PM Modi decided to boost a benefit program for India’s five-hundred million workers as he proposes to be re-elected in 2019 but has limited time and resources to apply the ambitious plan.
Initially, three programs have been targetted by Modi viz. old age pension, life insurance, and maternity benefits ignoring unemployment, child support, and other welfare programs – to most working citizens, as per government officials who wish to remain unnamed.
The government has drafted a bill to boost the welfare programs to all workers, including those in informal employment, by combining and curtailing fifteen federal labor laws into one. It plans to present the bill in July in the forthcoming session of Parliament, labor minister Santosh Gangwar told, while not being committed on a full-fledged roll-out before the national election.
The government plans to launch the project in six districts in the months that will lead up to the federal elections due in May next year, the officials said.
“Nobody can deny the importance of social security for the country’s working class and it is overdue,” said Satish Mishra, a political analyst at the Observer Research Foundation in New Delhi. “But the timing suggests it’s political in nature and Modi wants to push it in a hurry so that in election campaign he can claim it’s a game changer for poor.”
Making the system tenable will be a challenging task, and tough for the government to provide benefits from its current $376 billion budget. It aims to limit the basic capacity to maternity, pension, and death or disability benefits, ignoring unemployment and child support, the officials said.
“The whole issue is should the government be doing it? The answer is yes. Can the government do it? The answer is no because it does not have the money for it,” said Madan Sabnavis, chief economist at Care Ratings. “If the government does not spend a substantial amount, it will not be a proper social security plan. If it spends a good amount, the fiscal deficit will be pressured.”
The broad plan is meant for all workers although the government is worried about the bottom half of the country’s workforce. It will help in curtailing poverty in a country where a third of the world’s poor lives and still invests less than two percent of its GDP on social security. More than ninety percent of India’s workforce is in informal employment and without any social protection.
Giving least social security to the lower half of the working class, who make up about a fifth of the country’s population, would amount the government to 0.38 percent of GDP or about five-hundred billion rupees annually, Santosh Mehrotra, an economics professor at Jawaharlal Nehru University in New Delhi, said in an interview.
“In 22 years, India will be an aging society like China. If it doesn’t start working on social security today, who will pay for those old people?” said Mehrotra.