Is India a welfare state?  

PDS Ration Reu

The directive principles enshrined in the Constitution of India declare that India is a welfare state.  It is said that the welfare schemes protect the poor and the downtrodden, provide the skills needed to participate better in the process of accelerating economic growth, and equip the economically inferior workforce.

Social welfare systems provide assistance to individuals and families through programs such as food security, unemployment allowance, health care, maternal and child care assistance, old age pension, widow pension, housing assistance, etc.

Are the welfare schemes really benefiting the poor? Is their standard of living rising? Are these schemes able to instill any assurance in them of the security of life and the future? They are all questionable. On the other side there is a propaganda that these schemes should be stopped because the welfare schemes and the facilities provided free of cost to the people are draining away the exchequer. “Major share of the money obtained even from borrowings is utilized to finance these schemes. Spending too much for the free schemes instead of on manufacture or production sector is leading to economic crisis. The economic development of the country is slowing down”, they say.

But are the governments really serious and sincere in implementing welfare schemes? Are they implementing people’s welfare schemes or populist schemes? Are the schemes intended to eradicate poverty or to make poverty permanent?  For 75 years, the rulers have been introducing a number of schemes in the name of “garibi hatao”. Did they reduce poverty or uplift the poor? Has the wealth increased in the country? If so, where did the increased wealth go? These are all questions to be considered.

Why are the welfare schemes failing? The welfare schemes are not being implemented effectively due to lack of transparency or accountability, lack of citizen-centric policies, lack of community participation, and no honest review or monitoring mechanisms. The government’s purpose in designing and its sincerity in execution of the schemes must be analyzed. Most of the schemes are announced to appease people during elections. Schemes are announced in grandeur but are funded meagerly. It should also be noted

Many capitalist countries and even developed countries spend on social security. In 2019, for example, the United States spent 23 percent of its budget [ equal to $1trillion] on social security. In the same year the French government spent nearly one-third of GDP on social services.  Denmark, Sweden and Norway spend more than 25%.  The 38 OECD [Organization for Economic Co-operation and Development] member states, such as Canada, Australia, Austria, Italy, and Japan, spend an average of 20% on welfare schemes. India is now spending only about 4% of its GDP on subsidies, it is not a good reason for our economists to explain that the country is caught up in an economic crisis because of welfare schemes. This is a deceitful claim that the poor are responsible for all the ills of the country. China’s experience and policy are different. China has eliminated the problems of the poor by creating employment and developing basic services, and has also solved the problem of poverty but not through subsidies given in sectors like education, agriculture and sanitation. The difference between China and other countries is clear.

Free schemes are announced by any state taking into account the composition of the population, the urban-rural differences, and perhaps the level of economic development. The administrative structures and political decisions are built around it, so that an economic relationship is formed between the government in power and the particular interest groups they focus on. But it is a type of “donor-donee” level relationship. Facilities are not available to the people as a right, but at the mercy of the governments. India is being declared a welfare state even before it became a develop ed country.

The Indian democratic system is pressurizing the ruling parties to act for electoral gains and they are in a hurry to address the problems arising out of poverty with subsidies and populist schemes rather than solving them with long-term sustainable policies. There will be a positive response among the people towards the party which is benefiting them with immediate financial aid. All governments focus on a group called “swing voters”. In order to win back the parties plan to attract those voters towards them. So free schemes are introduced and implemented not as permanent solutions, but as vote bank schemes that temporarily attract the people.

As a result, these schemes are characterized with many shortcomings like corruption, crony bias, and the selection of beneficiaries as per the instructions of ruling parties and loyalties of influential personnel. These schemes serve as royal means of transferring social wealth to the bank accounts of the selected people, most of them usually undeserving. People are getting their benefits very un- evenly and incompletely. The schemes are being executed inefficiently.

Emerging market economies that use subsidies have switched from production-based subsidies (subsidies given for food, fuel, and fertilizers) to person-based subsidies (cash transfers) Thus governments are not taking care of increased prices but paying fixed subsidy to cut their allotments.  People are getting satisfied with the small amount of money that is directly falling into their accounts and are not realizing that the subsidy is reduced in the real sense.

Subsidies on the three Fs – food, fuel and fertilizers cost 2.5 per cent of GDP, which some claim is more than the amount allocated for all development projects. It is to be noted that the government spends Rs 3-4 on the Public Distribution System (PDS), to give one rupee subsidy- revealed 2005 NCAER study. The difference between words and deeds becomes clear when one examines some of the schemes announced and implemented by the Government.

Let’s look at three major areas – employment, health care and nutrition- where welfare schemes are in operation and analyze their effects on people’s lives.

Rural Employment Guarantee: The Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) has been in force since 2006. It aims to provide at least 100 days of wage employment for unskilled labor in adult members of a rural household. It was said that this will be the source of livelihood for approximately 14.70 crore active workers in rural areas during economic disasters and natural calamities.
The number of people seeking work under this Act (MGNREGA) increased to 13.3 crore by 43% raise in the financial year 2021-22. However, the government has reduced the allocation for the scheme by 35%. The amount of Rs 73,000 crore allocated in the financial year 2021-22 has been utilised.21 States face a shortage of funds and negative balance now. Prior to the announcement of the national lockdown in March 2020 the Centre had allocated Rs 61,500 crore for his scheme. But due to the lockdown, workers from cities have moved to their homes (villages) in a big way. The need to provide employment in the villages has increased. Therefore, in 2020-21, the allocation has been increased by 81 per cent to Rs 1,11,500 crore as emergency measure. But later in 2021-22, even though things have not improved, it has been reduced by 34 per cent to Rs 73,000 crore.

According to a study by Lib tech India and People’s Action for Employment Guarantee, by 4th December 2021, the Centre is yet to pay wages of over Rs 4,500 crore under the scheme. The number of transactions pending is 2.88 crore. Last year 64.36 lakh transactions (valued at around Rs 280.42 crore) more than 2% of the total transactions were rejected.

“It is very difficult to find work under MGNREGA. Even after getting the job done, getting paid on time is another problem. There are many loopholes in this entire process for example, there is a woman named Reena. We are fighting to get her a 90-day wage payment of ₹18,000. The govern ment has no intention of solving their problems. There is no proper order in providing work when people need it.” Richa Singh, a member of the Sangin Kisan Mazdoor Sanghatan (SKMS) in Sitapur district of Uttar Pradesh, explained in an interview.

Ironically, the developed states are using these schemes more often, than the poorer states that really need them.  This is widening the development gap between the states. This scheme, designed to help those in real need, is not even associated with any district or block level development plan contrary to what is expected.   In 2013-14, Rs 175 was spent on disbursing Rs 132 wages, of which only about Rs 90 went to the beneficiaries, which shows how much wastage and corruption the scheme is steeped in. 

Health Related Schemes: Governments in India have been propagating on a large scale that the health sector under the control of the government is providing free medical care to the people, as well as providing corporate level healthcare to the poor through schemes such as Aarogya sri and Ayushman Bharti. In this regard, proper review and rationalization is required. Among the Millennium Development Goals set by the World Health Organization, India trails behind in case of maternal mortality rate (113/100,000 live births in 2015& 99/100,000 in 2020), infant mortality (30/1000 births in in2015 &26/1000) rates which are considered the indicators of health care in a country.

India has public and private sectors in health care. Priority is given to primary health care, prevention of socially transmitted diseases and preventive vaccination of children in the public sector. In the private sector, secondary and tertiary care is preferred. Therefore, only 20% of the problems commonly faced by people are treated in the public sector. The free schemes run by the government are not enough in any sense. Therefore, everyone is forced to turn to the private sector for health issues.

70% of the health care system is in the hands of the private sector run either as a medium scale hospital or a corporate hospital industry. The industry on one hand attracts foreign patients and provides quality treatment comparable to any institute of international standards. Medical tourism generates 18% of the revenue. The health sector, employing 4.7 million people, has become a large market worth about $ 372 billion in 2021 earning the highest profits.

On the other hand, in the public sector, the system is deteriorating and losing popularity with substandard services due to lack of infrastructure. Everyone knows how much of a burden the private sector health care has become for the people during the covid19 pandemic.

More than 63% of people’s spending on health is from their own pockets. This is the highest of all the countries in the world. Less than 5% of the population has access to insurance.  Every year 30% of patients are slipping from the middle class to the below poverty line group by borrowing money or selling assets to pay for health care treatments.

“There is a need to increase our investments in the public health system. India spends only 1.2 per cent of its total GDP on healthcare, which is the lowest in the world,” says Dr Ambarish Dutta, a public health expert and additional professor at the Public Health Foundation of India.  U.S.A, U.K, and China spend 8.5 %, 7.9 % and 3.2 % of GDP respectively on health care. The Pradhan Mantri Jan Arogya Yojana is a health scheme being implemented across the country. However, during the COVID-19 pandemic from April, 2020 to June, 2021, only 17.7lakh tests [0.49% of the total tests] and 6 lakh [14.25% of patients] were hospitalized under this scheme. No matter how many schemes the government may announce, without developing infrastructure-it will not even touch the edge of the problem.

Dr Indranil Mukhopadhyay, associate professor of health at OP Jindal University, says the focus should be on strengthening primary care. The allocation in the Budget for 2021-22 has been reduced to ₹71,269 crore from ₹78,866 crore allocated in 2020-21 despite the coronavirus pandemic wreak ing havoc, which means the government is giving up its responsibility in the medical sector and pushing people towards the private sector.
Nutrition: It has been propagated throughout the world that India is shining brightly, but the reality is different. The vishwa guru’s place in development and creating a welfare state of the citizens is not recorded internationally as our rulers wish for, but in some indicators certainly we are gloriously infamous. We are ranked 101st out of 116 countries in the world hunger index.  If China is a country with less than 5 points and no hunger problem, our country is registered as a country with severe hunger problem with a score of 27.5 points.

According to the FAO report, 14% of the population is starving. According to UNICEF statistics, 200 million people eat only one meal a day and annually, 25 lakh people die due to starvation. UNICEF reports- 185 million Indians fall ill due to mal nutrition yearly. Every year, 8.8 lakh children under the age of 5 die due to lack of food. As of October 14, 2021, the Ministry of Women and Child Development has estimated that there are 17.76 lakh severely malnourished (SAM) children and 15.46 lakh moderately severely malnourished (MAM) children.

According to the National Family Health Survey [NFHS 2019-20 report], 89% of children in the age group of 6 to 23 months do not get enough food. Therefore, 32% of the children are under weight, 35% are stunted, 20% are completely emaciated. 68% of children and 66% of women are found anemic in2020. In 2016, about 36% of children and 46% of women were anemic as per NFHS. That is to say people’s health is deteriorating day by day. What happened to our welfare schemes that claim to be the role model for the world?

What is even more strange is that since the 1990s there has been no shortage of food in the country. Our country has been number one in the production of milk, pulses and millets, and we are second in the cultivation of rice, wheat, sugarcane, groundnut and vegetables. Yet we are in such a bad state in the hunger index. It is not because of lack of food production but due to lack of fair distribution.  Food security was guaranteed to all Indians as per 2013 act. The government has to provide food grains to the people at a subsidized rate if needed. This means that it is a failure of the ruling parties of successive governments to fulfil their constitutional duties. Their inefficiency is the cause of starvation and malnutrition.

Instead of systemic changes and policies that eradicate poverty, the ruling classes are implementing eye-wash schemes that cool the wrath of the people. The Poshan Abhiyan scheme was launched in 2018 to reduce malnutrition. It is a government scheme to provide additional nutrition to children in the age group of 6 months to 6 years, pregnant women, lactating mothers and adolescent girls of 11-14 years age who are out of school. The supplementary nutrition program (SANP) under Anganwadi Services (AWS) and Integrated Child Development Services Scheme (ICDS) are intended for this purpose. In the 2021-2022 Budget, all these have been put together and announced as an Integrated Nutrition Support Program.

Under the mid-day meal scheme, the government under the aegis of the Ministry of Education provides cooked food to all children studying in classes 1 to 8 in government and aided schools.  According to estimates for 2020-21, ₹12,900 was allocated for the mid-day meal scheme, but it was reduced to ₹11,500 crore in the 2021-22 budget. That’s a 10.8% decrease. “The closure of mid-day meals and ICDS during the pandemic has had a devastating impact, which is pushing children into severe malnutrition,” says health economist, Dr Indranil Mukhopadhyay.

Experts expect allocations for nutrition to increase. In 2020-21, the total budget for ICDS was allocated ₹28,557 crore, but it was reduced to ₹20,038 crore in the revised allocations. The allocation was reduced by nearly 29%. “We need to focus on nutrition for adolescent girls. Still a lot of resources are needed.”  Experts say so. But the government is reducing funds for essential welfare schemes. They are maintained nominally but the campaign is heavy.

The country is drowned in a sea of debts.  They add a debt of Rs 10 lakh crore annually. From 1947 to 2014, about Rs 56 lakh crore was borrowed, followed by Rs 80 lakh crore from 2014to2021. If such huge amounts are used for the creation of infrastructure and for productive purposes and development activities, it may be understood, but new debts are used to pay off old debts and interest. In 2021, we had debts equaling 60.5% of our gross national product [GDP]. Our taxes on gas (G), diesel (D) and petrol (P) were Rs 74,158 crore in 2014-15 and were raised to Rs 3 lakh crore in 2020-21. They say GDP has grown greatly but see which GDP is increased!

“The public economy is currently in deep turmoil as the fiscal deficit has reached an extraordinarily high level due to huge spending on welfare schemes by the Modi government,” said former finance minister Yashwant Sinha. “On the one hand, welfare schemes for the poor and on the other hand, policies that provide exorbitant benefits to selected corporates are being implemented,” he said.

In an interview to PTI, Sinha said, “The shocking thing is that no one is worried about the financial condition of the government, including those in the government. The country’s fiscal deficit is projected to be 6.9 per cent of GDP this fiscal year. There are no signs that any ruling party in this country is worried about this economic plight. “Everything in today’s economic policy depends on whether the government or the ruling party will be allowed to win elections or not,” Sinha alleged. His worry about the economic crisis and irresponsibility of ruling parties is correct but his assumption of welfarism towards poor as cause of crisis cannot be accepted. It is the welfarism of the big corporates causing economic crisis.

If we look at the way our banks are managed, we can see whose interests the economy revolves around. Banks have written off bad loans or non-performing assets worth Rs 2.02 lakh crore in FY21.  SBI alone has written off a total of Rs 10.7 lakh crore in the last seven years.  It didn’t happen just for a single year. This is the policy followed every year.  Rs 1,08,373 crore in 2016-17, Rs 1,61,328 crore in 2017-18, Rs 2,36,265 crore in 2018-19 and Rs 2,34,170 crore in 2019-20, have been written off the RBI said.  In the last 10 years, banks have written off Rs 11,68,095 crore (NPAs).  These banks have recovered only Rs 64,228 crore [14%] of the loans given. They have waived off twice as much debt as they collected in five years.

More over banks misinform people by declaring that it is only a book adjustment and the loans will be recovered as usual. According to an RTI response, between 2014 and 2019 scheduled commercial banks in India have written off bad loans worth Rs 6.35 lakh crore and have recovered only Rs 62,220 crore from written off loans. It is well recorded that less than 10% of such loans are recovered later and in practical sense, it is making the big fish free of their loans officially

The debts of bigwigs, distinguished corporate companies and personalities such as, Gitanjali Gems Mohil Choksi [8018 crore] R. E. I Agro [4314 crores], Winsome Diamonds [4076 crores], Vijay Mallya [1943 crores], Deccan Chronicle [1915 crores] etc., have been written off. 75% of these loans are written off by public sector banks, but it is not possible for the same banks to waive off the debts of small farmers who have a debt of Rs. 2-3 lakhs. “It is not an economically good move and it will not make any difference in the lives of farmers,” the Union Finance Minister had recently said.

That’s why the farmers’ dues are recovered by auctioning their food grains and seeds. We have recently read in the news about SBI, which harassed a farmer in Gujarat for two years by not giving him the required certificate by saying that he did not clear a loan of 31 paise. Can there be a more glaring example of demonstrating the purposes for which the government agencies are working?

The wealth of India’s wealthiest families reached a record high in 2021. The bottom 50% of the population accounted for only 13% of the country’s wealth, with the top 10 of India’s richest individuals owning 57% of the country’s wealth.  The 98 richest Indians have the same wealth as the 552 million people at the bottom.  The income of 84% of Indian households has declined due to the Covid-19 pandemic.  But in the same 2021 period, the number of Indian billionaires increased from 102 to 142.The wealth of 100 high-profile households was Rs 57.3 lakh crore [Oxfam Report, 18 January 2022].   “This inequality is killing the country’s systems,” they remarked. Does this in any way mean that the governments are working for the “welfare of the people”

It is in the nature of the ruling classes of today to announce schemes in the name of the welfare of the people, to release meagre funds and run them nominally but to propagate them in a populist manner and to create illusions that the lives of the poor are being lifted up from poverty. In fact, they maintain a machinery of government to the benefit of the big feudal and big capitalist classes. That is why no matter how many elegant schemes are introduced in the name of the people; the declared welfare will not be achieved. The plight of people will not improve if they sail with these schemes as executed presently. It must be remembered that many welfare schemes and acts are introduced after long fought battles. There is no way than struggles for people to establish their rights. The welfare schemes are framed deceitfully to submerge people in illusions and to obtain their approval to the ruling regimens.


[Dr.S.Jatin kumar is an orthopaedic surgeon by profession and is presently vice president of Organisation for Protection of Democratic Rights -OPDR TS. Contributed articles earlier to counter currents]


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