Session 4A_Welfare State and Financing Requirements-1 PDF

Session 4-A Financing Welfare Welfare State Case Studies in Centrally Sponsored Schemes Prof Govinda Bhattacharjee  Session Structure Welfarism and welfare state; Planning era distortions and Discretion Raj Budget and Welfa...

Session 4-A Financing Welfare Welfare State Case Studies in Centrally Sponsored Schemes Prof Govinda Bhattacharjee  Session Structure Welfarism and welfare state; Planning era distortions and Discretion Raj Budget and Welfare Expenditure Requirements of good policy Case Studies: Centrally Sponsored Schemes, Bolsa Familia. Beto Bachao Beti Padhao  Fundamental Assumptions behind Policy Making Welfare State State controlled development for nearly 7 decades Public sector to dominate the “Commanding heights” of economy, stifling the Public sector Soviet Model of centralised Planning Planning Commission Reservation for weaker sections in education and employment: SC/ST/OBC Article 16(4): “Nothing in this article shall prevent the State from making any provision for the reservation of appointments or posts in favour of any backward class of citizens which, in the opinion of the State, is not adequately represented in the services under the state.” Subsidies for the poor: Food, Petroleum Relief for agriculture: No tax, Subsidised fertilisers, free electricity and water for farmers Distortions caused  Origin of Welfare State: UK On 1st December, 1942, Sir William Beveridge’s review of social security was published in UK. It was designed to eliminate ‘Want, Disease, Ignorance, Squalor and Idleness’. The Beveridge Report aimed to provide a comprehensive system of social insurance 'from cradle to grave'. It proposed that all working people should pay a weekly contribution to the state. In return, benefits would be paid to the unemployed, the sick, the retired and the widowed. Beveridge wanted to ensure that there was an acceptable minimum standard of living in Britain below which nobody should fall. In 1944, the publication of Employment Policy White Paper was heavily influenced by Keynesian ideas. “The Government accepts as one of their primary aims and responsibilities the maintenance of a high and stable level of employment after the war.” This commitment in the 1944 White Paper on Employment Policy has generally been recognised as a major change in policy priorities. British public widely welcomed the policy. The first post-war election in June 1945, resulted in a landslide victory for the Labour Party, who were enthusiastic supporters of the Beveridge Report. Several Acts/ Amendments followed: National Insurance Act 1946, National Assistance Act 1948, National Health Service 1948, etc. The acts provided for sick pay and other benefits. Nationalisation of key industries followed: coal (1947); rail-ways, gas & electricity (1948); steel (1951).  What is a Welfare State There are two main interpretations of the idea of a welfare state: A model in which the state assumes primary responsibility for the welfare of its citizens which is comprehensive, since all aspects of welfare are considered and universally applied to citizens as a "right". The other form of welfare state is the creation of a "social safety net" of minimum standards of varying forms of welfare. The welfare state provides education, housing, sustenance, healthcare, pensions, unemployment insurance, sick leave or time off due to injury, supplemental income in some cases, and equal wages through price and wage controls. It also provides for public transportation, childcare, social amenities such as public parks and libraries, as well as many other public goods and services. Some of these items are paid through government’s insurance programs while others are paid from taxes.  Welfare State in India Constitutional Provisions Part IV: Directive Principles of State Policy (Art 36-51): Not enforceable but fundamental to governance Article 38-Social, Political and Economic Justice Principles promoting social and economic equality (Art. 39, 40, 41, 43A, 45A, 46) The state should ensure for its people adequate means of livelihood. The state should ensure fair distribution of the material resources of the country for the common good. The state should distribute the wealth in such a way that the wealth is not concentrated in a few hands. There should be equal pay for equal work for both men and women. (Art 15, 16) The state should ensure fair wages and a decent standard of life. The state shall ensure the education of children below the age of 6 years. (Art 45A) (SSA) The state should try to secure participation of workers in the management of the factory. Participation of Workers In Management Bill, 2023 The state should ensure protection of SCs, STs and other weaker sections from exploitation. Scheduled Castes and Scheduled Tribes (Prevention of Atrocities) Act, 1989  Directive Principles of State Policy – Contd. Childhood and Youth should be protected against exploitation. Men, women and children should not be forced by economic necessity to enter jobs and vocations not suited to their age or strength. (Art 39) The state within the limits of its capacity should ensure to the people (a) the right to work (b) the right to education (c) the right to state assistance in cases of unemployment, old age, sickness and disablement. (Art 39) RTE Act, SSA, NSAP The state should make provisions for securing just and humane conditions of work for the workers and maternity relief for women. (Art 42) The state shall endeavour to implement a Uniform Civil Code (Art 44) The state shall promote the educational and economic interests of the weaker sections of the society and in particular the interests of SCs and STs (Art 46) The state shall promote nutrition, standard of living and public health. (Art 47) Gandhian Principles (Village panchayats, Prohibition of intoxicating liquor, Cow, etc.) (Art 40, 47, 48) The state shall promote international Peace and security (Art 51)  Application of Directive Principles in Public Policy Minimum wages have been fixed in almost all the spheres of employment. Equal wages for equal work for both men and women have been enacted. Various programmes have been launched to boost rural employment (MNREGA). Panchayati Raj has been given constitutional status. Village Panchayats have been set up and are functioning at village level. Free and compulsory education for children (86th constitutional amendment) Right to Education Act, 2009 made education a fundamental right. Laws to protect children and women from exploitation. Welfare schemes for poor, SCs/STs, backward communities, reservation of seats for them in legislatures. Laws to protect environment and safeguard forests and wild life.  Historical Evolution of Policy Making in India Nehruvian Socialism: Socialistic Pattern of Society Elitist model: IIT, IIM rather than focus on primary education, health and sanitation Planning Commission led growth: Low growth, high unemployment, endemic poverty, brain drain Futile attempts at bureaucratic reforms Strong entrenched and vested interests and nexus between bureaucrats and politicians Use of bureaucracy for furthering private interests Emphasis on individual ability and quality rather than on system In 1964, Nehru admitted that his greatest failure was continuance of colonial administration The Governance mechanism was clearly unsuitable for implementing and delivering on a genuine development agenda.  Evolution of Public Policy Contd. Abject failure of Centralised Planning 6th Plan (1980-81 to 1985-86): on Increase in national income, modernization of technology, ensuring continuous decrease in poverty and unemployment. Result: Famine conditions in several states in 1985-86 due to decline in agricultural output 7th Plan (1986-87-1991-92): Focus on ‘food, work & productivity’: Result: Worsening Balance of Payment, rising debt burden, widening budget deficits, recession in industry and inflation, forcing the 1991 reforms Severe Distortions in Public Financial Management Centrally Sponsored Schemes, Direct Off-Budget transfers Economic Reforms of 1991 Liberalisation, Privatisation, Globalisation; New Industrial Policy: Opening of Economy to Private Sector However, bureaucracy and public sector leadership could not effectively deal with economic challenges posed by globalisation. Many PSUs perished Problems: Status quo-ist Bureaucracy, big size of government, lack of political will to pursue reforms  Indian Scenario: Case study Until the 1970s, policy analysis was primarily concerned with policy-making issues. However, in the 1960s, a growing interest emerged in the post-decisional phases of public policy. It became evident in the 1970s that many policies had not performed well. As it became apparent that policy-making in many areas, such as health, education and agriculture in India had not achieved its desired goals, so researchers in public administration and public policy began to focus on policy implementation. Implementation of policies was done mainly through Planning Commission – an extra constitutional body without any accountability. The model of implementation was through centralised planning via the five-year plans. Most of our Plan Schemes are case studies of implementation failure.  Case Study: Plan Transfers Federal Transfer of Resources: Finance Commission & Planning Commission Transfers Grants under Article 275 (1): (Non-Plan Grants), Plan Grants, Article 282 Discretionary Transfers of Planning Commission, 1951-84, >60% of Total Plan transfers as instrument of control of States by the Centre Scheme of Plan Transfers Normal Central Assistance (NCA) for Central Plans and State Plans; Additional Central Assistance (ACA) for implementation of externally assisted projects; ACA for Centrally Sponsored Schemes like (MNREGA, SSA, NRHM, ICDS, TSC, PMGSY, IAY, MDM, NRDWM etc.) which are operated throughout India; ACA for special programmes funded by the Ministry of Finance but implemented by other Departments/ Ministries, like JNNURM; Special Central Assistance (SCA) for special programmes operated in some states; Advance Central Assistance given in special, usually exceptional, situations. 12 Criteria (Weightage %) Original Gadgil Modified Gadgil NDC Revised NDC Revised Formula (1969) Formula (1980) Formula (1990) Formula (1991) A. Special Category States 30% share of 3 30% share of 8 30% share of 10 30% share of 11 States States States States B. Non-Special Category States (i) Population (1971) 60.0 60.0 55.0 60.00 (ii) Per Capita Income of which 10.0 20.0 25.0 25.0 (a) According to the deviation method (for States with per 10.0 20.0 20.0 20.0 capita income