The Hindu Business Line : ‘Spending 6-8% of GDP can ensure social security for all’

New Delhi, May 18 The Indian Government would be able to extend basic social security benefits to the entire population if it were to spend 6-8 per cent of the gross domestic product (GDP) on social sector schemes, says a study by the International Labour Organisation (ILO).

The study — Poverty, Economic and Social Development and the Right to Social Security within Global Decent Work Debate — will be released next week. It says the cost of basic social benefit package in India over the next 20 or so years should not exceed 6-8 per cent of the GDP. “Such a package might include essential healthcare, benefits directed at child welfare and old age, and disability-related income insecurity,” it said.

Currently, India spends less than 3 per cent of its GDP on social sector schemes. According to a recent World Bank report, in 2006-07 India spent 2.6 per cent of its GDP, or 12.8 per cent of the total central Government expenditure (including transfers), on various social sector schemes.

Social sector schemes in India are primarily aimed at poverty alleviation and preserving the livelihoods of farmers and other marginalised sections, and some of the schemes have been in operation for nearly 40 years.

According to ILO calculations, less than 2 per cent of global product (total GDP of all countries taken together) could provide basic social security to all the global poor (living below the poverty line of less than one dollar a day) and 6 per cent would cover all those who are above the poverty level but currently lack access to social security.

Sustainable growth

The study says the lack of “social security floor” poses major risks for sustainable economic growth and development in the Asia-Pacific region and may lead to compromise on the positive effects of globalisation.

It also equates four more countries at par with India that can ensure basic social security for citizens by spending 6-8 per cent of GDP. They are Bangladesh, Nepal, Pakistan and Vietnam.

The study says implementing basic social security system can make an enormous contribution in pulling people out of poverty and achieving the first Millennium Development Goal that calls for the number of people living with less than one dollar a day to be halved by 2015.

The ILO paper also calls for setting up a global social security floor along with other growth-oriented developmental activities. There are “good social reasons to introduce social protection mechanism at an early stage of economic development and generally no good economic reason reasons why that should not be done,” the report states.

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