Rethinking Social Safety Nets in a Changing Society

With a growing economy and declining poverty, India faces a curious challenge in providing a social safety net to its citizens. Using data from three rounds of the India Human Development Survey (IHDS), collected in 2004-5, 2011-12, and 2022-24, this paper shows that households face considerable transition in and out of poverty as the economy grows.  Historically, India’s approach to social safety nets has involved identifying the poor and providing them with priority access to various social protection programmes that include both in-kind and cash assistance—however, the nature of poverty changes with economic growth. This churn in households’ economic circumstances makes it difficult to identify and target the poor precisely. Traditional approaches to identifying the poor through the provision of Below Poverty Line (BPL) cards, now dubbed priority cards, assume long-term stability of poverty and tend to focus on chronically poor households that usually come from poor regions or have enduring characteristics that predispose them to poverty (e.g., belonging to Scheduled Castes and Tribes). The IHDS data shows that with a decline in chronic poverty, transient poverty begins to dominate. This suggests that our approach to social protection must pay greater attention to circumstances of life that push people into poverty rather than circumstances of birth associated with social identity or region of birth.  This paper discusses various approaches to providing safety nets and examines the experiences of some critical programs in reaching the poor.

This paper was presented at the India Policy Forum (IPF) in July 2024