Why India Lacks a Robust Social Security Policy: A Critical Analysis

India's economic and social landscape is complex, with a range of challenges that need to be addressed, particularly in terms of social security frameworks. Despite government initiatives and policies, a comprehensive social security system remains elusive. This article explores why India's approach to social security is inadequate and suggests how a more robust framework could be implemented.

The Misconception of Socialism in India

While the concept of socialism has been discussed extensively in India, the reality is far from what is often imagined. Socialism, as a principle of shared economic resources and a welfare system, has faced significant challenges in practice. It is not merely a question of adding the words 'socialism' to the constitution; it requires a shift in mindset and a systemic overhaul.

The efforts to integrate socialism into the Indian economic fabric have been met with resistance. Leaders have had to struggle to incorporate these principles, and true transformation requires active participation and struggle from the people.

The Challenges of Implementing Social Security in India

One of the primary stumbling blocks in India is the concentration of tax-paying individuals. Currently, only around 7 million individuals contribute to the tax system, which suggests a significant lack of tax compliance and economic inclusivity. For a social security policy to become effective, the country would need to have a much larger economy, at least a 10 trillion rupee economy, making such initiatives feasible.

Furthermore, the majority of Indians lack a clear understanding of social security. Many are aware of various government schemes, but these are often symbolic or ineffective. Additionally, a significant portion of the population argues against free welfare services from the government, viewing it as an unjustified concept.

Learning from Other Countries

The United States has long had a more advanced social security system, assigning Social Security Numbers (SSNs) to every individual at birth. This number is used in various aspects of life, from tax filing to banking, providing a robust digital identity. Unlike India, the US has been able to implement such a system over 8 decades ago, highlighting a significant gap in India's progress.

In India, the Aadhaar system, an identification number for every Indian, is in place. Since its inception, the Aadhaar database and Direct Benefit Transfer (DBT) mechanism have saved over 1.7 lakh crore rupees, benefitting nearly 1.4 billion Indians. This is a positive step towards a more efficient welfare system but falls short of the comprehensive coverage needed for social security.

Addressing the Informal Sector

A major portion of India's population works in the informal sector, characterized by ad hoc employment terms and often exploitative practices. Formalizing this sector through a social security framework could transform lives. By requiring anyone who employs another person, even for household chores, to adhere to certain rules, we can convert such informal employment into formal employment.

The key to this system would involve:

Compulsory registration with an employment bureau for all employees and employers. Compulsory use of cashless payment methods for employee payments. Contribution of a small part of the income to a social security fund for every employee.

Such a system could provide a safety net for workers, ensuring basic care in old age and offering income security during times of unemployment. Currently, the voluntary nature of many social security schemes leaves much to be desired, with many individuals not planning for retirement or understanding such complex systems.

Addressing Poverty and Unemployment

The present welfare system in India has several flaws, including the exclusion of certain groups and the non-portability of benefits. Quantifying social security in India involves addressing both poverty eradication and the provision of basic income security in times of need. Measures such as unemployment benefits and robust safety nets are essential.

For instance, the suicide of a Kingfisher airline employee due to financial loss highlights the lack of adequate safety nets, especially for higher-income families. The middle and upper classes often face economic challenges without any fallbacks, making comprehensive social security coverage crucial.

Conclusion

India's current social security landscape is far from ideal, with a significant gap between theory and practice. While progress has been made, such as the implementation of the Aadhaar system, a more robust social security framework is needed to address the multifaceted challenges of poverty, unemployment, and lack of economic security. By learning from successful models and addressing the gaps in the current system, India can move closer to achieving a secure and inclusive society.