Incommensurate Welfare Gains: The Role of Ideas, Institutions, and Interests

Abstract

Despite the presence of various social safety net programs, Indian households are not resilient to daily risks and exogenous shocks. To understand the incommensurate success of Indian social welfare programs in improving resilience, we focus on key elements of the policymaking process—ideas, interests, and institutions—in this chapter. We deliberate upon the ideas which motivate social welfare programs, the institutions responsible for delivering welfare benefits, and the political interests which shape program design and effectiveness in the country. Building upon arguments around policymaking process and the implementational hurdles, we highlight the importance of citizen-state social contract, local institutions, subnational politics, civil society activism, and state capacity in sha** the focus, form, and scope of social welfare policies.

Introduction

Despite the array of social safety nets—each addressing a particular feature of human deprivation—why do India’s poor and those close to poverty continue to be vulnerable to economic uncertainty with long-lasting adverse consequences? There are two ways to answer this. First, social welfare programs are often inefficient in reaching their citizens of focus (targeted beneficiaries), which could emerge from flaws in design (form), corruption, or ineffective implementation. Second, the social welfare programs may not alone be sufficient to create development resilience (scope) and require other enablers to work in unison. In this chapter, we would focus on the first explanation, which has often been attributed to the poor performance of social welfare programs in the country.

Let us consider some facts. Forty percent of grains earmarked for the poor through PDS fails to reach its beneficiaries.¹ There remains a substantial unmet demand for work at MGNREGS in many of the poorest regions. It is often reported that wage payments at the MGNREGS sites is either delayed or paid a lower amount than stipulated.² The quality of school meals under MDMS remains nutritionally poor and hygiene quality remain a lingering concern. ICDS centers are known to be understaffed, and Anganwadi workers grossly underpaid, overworked, and demotivated to adequately fulfill their ever-increasing responsibilities as caregivers, teachers, and health workers, all at the same time.³ A larger share of the poor is still unaware of the benefits of the health insurance program, and incapable to figure out the rigmarole of what coverage it provides, the associated costs of care, and the risk of being overcharged for seeking healthcare.⁴ Maternity benefits, despite using computerized payment methods frequently get transferred to wrong bank accounts.⁵ Most importantly, the inability to prove their poverty status arising from complex paperwork debars the poor from availing any benefits meant for them.⁶ These are not field anecdotes or isolated journalistic accounts but generalizable findings across multiple academic research papers and reports which highlight the fledgling but poorly developed India’s social safety nets architecture. Yes, there are exceptions—some states do a better job and protecting the poor—yet for most of the poor, the transformational impact of the social welfare schemes remains illusory.

This chapter focuses on these bottlenecks—design faults and implementational hurdles—which limit the effectiveness of social welfare programs and thereby development resilience. Our proposed answers are grounded in a careful analysis of policy ideas—conceptualization of the nature of citizen-state social contract on the subsistence floor—and the institutional structure—responsible for designing and implementing the programs—which undergirds the success of any social welfare system.⁷

Ideas, Institutions, and Interests

The challenge of public policy is to come up with an idea on how to utilize key welfare institutions—markets, state, and society—to support citizen welfare.⁸ In the context of low- and medium-income countries, markets are underdeveloped, and societies provide mutual social insurance to its members. State, therefore, takes a ‘developmental’ role where its primary responsibility is not only to protect property rights, and maintain law and order, but also ‘to be a guide, coordinator, stimulator, and a catalytic agent for economic activities’ … [because, for]…various historical and structural reasons, the development process [in such contexts] has been atrophied and the path forward is darkened by all kinds of missing information and incomplete markets' (Bardhan 2016, pp. 864). Implicit in this arrangement, are the ideas around rights and obligations—explicit or implicit—of the state toward its citizens, referred to as the citizen-state social contract.⁹

There is wide variation in the nature and strength of social contract as high inequality, weak civil society, and entrenched elite interests perpetuate non-democratic institutions and therefore weaken the bargaining power of citizens with the state.¹⁰ A citizen-oriented social contract, on the other hand, promotes equal opportunity, economic empowerment, and social cohesion, with a greater role of social protection against economic insecurity. Ideas around the nature of social contract and redistributive welfare policy are, however, imbedded in the contextual political, and socio-cultural norms or economic needs thereby determining the nature of welfare mix while the effective implementation necessitates appropriate governance arrangements which includes allocation of funds, assignment of responsibilities, enactment of regulations, and local bureaucratic appointments to deliver the welfare services. Long-term success of such a design hinge on the cohesiveness of ideas around redistribution, political commitment to those ideals, and a capable state to efficiently implement welfare programs. This is only possible through a perfect trifecta of ideas, interests, and institutions aligned to enact, deliver, and innovate on the social welfare policies for human resilience which is a central challenge for the develo** countries with poor institutions, vested political interests, and often ill-conceived ideas around welfare.

Borrowing from the textbook models of policymaking, we present a framework in Fig. 8.1 to describe the intricate linkages across ideas, institutions, and interests which determine the focus, form, and scope of social welfare policies and its reform over time.¹¹ We argue that while the ideational process is a culmination of the collaboration between macro-level ideas and institutions, and the influential interest groups they foment, implementation of welfare schemes depends upon the program design and local institutions—state capacity, bureaucratic effectiveness, and the nature of social contract.¹²

Fig. 8.1

(Adapted from Gough [2008])

The role of ideas, interests, and institutions in social welfare policy design

Ideas Set Forth the Welfare Agenda

Ideas, simply put, represent the historically formed cognitive beliefs, perceptions, and the intrinsic values held by the policy actors which allow them to frame their understanding of the social problem, and offer suggestions, thereby initiating an ‘agenda setting’ process (Kingdon and Stano 1984). Policy ideas—the preferred ideological narrative of the policy actors within the nature of citizen-state social contract—are formed with respect to the national economic transformation (declining importance of agriculture, industrialization, urbanization, changing demographic share of the population, etc.) which create newer forms of vulnerability, along with transnational influences such as global consensus on certain development goals, international aid, or transferable policy learnings on best practices in program delivery.

Despite distinct models of welfare policies in the advanced nations, they have all been associated with the structural issues with the labor markets and economic change in the wake of industrialization (Es**-Andersen 1990). East Asian economies of Japan and Korea too developed ideas around a more expansive social welfare programs in response to changing economic realities following the democratic reforms of 1993 and 1987, respectively (Kwon 1997). Among the develo** economics, social welfare programs in a majority of Latin American countries were introduced as a result of the economic crises in 1990s which led political actors to develop newer ideas around reductions in poverty and inequality which led to the popularity of conditional cash transfers (Barrientos 2009; Levy and Schady 2013).

The influence of transnational organizations in influencing the design of domestic policies is conspicuous. International organizations such as the International Monetary Fund (IMF) or the World Bank propagated targeted social protection schemes with a focus on the poor in most develo** countries including India in the 1990s. The same institutions are now promoting a case for universal and guaranteed social protection highlighting the rights-based ideas of social security of every citizen (World Bank 2019). This shift in policy ideals reflect the changing global paradigm in favor of human rights and dignity of citizens as a basis of social protection against the earlier views around fiscal profligacy. Similarly, international donor organizations have also influenced the expansion of social welfare programs while in some cases countries there is a diffusion of social policy ideas across nations (Graham 2002; Weyland 2005).¹³

The perceptions of current development challenges (or the scope of the social problem), identification of the deserving beneficiaries (focus), and the nature of prescribed solutions (form) to it—cash benefits, food transfers, old age pensions, social health insurance—therefore reflect the underlying ideas of the policymaker around the nature of welfare mix to be designed in a particular economic and political context.

Institutions: Conduit of Welfare

Scholarship on the role of institutions for long-run economic development and growth is vast.¹⁴ Institutions referred as to the set of ‘rules and norms’—formal (property rights, legal codes, democratic constitution, bureaucracy, etc.) and informal (social sanctions, customs and traditions, and corruption among others)—shape and govern political and economic exchange in a society. Some institutions ease the challenges of coordination, while others could be disruptive to fair exchange.¹⁵ Policy actors prescribe their policy ideas with regard to their understanding of the presence of institutions and their effectiveness.

During the ideational process, supra-institutions—legislative frameworks, political system, and financial strength as—determine the framing of policy paradigms. These supra-institutions, backed by legal frameworks, are influenced by a multitude of ideas—constitutional democracy, electoral systems, federalism, bureaucratic structure, citizen rights, etc.—which are aligned with the nation-state’s cultural norms, religious practices, or social structure.¹⁶ Local institutions, on the other hand, mediate the delivery of welfare policies. Formal state machinery—bureaucrats, elected representatives, non-governmental service providers, etc.—and its interaction with the informal social norms and practices governs the everyday nature of exchange between citizens determine the success of local institutions. But local traditions, rituals, and entrenched hierarchies often inhibit fair terms of exchange within societies and resist formation of voluntary associations which lowers the quality of citizen-state engagements. It could also abet bureaucratic corruption, identity-based discrimination, and poor grievance system which implies that welfare recipients are often deprived of their entitlements.¹⁷ The unevenness in the performance of local institutions, therefore, has been attributed to the divergence local state capacity for improved well-being (Bardhan 2016).

Perverse Interests Undermine the Welfare Agenda

Policies create politics through a feedback process. The emerging politics could potentially shape policy outcomes depending upon whether it benefits the masses or the elite interest groups (Campbell 2012).¹⁸ Where institutions are poorly developed and state accountability is low, institutions are prone to being manipulated for political interests thereby reducing the policy process—from ideation to delivery—an inherently political exercise. Supra-level institutions create strategic opportunities for the political actors to further their interests, be it maximizing electoral gains, claim rule legitimacy, or social mobilization. As a result, there is often resistance to a necessary change among the elites, causing stasis in the ideational process much to the detriment of long-term development. The institution of federalism adds another layer to the politics of welfare policies with its own distinct subnational policy ideas, institutional norms, and political interests.¹⁹

Local interests are often served through clientelistic practices, elite capture, and street-level bureaucratic inefficiencies may undermine the success of well laid out policy design of formal supra-institutions through discrimination, rent seeking, and corruption in service delivery. To avoid the last-mile delivery concerns—rampant in the develo** countries—the citizen-state social contract, as designed at the supra level, needs to be supplemented with sufficient motivation, incentive, and accountability of local state institutions.²⁰ Develo** local state capacity through democratic institutions such as decentralization of governance which empower citizens and increase accountability are therefore essential to improve delivery. Empowered citizens imply greater voice to the citizens in building a more compact social contract further influencing ideas around the focus, form, and scope of social welfare policies.

Ideas, Institutions, and Interests Co-evolve

Policymaking process is not static, yet it is a slow or gradual process constantly evolving in response to changing economic, political, and institutional considerations.²¹ Ideas, too, instead of being dogmatic ideological stances, are shaped by (and also shape) the institutions and interests within the emerging policy paradigms over time.²² Some perpetuate vested interests thereby inhibiting change, while others force their way into civic consciousness.²³ For example, the emergence of universal concepts (such as human rights, malnutrition, or social inclusion) or specific group-based upliftment ideals (elderly, or marginalized ethnicities) have created broad-based moral consciousness around the need for a ‘social minimum.’ Accepting these goals as ‘socially desirable’ creates a political consensus around the need for appropriate institutions, the design of which—in the form of delivery or the beneficiary focus—might still differ across ideas held by the policy actors. The disagreement may be mediated by the respective interests of the policy actors in establishing the policy paradigms at a specific point in time. While short-term vested interests might hinder change, ideas can potentially act as catalyst for long-term change, especially when the policy actor stands to gain from it in the future.²⁴

Long-Term Success of Social Welfare Programs

Long-term success of social welfare strategies requires the emergence of a compact social contract with clearly articulated ideas around the role of state and its commitment to social welfare, along with the institutional apparatus to identify and deliver welfare to the intended beneficiaries. Such a social contract requires broad-based political support and democratic consensus across policy actors and citizens on what ought to be the socially desired ‘basic minimum.’ These deliberations are however an ongoing process—which includes the challenges of developmental priority, institution building, political bargaining, and fiscal considerations—amid which the form, focus, and scope of social welfare programs are determined.

While the short-term success of social welfare programs is often measured through a combination of many attributes—namely, appropriateness, adequacy, equity, cost-effectiveness, incentive compatibility, sustainability, and dynamism—long-term benefits include not only a reduction in poverty and extent of deprivation but also a reduction in the future likelihood of falling into poverty, along with empowering citizens, thereby building development resilience.²⁵ There is no golden rule, however, for what is the most appropriate form or an adequate amount of social transfers. It depends upon the developmental challenge at hand—extent and nature of deprivation—and the government’s ideas (or solutions) around what should be the minimum subsistence floor for its citizens (scope), who are the people in need (focus) and how to best help achieve that (form). When the policy actors do not have a perfect understanding of the ‘developmental problem’ or the financial and institutional wherewithal to address it—which is most often the case in develo** countries—policy ideas are often a kind of experiments—suited to the interests of the policy actors, even when informed by theory—with uncertain outcomes. The proposed ideas around welfare therefore emerge and evolve within a particular form of economic, social, and political setting where good ideas often clash with perverse interests.²⁶

Diagnosing Incommensurate Welfare Outcomes

The framework presented in Fig. 8.1 is useful to understand the disconnect between social safety net policies, their implementation, and the actual welfare outcomes in India. We use it to make two points. First, we argue, as we have done throughout the book, that social welfare programs in the country have a short-term focus, and myopic approach toward sustainable development. A weak social contract has only provided band-aid solutions to poverty reduction with little recognition to long-term strategy toward human capability and resilience building. Second, the fledgling social welfare architecture is further handicapped by poor institutional arrangements—weak state capacity—to deliver the welfare benefits. Unless the local institutions—social and political—are empowered sufficiently, elite ideas driven ideational process might not be able to achieve broad-based success—in implementation, as well as impact.

Fledgling, Yet Feeble ‘Social Contract’

India’s centralized economic planning, in the early years of its planning period, prioritized economic growth over redistribution with the idea that fruits of economic growth would trickle down to the poor.²⁷ The responsibility of social welfare was assigned to the subnational governments which did not express much interest in distributional objectives.²⁸ The 5th five-year economic plan (1974–1979), for the first time, brought about the idea of a ‘Common Minimum Needs Program.’²⁹ Subsequently, newer anti-poverty schemes were introduced, yet expenditure on social safety nets received only a ‘residual’ budgetary allocation.³⁰

Inadequate attention to social welfare policies could be explained by an “absence of a real commitment among state elites, poor quality peripheral bureaucracy, but most of all, powerful vested interests” (Kohli 2012). Social institutions marked by multiple axes of identity-based divisions—subnational, religious, linguistic, caste, and class—provided sufficient distraction for the new democratic nation to generate a strong social contract. Elite interests—of farmers and businessmen—dominated policy ideas, and the citizen voices were suppressed by the social divisions within these groups. It was therefore in the interest of policy actors to harbor upon group identities and the form of politics it created to undermine citizen mobilization for ensuring a social minimum. The ‘social question,’ however, was addressed through identity-based political representation rather than citizenship ‘rights.’³¹

The ideas of redistribution under the slogans of ‘gharibi hatao’ (eradicate poverty) emerged in the 1970s only when the Congress party—which held unopposed political power till then—began to face political pressures with a rising influence of identity-based political parties—language, region, and caste—at the subnational level. It led to a slew of anti-poverty policies—institutional support through expansion of agricultural credit and irrigation services—with the scope of addressing rural poverty, but the performance of these programs was unsatisfactory in reducing mass poverty.³² It benefited primarily the interests of the landed agricultural class leaving the structure of poverty intact with families, religious, and caste affiliations continuing to be the source of social insurance during times of need.

The next two decades, 1980s and 1990s, brought about an ‘attitudinal shift’ in the government, away from state-led economic planning to greater reliance on private trade and global markets for economic growth (Rodrik and Subramanian 2004).³³ Policies which hindered private entrepreneurship—an array of license requirements, land and labor regulations, and other controls—were replaced with a greater ‘pro-business’ shift in the planning process. The idea of development through redistribution, as espoused during the 1970s, was quickly relegated to the backburner with priority being accorded to the “growth first” strategy (Kohli 2007). The strategy of economic liberalization put India on a path of unprecedented growth and structural transformation of the economy, yet achievements on human development outcomes continue to be lacking.³⁴

While economic deregulation did increase economic growth rates and led to a reduction in consumption-based poverty, it didn’t ‘trickle down’ to generate broad-based prosperity and therefore widened interpersonal and spatial inequality.³⁵ Commensurate improvements in human development outcomes such as undernutrition, health, or learning outcomes among children remain lacking. The growth process also did little to hasten the pernicious role of ‘sticky’ social institutions and cultural norms—unequal intra-household bargaining power, poor sanitation and hygiene practices, and low female labor force participation—while improvements in the quality of public infrastructure, which are essential for a broad-based reduction in poverty remained slow. These outcomes, however, should not be surprising if one believes that the attitudinal shift toward economic deregulation “was shaped largely by the economic problems of the government rather than by the economic priorities of the people or by long-term development objectives” (Nayyar 2017, p. 47).

The emergence of rights-based social protection demands in the 2000s proved to be a watershed moment which changed the policy ideas around redistribution. These ideas emerged from redistributive concerns arising out of a globalizing economy, urbanization, informalization of labor, and democratic strengthening. Government planning document also echoed its vision for ‘inclusive growth’ which “yields broad-based benefits and ensures equality of opportunity for all” (Government of India 2006, p. 2). Social welfare programs were now backed by the constitutional ‘rights’ created institutional guarantees to welfare transfers. Newer social welfare schemes were introduced while the poorly performing ones got a new lease of life, even in regions traditionally known for poor governance and corruption in public service delivery.³⁶ Civil society groups, the prime architects of this change, hailed it is a great triumph for the democratic process. Legitimacy to the concerns of poor and their political empowerment provided a proof that the “demands of the underprivileged majority can prevail over privileged interests” (Drèze 2010).

Economic growth in the subsequent years had allowed substantial financial resources to be spent on welfare, and greater political competition (especially at a subnational level) contributed to a more progressive social welfare policy. The ideas around scope, focus, and form of the social welfare programs however continue to be subservient to the perverse political interests and underdeveloped institutions. For example, despite its widely established nutritional benefits, political leadership in most states are hesitant to add eggs to the school meals or early life nutritional interventions, fearing its punitive electoral outcomes. The introduction of eggs is likely to offend the vegetarian lobby, leading to a clash of interests much to the detriment of improved development outcomes. While employment and food are considered citizen entitlements backed by constitutional legislations, right to affordable healthcare has not gathered the same support. Similarly, big farmer’s political interests inhibit innovations in farm income support programs and agricultural diversification, while public health insurance policies are often held ransom by the profit-driven interests of private healthcare providers.

At the implementation level, however, ideas matter less, but locally relevant social institutions, and state bureaucracy, become important. The efficacy of welfare systems depends upon the administrative structure responsible for delivery of benefits. Once the form, focus, and scope of policies are decided, fiscal allocations are made by the federal or subnational government which is funneled to villages and municipalities. Local bureaucrats and politicians work jointly to identify and distribute these benefits to deserving citizens. District and sub-district bureaucrats act as the state representatives while elected politicians are the people’s representatives in ensuring the deserving citizens get their welfare entitlement. An efficient, motivated, and adequately incentivized bureaucracy at the local level along with political empowerment of the citizens, therefore, is required for an egalitarian distribution of benefits to the citizens. While local state capacity and state institutions are becoming more participatory leading to greater benefits to the citizens, they continue to be underdeveloped, leading to an inefficient social welfare delivery system.

Underdeveloped Local Institutions

Persistent inefficiencies of the local institutions lead to an uneven translation of welfare ideas into human welfare, which has been the bane of Indian social policy, with the ignominy of being described as a flailing state—“a nation-state in which the head, the elite institutions at the national (and in some states) level remain sound and functional but this head is no longer reliably connected via nerves and sinews to its own limbs” (Pritchett 2009). Poor attendance of public health and teaching staff at workplace, frequent closure of shops which provide food to the poor and often malpractices by the shop owners, poor hygiene of school meals, lower increase educational learning, and lack of motivation among the lower level of public service providers reflect this problem.

Rent seeking behavior among local politician and bureaucrats is a typical characteristic of institutional failures of the state which lowers citizen’s trust in the public delivery system thereby acting as a deterrent to reforms such as better payment to the lower level staff and investment in local state capacity (The World Bank 2016). Local governance institutions (arms and limbs of the state) have not developed commensurately in India.³⁷ Trying to unpack the success as well the failures of the Indian state, Kapur (2020) notes that the Indian state succeeds mostly in episodic delivery of services or mission-mode projects such as holding free and fair elections, emergency relief, providing digital identity, building toilets, public schools, road infrastructure but when it comes to the everyday service delivery such as continued provision of social welfare programs, teacher, or health staff attendance, it lets its citizens down. The failure, he argues, emanates from the lack of local state capacity to deliver services, the nation’s struggles associated with a democratic transition amid widespread poverty and weak fiscal capacity, and the poor bargaining power of citizens through pervasive divisions along the lines of hierarchy and status in the society—religion, caste, class, and patriarchy—which promotes rent seeking and patronage, thereby debilitating local accountability.³⁸ While incentives such performance pay bonuses to local state actors have been put forwarded as solutions to ensure better accountability, and the use of technology to monitor performance, but it somehow hasn’t been able to change the culture of frontline bureaucracy.

Below, we discuss key features of the local state institutions, essential to understand the inefficiencies inherent in the last-mile delivery of the social welfare programs.

Local State Capacity and Implementation Deficits

Last-mile service delivery concerns—be it public goods or social safety net programs—have long been recognized as a ‘binding constraint’ to development.³⁹ Information asymmetry between the local state and higher authorities further creates avenues for rent seeking behavior by the local bureaucrats and politicians creating a ‘leaky’ public system which increases fiscal costs of the programs and reduces public support for welfare, in the long run.⁴⁰ Leakages in the PDS, lower take up of the health insurance, poor implementation of MGNREGS, overworked health and Anganwadi workers, and modestly funded primary health centers are some of the most glaring examples state failure. Overcoming this constraint requires an active local state, and its enhanced capacity to deliver.⁴¹

Local state capacity, however, is one of the most tenuous aspects of governance as it most intimately connected to the variegated local institutions—archaic norms and beliefs, coercive power structure, conflicts, etc.—which largely emanates from information asymmetry on the part of the state around everyday lives of its citizens and how they negotiate with the local bureaucracy. Local state institutions—bureaucracy and political leadership—are often seen as insensitive to public concern and inefficient in their daily operations with complete disregard to formal and fair procedures.⁴² Popular mass-media such as TV and movies have popularized this vision of frontline bureaucracy in India where citizen’s engagements with the local state are rarely rules-based, time consuming, and beset with discrimination.⁴³ Critics of the state intervention use these experiences to argue that the Indian state is bloated and inefficient. The reality, though, is mixed. There is plenty of evidence to show that local bureaucrats are often corrupt, inefficient, and apathetic to citizen concerns, but it is also important to note that performance is marred by lack of sufficient resources (human and financial) at their disposal to serve 1.3 billion residents of the nation.

Lower-level bureaucracy in India is considerably smaller compared to other countries. The share of local government employees in United States and China are five times to that of India, and the Indian state spends only 3% of its total expenditure on local government, while United States and China spend 27 and 51% of their total expenditure respectively (Kapur 2020). At the same time, despite a proliferation of administrative units and the rising managerial responsibilities of implementation and monitoring of various welfare schemes and infrastructural projects has not met with a commensurate increase in hiring posing a particularly acute challenge for the effectiveness of local state institutions and welfare delivery (Somanathan and Natarajan 2022). At the upper administrative echelons of the local state, district and sub-district level bureaucrats have increasingly become overburdened. A time-use survey of local officials in the country by Dasgupta and Kapur (2020) suggests that this ‘bureaucrat overload’ affects program implementation as well as the politician’s incentive to intervene. Resource constrained officials implement programs poorly because of the time constraints, and poor implementation further discourages devolution of funds to that administrative unit from higher political authorities, thereby significantly reducing state capacity and possibly welfare benefits to the deserving.

Technological innovations such as IT-enabled payment services, smartcards, and unique identification number in the form of Aadhaar have surely reduced the reliance of welfare beneficiaries on local state, thereby contributing to building state capacity.⁴⁴ Yet, lower staffing remains a lingering concern for improving long-term development outcomes. For example, while augmenting staff strength at the early childhood welfare scheme, ICDS, in a large-scale experiment by Ganimian, Muralidharan, and Walters (2021) shows a significant effect on improving learning and nutritional outcomes for children—representing two potentially large transformative impact of—ICDS workers continue to be poorly paid and overworked leading to low levels of motivation.⁴⁵

Expansion of state capacity, however, is more than hiring more people or creating a disciplined bureaucracy. Local state actors in India are notoriously known for extracting private benefits from the public resources they are responsible for. To stop such practices, greater state capacity also includes improvements in the prevalent ‘culture’ of bureaucratic practices which includes “the incentives, beliefs and expectations, or norms, shared among state personnel about how others are behaving” (Khemani 2019). Such practices are intrinsically connected to the nature of politics—both at local and federal level.

Elite Capture and Clientelism

Low state capacity and the ensuing implementational deficits in the delivery of social welfare are part of the larger malaise with the local institutions in India which is subservient to elite interests which work through personalistic ties. The entrenched structure of power in the local institutions is sustained through the information asymmetry inherent in the last-mile delivery systems and clientelistic local politics leads to ‘fragmented and unequal’ social welfare program implementation (Keefer and Khemani 2003).⁴⁶ Clientelistic practices—preferential treatment based upon caste, religion, and party affiliations—allow for politically targeted spending and strategic transfers.⁴⁷ Local elites—bureaucrats and elected representatives—possess discretionary power through the arbitrariness in beneficiary identification and the discretionary allocation of benefits, which perpetuates a culture of rent seeking and corruption.

Targeting errors—of inclusion and exclusion—are often a function of who the elites consider poor, and the process involves corruption and favoritism. A survey by Niehaus et al. (2013) found that welfare beneficiaries—as identified by the possession of a below poverty line (BPL) card—are often misclassified. They find that 70% of the ineligible households possessed BPL cards while 13% of the eligible households did not get one. Around 75% of the households reported paying a price above the statutory fee for the BPL card. Such forms of corruption emanate not only from the logistical challenges of identification, but also discriminatory partisan networks.⁴⁸ In schemes where participation is not targeted, local corruption and elite capture is of a different kind. The demand for work in the universal public works program, MGNREGS is mediated through local politicians who aggregate citizen demand and work with the state officials to get the program going. It is often reported that increase in MGNREGS wages are not passed on to the workers by the officials (Niehaus and Sukhtankar 2013b) and overreporting of number of days worked and underpayment of wages is a norm (Niehaus and Sukhtankar 2013a).⁴⁹ Similarly, there is substantial evidence which shows that identity-based networks facilitate access to subsidized food through PDS or nutritional assistance through ICDS.⁵⁰ Social welfare programs, therefore, often fail to reach the most marginalized and deserving.

Decentralization and Public Action

The pernicious effects of elite capture, and bureaucratic harassment, could potentially be overcome by empowerment of citizens and greater public action, through participatory governance which leads to a more deliberative citizen-state engagement. Administrative decentralization, therefore, emerged as an important instrument to improve state capacity for the implementation of social welfare programs. Decentralization which entails a formal devolution of power to local actors has two key components: civic participation and political accountability. Under a decentralized regime, citizens elect their local leaders and partake in local governance through highlighting the relevant developmental issues. Elected local politicians are further held accountable through the electoral processes. India’s 73rd and 74th Constitutional Amendment Acts, 1992 provided legal status to the panchayati raj institutions (PRIs) and urban local bodies (ULBs) in rural and urban areas respectively, for greater administrative decentralization and community involvement in planning and implementing various developmental schemes. Gram Panchayats, meaning village councils, acts as a cabinet council from a collection of villages which engages with the local population through commonly held gram sabhas (village council meetings).⁵¹

The success of MGNREGS partly lies in its decentralized implementation. Being a demand driven social protection program, panchayats are responsible for drawing up plans to determine labor allocation and selection of development projects to employ workers under MGNREGS which allows for greater accountability toward the program beneficiaries. Similarly, decentralization of ICDS has improved community participation in the program, therefore its effectiveness in some of the poorest regions in the country.⁵² Yet, in a country with high levels of inequality, and unequal status across groups, reduction in information asymmetry through participatory local governance does not necessarily guarantee greater accountability and citizen empowerment.⁵³

Local elites, despite greater public accountability, continue to hold political power, through their stranglehold over the moral economy of reciprocal exchanges within a rural society. The poor cannot bypass the local elites in claiming the state benefits.⁵⁴ Moreover, they continue to rely on traditional elites for other non-state services such as wage-based employment. As a result, the culture of subordination of the historical disadvantaged communities remains persistent thereby limiting the political freedom and voice which social welfare programs through decentralized system aim to relax.⁵⁵ Similarly, while periodic local elections may allow the democratic freedom to dislodge inefficient performers, administrative decentralization may also allow politicians to pursue patronage-based politics in a bid to enhance their political support base.⁵⁶ The benefits of decentralization, therefore, can only be realized when the entrenched power structures are weakened sufficiently for the disenfranchised section of the population to become an active participant in the local democratic process.⁵⁷ Until then, participatory governance, by itself, is less likely to have a transformative role in providing social welfare support to the most deserving in an efficient manner.

Varying Social Welfare Ideals at the Subnational Level

While a fledgling social contract, low state capacity, and weak local institutions undermine the effectiveness of social welfare programs at the national level, there are noticeable subnational exceptions. Some of the Indian state governments have exhibited greater commitment to social welfare ideas than others. They have relied upon a building a political coalition which has worked toward pushing citizen interests over private ones and reducing some of the last-mile implementational challenges through empowering local participatory institutions. As a result, they have been recently referred to as ‘laboratories’ of social welfare policy formulation in the country.⁵⁸ But not all states have been equally enthusiastic in pushing social welfare agenda, as ideas, interests, and institutions around social welfare vary significantly at the subnational level.

India’s parliamentary democracy has a federal character. It is imagined as a cooperative federalism under which the legislative domains of the central and central governments are clearly defined. While the central government has the power to legislate and enact new welfare programs, federal governments have the responsibility of implementing them. Federal system of parliamentary democracy is therefore an important institution of welfare delivery, where subnational governments, in addition to implementation of welfare programs, can also enact their own programs provided it falls under their purview of state or concurrent list such as agriculture, education, or health among others.⁵⁹ They can also add newer programs, innovate upon the form of welfare delivery, or increase its focus through an expanded set of beneficiaries, out of their own resources. Given the importance of subnational governments in program delivery and design, one observes remarkable variation in the delivery and effectiveness of social welfare programs across Indian states.

To highlight the variations in social welfare program implementation across Indian states, we present some of the social welfare programs performance indicators in Table 8.1. The South Indian states—with a higher per capita income and better human development indicators—clearly perform better. Among other regions, hilly states of Himachal Pradesh and Uttarakhand, along with the poorer states of Chhattisgarh and Odisha which have a tribal huge population are standout better performers.

Table 8.1 State-wise performance on social welfare programs

South India’s Historical Exceptionalism

It is quite well-known that the South Indian states historically prioritized citizen welfare. They not only invested more in social welfare programs, but also ensured that the benefits extend to the most marginalized and maintained an efficient bureaucracy to keep last-mile implementational challenges to a minimum. Tamil Nadu and Kerala are the most prominent examples of it, where progressive social policies extended beyond welfare programs to investments in public welfare services such as education, health, and infrastructure, despite having a comparable level of poverty than the rest of India (Dreze and Sen 2002, 2013).⁶⁰ Social welfare reforms in other South Indian states of Andhra Pradesh and Karnataka followed the same lead. Progressive social policy in South Indian states have put them on a higher trajectory of economic and human development. Several reasons have been attributed to their exceptionalism, most important being a history of social movements and a united linguistic identity which allowed them to overcome deep-rooted societal divisions, reduce elite capture, and create more egalitarian local institutions, fostering greater public action.⁶¹

Welfare-oriented social contract in Kerala goes back to the pre-independence period when the princely states of Travancore and Cochin made a strong commitment to reduce identity-based distinctions and empowered communities through public investments in literacy and public services. State politics in the post-independence era, continued the same trend, organizing around class-based movements, instead of identity, leading to greater social capital, which has contributed to Kerala’s empowered citizenry to demand greater welfare benefits.⁶² In Tamil Nadu, on the other hand, mass-led non-Brahmin movement—protesting elite caste’s political capture—reduced traditional elite influence and championed the cause of social justice thereby facilitating greater political demand and supply of broad-based public services and social welfare for the citizens. The state championed public school meals and early life nutritional interventions much before they became national level welfare schemes.⁶³ The southern states had also initiated participatory governance through decentralization of program governance much earlier than some of the other states. The subnational social welfare ideas percolated down to create egalitarian local institutions through an efficient bureaucracy. At the same time, citizen empowerment through social justice movements created a stronger sense of collective action which reduced elite interests and ensured leaders remain accountable to their promise, thereby contributing to improved welfare delivery systems. What also worked in making the social welfare more effective in these states is that instead of a narrow focus on a specific section of the population, most of the schemes are universal in nature, and often free.

Historical trends are persistent. Southern states, despite a significant reduction in poverty, lay a greater emphasis on the ideals of social welfare. It is essential to their politics. Andhra Pradesh, another South Indian state, has been one of the best performers in implementing MGNREGS, and its success comes from a strong political commitment from the state government. The state was also one of the first one in pioneering social audits of the program by the local citizens and bringing in electronic payments. Social audits have now been further extended to other welfare programs.⁶⁴ Similarly, direct cash transfers to farmers were first introduced by the newly formed state of Telangana (carved out of Andhra Pradesh), which was subsequently launched as a national level scheme, PM-Kisan.

Emerging Political Populism in North India?

The nature of politics in South India has been key to its successful social welfare policies. A broader political coalition which supported the ideas of citizen welfare and created efficient institutions in pursuing poverty alleviation policies, as imagined in the South, were lacking in other states. Kohli (2012), observes that the “southern states as a whole share some of these political traits of India’s “social democratic” states—a broad power base and competent bureaucracies—but not others—well organized ruling parties and an activist citizenry—creating within them some capacity for poverty alleviation. Hindi- heartland states pretty well lack most of these traits, creating a political landscape in which repeated redistributive failures have by now become a norm.” Yet, despite the general pessimism associated with poor social development in North Indian states, incremental positive changes are now visible (Vivek 2015).

Himachal Pradesh and Uttarakhand along with the poorer states of Chhattisgarh and Odisha are at the forefront of this positive change. Himachal Pradesh, like Kerala, has taken a more expansive and deliberative model of social development in the post-independence period, where bureaucratic disciple is strictly adhered to, and collective action (especially around forest and water management) inspires greater public action holding local politicians accountable.⁶⁵ The state had undertaken a massive universal education drive in the 1970s and ranks high on most human development indicator currently. Uttarakhand, carved out of Uttar Pradesh in 1999, is another hilly state in the Himalayas, which has taken a similar model as Himachal Pradesh.

The turnaround in the performance of social welfare programs in the relatively poorer states of Chhattisgarh and Odisha is however the most striking.⁶⁶ Even before the National Food Security Act, 2013 was implemented in the Indian parliament, Chhattisgarh had enacted its own Food Security Act following up on a massive reform of PDS in the preceding decade. Today, it has the most well-functioning, near-universal PDS which was unimaginable two decades ago. In Odisha, where starvation deaths used to be a common occurrence in the 1990s, improved performance of food and early-child nutrition initiatives, has made it a ‘success story’ of social welfare program implementation and impact, despite lower state capacity.⁶⁷

A convincing explanation of why some states have seen such a turnaround while others continue to flounder could possibly be a book (or a series of them) in itself. A myriad set of ideas, interests, and institutions have forged the subnational social contracts, and the process is still a work in progress. Among the many possible explanations, what stands out is the role of politics and commitment of state leaders.⁶⁸ Noted economist and one of the most influential chroniclers of social welfare reforms in India, Jean Drèze, reckons that social welfare—ideas of welfare and its effective implementation—is a political problem. Referring to the improvement of PDS in Chhattisgarh, he says⁶⁹:

Ultimately, however, it is political will that seems to matter most. Somehow, the PDS became a political priority in Chhattisgarh and a decision was made to turn it around, instead of siding with the corrupt dealers who were milking the system. When political bosses firmly direct the bureaucracy to fix a dysfunctional system, things begin to change.

The fact that government functionaries were under enormous pressure to make the PDS work was evident in Lakhanpur. For instance, monitoring grain movements had become one of the top priorities of the patwaris (landrecord officers) and tehsildars (revenue officers). The tehsildar mentioned that the PDS was the first agenda item whenever meetings were held at the district level. The political pressure was also manifest in their willingness to stand up to vested interests, e.g. by arresting corrupt middlemen and sending them to jail if need be.

It would be naïve to think that the revival of the PDS in Chhattisgarh reflects the kindheartedness of the state government, especially in the light of its contempt for people’s rights in other contexts. It was a political calculation, nothing more.

Historically, the pursuits of social welfare were a political plank in Southern India, while the North Indian politicians appealed to the narrow politics of identity—mostly caste and religion—appeals to sustain their politics.⁷⁰ Since the 1990s, social welfare policies have become a part of political calculations in North India as well as the role of regional parties in central politics has risen.⁷¹ Multi-party fragmentation at the center necessitated a new form of electoral engineering which allowed the subnational governments to design and implement their own distinctive welfare policy agendas (Tillin 2022). Greater influence of subnational politics on the national politics has allowed the state political bosses, the chief ministers, to be more assertive in exercising their discretionary powers, and stake claims for the success of welfare programs, thereby increasing their popularity to seek ‘regime legitimacy’ (Manor 2015, 2016).⁷²

The institution of federalism has therefore been key in sha** the ideas of welfare at the subnational level. State governments have not only been actively participating as key actors in the policy design process, but also influencing each other through learning from one another’s experience. In that regard, North still has a lot to learn from the South. There are two major aspects to it—sustained commitment to the ideals of social justice, and faster economic growth. It is important to note that the success of Southern states in social policy implementation came from a longue durée policy commitment to redistributive ideas which empowered citizens to demand their citizen entitlements and hold state actors accountable for service delivery. These services went beyond social protection programs to public investments in education, health, and other infrastructure, which created a citizen-oriented social contract.⁷³ The ability of the state to supply welfare support, on the other hand, emerged from their fiscal ability to generate sustained economic growth. A large share of the North Indian states lack on both these fronts. The politics around social welfare in the North Indian states has emerged as another strategy of political populism, or ‘political calculations,’ as Jean Drèze remarks in the above quotation, to ensure electoral success as the redistributive ideas lack a commitment to social justice and citizen empowerment. This is also reflected in the continued lack of enthusiasm in improving the quality of public services. Similarly, stagnant economic growth in most of the states implies a diminished agency to allocate more funds to welfare programs to improve implementational capacity.

Threats to Subnational Welfare Regimes

Federal relationship is determined by partisan dynamics and the nature of political leadership at the central level, given they control the resources.⁷⁴ Subnational welfare regimes thrived in India because they got greater resources from the center, and the state leadership had autonomy to improve implementation. As the power of one central political party declined since the beginning of the 1990s, and consequently, the influence of country’s Prime Minister (PM) watered down, subnational leaders began to assert their autonomy. The election of 2014 and the massive victory of BJP in the central elections with PM Modi at its helm, however, marked a break with the central party and PM again becoming important.⁷⁵

Concentration of power at the center has created a tussle between the center and state governments to appropriate the credits of social welfare programs. Many of the programs now have a prefix PM (for “Prime Minister”) attached to the programs to signify political leader’s benevolence. Centralized transfer of welfare benefits—bypassing the subnational government, leveraging upon the technology to make direct transfers—has further encroached upon the state government’s constitutional responsibility and fiscal space causing rift between the central and state governments (Aiyar 2019).⁷⁶ Since 2014, a series of flagship schemes have been further launched by the central government, which provides private transfers (such as housing, toilets, cooking gas, and cash) in addition to the social welfare programs to “redefine and to repurpose the welfare state from a right-based and universalistic logic to a logic of rationing and targeting welfare to those who “deserve” it” (Heller 2021, p. 117). The new semantics of pro-poor politics, arising out of electoral necessities, tries to shift social protection paradigm in the country from state support as a citizenship right to personalized gestures of generosity, rather than social upliftment and justice. Such personal politics which centralizes political power in one strong national level leader has the risk of undermining public action through democratic accountability, deliberative local institutions, and citizen participation, essential to sustain a social democracy (Sircar 2020). It also skirts the issue of transforming the state bureaucracy and local institutions, which are still central in identifying the poor, delivering the benefits, and ensuring political accountability (Aiyar and Walton 2015).

Conclusion

Development resilience requires adequate protection against anticipated and unanticipated risks, while develo** human capabilities to adapt to such risks over time. Indian state has taken great strides in providing this through an expansion of the coverage of social welfare programs through enacting rights-based legislations, introducing newer social safety net programs, and improving welfare delivery systems, but there is still a long road toward “having found its feet as far as social security programs are concerned” (Drèze and Khera 2017). Such anxieties largely emerge from the politicized nature of the ideational process of social welfare programs determined by perverse interests. Redistributive ideas motivated by short-term electoral concerns in countries with underdeveloped institutions often makes the social welfare program a handmaiden of political interests with detrimental implications for a transformational impact on poverty and increasing development resilience. The success of some of the state governments in creating a stronger social contract regarding welfare however provides some respite to these apprehensions which now seems to be under threat with the rise of new forms of welfarism which does not pay attention to encouraging collective mobilization, civic action, and effective state institutions.