India’s sheer size and poverty have meant that addressing the needs of its hundreds of millions of poor and vulnerable citizens has preoccupied Indian policymakers since independence. Unsurprisingly, the mix of strategies, the resulting policy instruments to undergird them and their relative effectiveness have been a matter of contentious debate.
As with other poor developing countries, India’s efforts to improve the welfare of its vulnerable populations have, at least in principle, involved three major components. The first, given the abysmally low income of the average Indian household, has been to try to raise incomes through growth with the assumption that higher incomes reduce vulnerability to shocks and provide the ability to self-insure. The second component has been to provide public goods and thereby lay the foundations for equal opportunity. The third has involved efforts to weave safety nets for communities and individuals that are especially vulnerable.
India has done modestly well on the first component, especially in recent years, although the country’s growth has been less inclusive than that in comparable high-growth countries, in particular because of its inability to develop labor-intensive manufacturing. By contrast, India’s record on universal public goods, ranging from the quality of public health and primary education to water and sanitation, has been woeful. India has partially sought to compensate for the weaknesses of its provision of basic public goods with attempts to build a welfare state. Social safety nets, defined here as mechanisms that assist individuals in maintaining what the community views as a basic standard of living, have become a key part of these efforts.