Social Security Schemes: Coverage, Regional Dimension And Related Issues in Himachal Pradesh

Social security at large and that of the underprivileged sections of the society is one of the prime responsibilities of the State in the Indian context. Social security schemes to such sections of the society as are most vulnerable to the fast changing social and economic organization in India have been in vogue for over four decades. These cover the economically disadvantaged old people, widows, physically handicapped, ex-patients of leprosy and such ex-servicemen or dependents of ex-servicemen who are not in receipt of any kind of pension. All these schemes were started with very modest coverage initially but the coverage net has been widely expanded over time. The compensation being paid as monthly pension began at a modest scale but has multiplied manifold. The measures not only provide direct benefit to the identified beneficiaries with virtually no leakage or misappropriation but also impart a certain level of social status and acceptability to the beneficiaries in the social milieu. Normally initiated as the State Government initiatives, the political acceptability and socio-cultural imperatives have resulted in the central government also initiating social security schemes for the old and the infirm under the National Social Action Plan in the mid-1990’s.

The underlying objectives and the guidelines for implementation of these schemes can not be faulted. However, at certain levels, the exercise of discretion in selection of beneficiaries on the one hand, and non-adherence to the coverage parameters in letter and spirit, on the other, can lead to certain distortions in the attainment of the basic objectives. This paper attempts to analyze the regional dimension of coverage under the social security schemes in Himachal Pradesh and also suggest the possible correctives.

The rates for old age and widow pension have undergone significant change over the years.

A comparative picture of the rates over time is presented in the following table:-

Source : Directorate of Social Justice and Empowerment, Himachal Pradesh.

It is seen that the rate of pension doubled in less than five years in the period 1969-1974. Thereafter, it took two decades to double by 1994. It further doubled in less than eight years by 2002 and has seen a further 50 per cent mark up in the next 6 odd years. Since the pension is not an economic measure but is more in the nature of providing succor, it is difficult to link it to any economic parameter. However, it would be only fair if the rates of pension are made inflation neutral into the future. Such a measure, if adopted, will also make the revision process free from political footprint and accord greater resilience to the scheme along with ease of implementation.

The data on the growth of the coverage under all the schemes except those relating to the ex-servicemen or their dependents not in receipt of any pension and the ex-patients of leprosy (the coverage for these two categories in 2003 was 4,688 and 1,993, respectively, and is a number with a tendency to decline over future) is presented in the following table:-

* :Acronyms stand for “Old Age Pension under the State scheme”, “Old Age Pension under the National Social Action Plan” and the “Rehabilitation Allowance for the Physically Handicapped”, respectively.

Source : Directorate of Social Justice and Empowerment, Himachal Pradesh.

As is evidenced by the above data, there has been a quantum increase in the coverage of the various social security schemes in Himachal Pradesh. Between 1980-81 and 2000-01, the coverage increased from 45,125 to 1,55,245 showing an increase of the order of 244 per cent. In the corresponding period, the population of the State increased from 42.81 lakh to 60.11 lakh, an increase of about 40 per cent. There has, however, been an increase in the recent years in the coverage and as on 31st March, 2008, the total coverage is over 2.35 lakh beneficiaries. It needs to be underlined that a very large part of the increase is under the Old Age Pension scheme of the National Social Action Plan. One could safely conclude that the entire additional coverage under the Old Age Pension scheme in the present decade has come from the National Social Action Plan. This becomes clear from the data in the following table:-

Source : Directorate of Social Justice and Empowerment, Himachal Pradesh.

Coming to the analytical aspects of the social security schemes, it should hold good that the coverage of the Old Age Pension scheme should bear a strong relationship to the total population in the State as also the poverty incidence. Similarly, the widow pension scheme coverage should be correlated to the total female population. These aspects will be analyzed in the following text.

At an overall level, the coverage of these schemes has seen a fast expansion over the past three decades. These schemes covered 1.05 per cent of the population in 1981, which increased to 1.69 per cent in 1991 and further on to 2.55 per cent in 2001. Presently, the schemes cover about 3.5 per cent of the estimated population of the State. A question arises as to what percentage of population should be normatively covered by the social security pensions. In this behalf, the stance taken by the successive Central Finance Commissions would be of immense interest. The Seventh Finance Commission (1979-84) had made an allowance of providing for 0.1 per cent of the State’s population according to the 1971 census at an assumed rate of Rs. 60 per month. The Eighth Finance Commission (1984-89) used the per capita expenditure approach for this purpose and provided at the rate of Rs.4.59 per capita expenditure on the entire population according to the 1981 census. The Ninth Finance Commission (1990-95) made a provision for the old age pension at the rate of Rs. 100 per month for 0.2 per cent of the total population according to the 1981 census. The subsequent Commissions have, by and large, adopted the norm of 0.2 per cent of the total population. By this parameter, the coverage in Himachal Pradesh at an overall level of 3.5 per cent of the projected population in 2007-08 and that for the old age pension at 2.10 per cent of the projected population is far in excess of the normative prescriptions. It is more than ten times for the old age pension alone and if one takes into account the total coverage of the social security schemes, it is about seventeen and a half times. Therefore, the social security net has been cast far too wide in Himachal Pradesh. It costs the State Exchequer about Rs. 87 crore per annum at the present coverage and rate. It is important to underline the fact that the expenditure on social security schemes constitutes a mere 0.69 per cent of the total budgetary expenditure of the State. It is one of the good revenue expenditure outgoes since the spending directly reaches the selected beneficiaries.

A higher than the normative coverage can have two implications. One is that the population profile in the State is changing with increased longevity and causing more people to look out for the old age pension support. The other can be that an ever increasing number of people are being pushed into depravation and poverty, leading to a persistent increase in the numbers seeking the social security net. On the face of it, both the implications seem out of sync because the per capita incomes are persistently on the rise and there has been a reduction in the number of people living below poverty line in Himachal Pradesh. These implications will be examined in a bit greater detail subsequently.

Having laid out the macro picture, it is of paramount importance to look at the inter-district data on the coverage of the social security schemes. The inter-district data on coverage of social security schemes has to be viewed in the context of the total population, female population and the population living below the poverty line. The district-wise data on the coverage of the social security schemes including the OAP, NSAP-OAP, WP and Rehabilitation allowance for the physically handicapped vis-à-vis the total population is presented in the following table:-

The above data clearly reveals that the district-wise distribution of the beneficiaries of various social security schemes is skewed when viewed with respect to the population distribution. Mandi, Lahaul-Spiti, Chamba, Shimla, Kinnaur, Kullu and Bilaspur districts have a coverage at a much higher level as compared to the population percentage, in that order. Does it imply that these districts have more old, aged, infirm, widows and deserted women and physically handicapped people or the incidence of poverty in these districts is higher than the other districts? The coverage in Sirmaur, Hamirpur and Kangra is lower that the population ratio but can be easily remedied while undertaking any expansion in the future coverage. The coverage in the districts of Solan and Una is very low when compared to the population ratio in these districts. It certainly should imply that these five districts have lesser old aged people and lesser incidence of poverty if these attributes were related to the coverage and the selection principles. On another plane, the skewness could also result from the selection process unduly benefiting certain districts. In this behalf, the examination of the poverty incidence data as is accepted by the State Government would be worthwhile. The data in this behalf are presented in the subjoined table:-

Note : The data on population living below poverty line has been taken from the records of the Directorate of Rural Development, Himachal Pradesh.

Note : The data on total population and female population has been taken from the Census 2001.

A quick perusal of the above data reveals that except in the case of Kinnaur district where the coverage of social security schemes and the poverty incidence appear to be strongly correlated, there is precious little to relate the poverty incidence with the coverage of these measures in any of the other districts. This is despite the fact that poverty or the income level of the beneficiary is the single most important criterion for admission to the schemes. It is, therefore, imperative that the future expansion of the schemes or replacement of the existing beneficiaries takes into account the poverty incidence while bringing newer beneficiaries under the social security net. One of the most important reasons for this distortion in reporting income of the beneficiaries is lack of a common database being used for various schemes. There is sufficient merit in adopting a singular database for various programmes or schemes to avoid misrepresentation of facts although there may be some errors in that as well. However, the BPL survey outcomes should be relied upon more than any other database because these are most comprehensive and participative.

Let us also look at the coverage of the widow pension scheme in its regional dimension. The data is presented in the following table:-

The above data reflects a situation which is contrary to the popular belief that the coverage under the widow pension scheme is a function of the total female population in various districts. Here again, the coverage is not truly representative of either the female population or the poverty incidence.

From the above analysis, we gather that the coverage of the various social security schemes does not bear a strong relationship to any of the factors which could govern its district-wise distribution, be it the total population, population of the females or the population living below the poverty line. This disparity needs to be addressed for correction, especially when we view it from the angle of possible future expansion in the coverage. It is not true that the State Government is not aware of the disparities in the district- wise coverage of this most important social equity measure. In fact, the budget speech of the Chief Minister for the year 2000-01 contained the following announcement towards remedying the situation:-

“ – The selection of the old age pension beneficiaries will be done by the Gram Panchayats in the open Gram Sabha meetings;

– The inter-district distribution of the beneficiaries shall be on the basis of an objective formula giving 60 per cent weightage to the [population and 40 per cent weightage to the inverse of the per capita income from the primary sector of the economy; and

– Sub-district level allocation of beneficiaries shall be governed by the population concentration in each Panchayat.”

The above pronouncement could not be implemented in that year. However, implementation of such a transparent process would have removed a wide range of misgivings about the bias in the selection process and other shortcomings. An additional number of about 80,000 beneficiaries have been brought under the social security net since 200-01 and such a large number could easily rectify the disparities to a significant extent. The fact about the disparities in coverage of the old age and widow pension schemes among various districts was again recognized in the Budget speech of 2003-04 also. It was pronounced that the Government will apply correctives in determining the additional coverage. Yet, the disparities have, by and large, persisted at the same level as prior to 2000-01.

In the context of the disparities, Solan and Una districts clearly stand as the worst sufferers on all the three frames of analysis presented above. The districts of Hamirpur and Kangra follow these in terms of inadequate or lower than proportional coverage. The imbalances in all other districts can be redressed through the process of attrition but in the case of these four districts, specific and conscious correctives need to be put in place for correctly targeting the schemes.

Recently, a study was got conducted by the State Planning Department on the response of the beneficiaries to these schemes through the Bureau of Economics and Statistics. The study also pointed out towards some deficiencies in the implementation process as also towards the inadequacy of the amount of pension. The inadequacy aspect has recently been addressed by the State Government by revising the rate from Rs. 200 to Rs. 300 per month. As stated above, the coverage of these schemes in Himachal Pradesh is much higher than the normative prescription despite the fact that the poverty ratio in the State is lower as compared to most States in the country. This paradox calls for better targeting of the beneficiaries so that the genuine people are covered.

Presently, the selection methodology leaves much to be desired. The best way out for effective selection process would be to entrust this task to the Gram Panchayats through the open Gram Sabha meetings. Such a step will also strengthen the commitment of the State Government towards effective decentralization of governance. Also, would it not be appropriate to restrict the coverage of these schemes to the population of the BPL families because the process of income determination is apparently more transparent in this case than the method presently followed for selection of the beneficiaries at the district level. Substitution of the beneficiaries should also be left to the Gram Panchayats. Lastly, the revision in the rate of these pensions could be flagged to the inflation. Any revision higher than that could possibly be a function of the well being of the State finances.

DK Sharma

Devinder Kumar Sharma, a former Principal Adviser and Secretary Planning, Government of Himachal Pradesh, is a visiting professor and an economist. He lives in Shimla.