Sample Material of Current Public Administration Magazine
India's Complex Welfare System
The Directive Principles of State Policy, enshrined in Part IV of the Indian
Constitution reflects that India is a welfare state. Seats are reserved for
scheduled castes and scheduled tribes in government jobs, educational
institutions, Lok Sabha and Vidhan Sabha.
The government has passed laws for the abolition of untouchability, Begar and
Zamindari. The government has opened Fair Price Shops, where essential
commodities are sold at reasonable prices to the poorer sections of the society.
In 2000, the union government's expenditure on social services (includes
education, health, family welfare, women and child development, and social
justice and empowerment), rural development, and basic minimum services was
approximately US$7.7 billion (Rs361.7 billion), which was 11.1 percent of total
government expenditures and 1.7 percent of gross domestic product (GDP).
The union and state governments maintain reserved seats in political and
education institutions for lower castes, indigenous persons, and others based on
their percentage of the population. Development programs have been produced —
often at state or local levels — for social development and the empowerment of
women and lower castes.
Prime Minister Narendra Modi has promised a bank account for every Indian
household under a push to end "financial untouchability" that could
revolutionise how the state aids poor people.Yet the complexity of India's $50
billion in transfer schemes, from fertiliser subsidies for farmers to cheap bags
of rice and cooking gas canisters for households, will make reform a huge
Here is an overview of India's main welfare, food and farm aid programmes,
with reform milestones:
PROGRAMME ANNUAL COST
FOOD- $18 billion
- Families are entitled to 5 kg of food grains per person per month at a
subsidised cost of 2-3 rupees per kg.
- Plan: Overhaul the Food Corporation of India in six months to one year.
- Milestone: Reduce grain purchases and partly introduce cash payments to
poor households in cities over the next 2-3 years.
MINIMUM SUPPORT PRICES- $12 billion
- The government subsidises wheat and rice farmers by paying above-market
minimum support prices, as well as offering subsidies for credit, power and
irrigation. This has led India to accumulate vast surplus stockpiles.
- Plan: Reduce the rate at which minimum support prices are increased to 4
percent a year, down from an average of 10 percent over the last five years.
- Milestone: Implemented in June.
FERTILISERS- $10 billion
- The government pays a subsidy to fertiliser producers, leading to
overproduction and indiscriminate use by farmers of urea, the only
fertiliser that India does not have to import.
- Plan: Government considering making money payments to farmers' bank
accounts to cover their fertiliser costs.
- Milestone: Reviewing payment of subsidies to retailers on fertiliser
sales. Cash subsidies could be paid into bank accounts by 2018/19.
RURAL EMPLOYMENT SCHEME- $6 billion
- India's previous government promised to provide 100 days' work a year
for the rural poor.
- Plan: Expedite payments and cut out corruption by paying wages straight
into bank accounts of day labourers.
- Milestone: Already happening in some states. Seeking to roll out in
other states over the next one to two years.
COOKING GAS- $3 billion
- Oil marketers incurred 465 billion rupees ($7.6 billion) in revenue
losses on the sale of subsidised cooking gas to 160 million households last
fiscal year, about half of which was funded by the upstream companies.
- Plan: India last year launched direct payment into bank accounts towards
the cost of cooking gas in about a third of districts, paying 20 billion
rupees ($327 million).
- Milestone: Officials believe that within a year, the government could
roll out the direct payment scheme across the country.
KEROSENE- $3 billion
- The central government supplies subsidised kerosene to the state
governments, which distribute it to consumers through state-run shops.
- Plan: Officials are still not clear how this subsidy could be directly
transferred into bank accounts as an earlier attempt in some states failed.
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