Editorial Notes

Holes in the Social Security net

MGNREGS and the National Social Assistance Programme (NSAP) have the potential to provide social security provide social security in times of an economic shock. But it did not effectively provide because of patchy implementation.
By IT's Editorial Board
February 23, 2017


GS (M) Paper-2: “Government policies and interventions for development in various sectors and issues arising out of their design and implementation.”


Holes in the Social Security net


A survey is conducted seeking evidence on whether the social security measures work in the face an economic shock like demonetisation and whether these programmes themselves face disruption because of demonetisation.


Key findings of the survey:

  • Since demonetisation, 57 per cent of people studied were turned away by banks, without their wages or pension.
  • On average, people had been to the bank thrice since demonetisation; 30 per cent had made more than three visits.
  • After demonetisation, 73 per cent of MGNREGS households and about 52 per cent of pensioners said they had a greater need for these entitlements.
  • 10% of respondents had not gone to the bank even once showing that they are out of the formal economy.
  • People viewed demonetisation as a disruptive measure which impacted access to social security.
  • First, it was a push from post office to bank account, then to open multiple bank accounts, including Jan Dhan accounts, then to get an Aadhaar card, an ATM card and so on.
  • And there is the mandatory introduction of Aadhaar to access MGNREGS work from the next financial year, which has ridden roughshod over the orders of the Supreme Court and is likely to cause massive exclusion.

Did MGNREGS and the National Social Assistance Programme (NSAP) provide social security in times of an economic shock like demonetisation?


  • The answer is yes — and no. Yes, because these programmes have the potential to provide social security.
  • No, because of patchy implementation. On whether the functioning of these programmes was disrupted, the answer would be no.
  • But this does not imply that people who access these programmes weren’t affected by demonetisation.

Role of MNREGA in post-demonetisation scenario:

  • According to the Ministry of Rural Development’s data, after demonetisation, people worked more on MGNREGS than what was planned, while in the previous year it was consistently less than planned.
  • This was perhaps due to the enhanced allocation via a second supplementary budget of Rs 4,000 crore to the MGNREGS, announced after demonetisation.
  • The ministry released 43% more funds to states over the last three months, compared to the same time period last year.
  • But 53% of all MGNREGS wage payments were delayed in FY 2016-17 up to January. 60% of these were delayed beyond 30 days.
  • People generally made more trips to bank to check whether their money had been deposited or not.
  • But MGNREGS workers made more visits to the bank than pensioners, reflecting greater uncertainty in wage payments.
  • About 70% of workers, who went to the bank returned empty-handed, compared to only 30% of pensioners who were denied their pensions.
  • Being denied cash at the bank may not be entirely due to demonetisation but it reflects weak delivery systems, uncertainty and under-resourcing.
[Ref: Indian Express]


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