment Guarantee Act”, and there is also “the Directive Principles of State Policy” , there is lack of “coherent social protection policy framework”, which “is not yet in place.”
Not only is the spending on social safety net programmes in India low, the government’s “roles and responsibilities” for implementing them “are often unclear and spread across multiple actors,” the report says.
Giving an example, the report says, “In India, urban health spans four ministries and nutrition spans six, with multiple levels involved within each. In particular, municipalities tend to vary significantly in accounting practices and their capacity to deliver services.”
It report further says, “Cities, provinces, and municipalities may each have their own programmes, which may not necessarily be consistent with national schemes.” It adds, “Limited analytical work has been conducted to document and appraise the nature and scale of urban social safety net interventions available at different governmental levels.”
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Download report HERE