Social Protection In Budget
Dr. Lok Nath Bhusal
With the increasing liberalisation of our economy and society, people’s livelihoods have also become increasingly vulnerable, amidst few opportunities. The traditional family and social protection mechanism have been fast receding, calling for the state’s formal support to promote and protect our livelihoods. Not only socialism of whatever variety alone, the liberal human rights discourse has also stressed on state-funded and state-provided social protection benefits. Besides political motivation, evidence also reveals that spending on social protection is actually an investment. In sum, from a lifecycle perspective, it appears that social protection has become a necessity for the government and the citizens for realising the state’s larger goal of ensuring human security for all.
Along with the vigorous pursuit of a liberal economic order, Nepal has also made commendable achievements in extending social protection after 1990, mainly through cash transfers. With the increase in the number of innovative social protection products to cover a larger section of the vulnerable population and increase in the social assistance allowances, public expenditure on social protection has also increased dramatically over the years. These developments suggest that a ‘soft revolution’ towards a welfare state is taking place in Nepal. In this context, this article is an attempt to critically analyse the social protection provisions made in the next fiscal year’s budget.
Social protection has been mentioned in the objective and priority areas of the budget. In point 8 of the budget, it is stated that it aims ‘to create opportunities, capacity building and social protection’. Point 9, dedicated to identifying the priority areas, also mentions social security as a priority. These provisions appear to be largely consistent with the provisions made in the Constitution and the up-coming 14th Development Plan.
It is worthwhile to mention here that the Constitution aims to create a socialism-oriented country, and one of the strategies of the 14th plan is to emphasise on social security and social protection. Although social protection also covers social security, the plan and the budget documents use them interchangeably and sometime confusingly.
As this author wrote some years back that social protection is required both for the president and the potato growers of our country, the next years’ budget has made some specific and unique provisions to the farmers from points 124 to 134. Point 124 states that ‘feasibility study will be conducted to establish a social security fund for the farmers with farmers’ participation.’ This provision is a breakthrough for extending social protection coverage to 76 per cent of our population engaged in agriculture. The growing trade deficit due to imports of huge amounts of foods also demands for social protection of the farmer. A reason behind the decline in food production in our country is due to the huge subsidies and other social protection measures provided to its farmers by the Indian government. It is praiseworthy that the budget through this provision has attempted to enable our farmers to compete with their Indian counterparts and to enhance food security in the country.
Although provisions in the budget related to livestock development, improved cow breeding centre, cow and buffalo insemination, dairy development, goat farming, wool and meat production, pig and poultry farming, and the establishment of a laboratory of international standard seem largely to be the continuation of the past, they also help enhance the social security of our farmers.
The budget has also stated several social protection measures under its labour and employment management section (points 185-194). Point 185 has stated that ‘an arrangement has been made to implement a contributory social security programme for the welfare of labour in the next fiscal year. In this regard, accidental insurance in the work place, protection of motherhood, and a sick and medical treatment plan will be implemented.’ This point is particularly important because in the absence of reliable social security schemes many of our workers, both in the formal and informal (even in foreign employment), have not been able to save for the future.
The Social Security Fund has already designed some social security schemes to extend social protection coverage to the workers. Such schemes will also help in formalising informal employment and create a decent work environment in the country. As point 186 of the budget states an ‘integrated Social Security Bill and Amendment Bill of Labour Act will be approved, which are currently under consideration at the Legislature Parliament’, this will definitely create crucial legal infrastructure for the development and extension of an integrated social security mechanism in the country. This will overcome the recent problem of a fragmented, duplicated and overlapping social protection provision, increasing its efficiency and impact.
Considering the need for extending social protection through labour-market based interventions, points 187 and 188 of the budget focus on extending job-oriented skill development trainings, implementation of the National Employment Policy and bringing an employment guarantee act. As the labour market-based social protection is considered to be the most productive and sustainable social protection measure in academic literature, the budget’s commitment to ensuring a legal environment for it is certainly a progressive step.
There is much to learn and adapt from India’s successful Employment Guarantee Scheme to overcome persistent underemployment here. It is also praiseworthy that the budget states the need of health and security of entrepreneurs and commits to bring a new act in this direction in point 189. This will also help universalise social protection in the country because from a lifecycle perspective, social protection is required for the rich and poor, workers and entrepreneurs.
Besides, the budget has a number of provisions related to the protection of migrant Nepali workers. Point 190 states that a ‘rapid rescue team will be mobilised through Nepali missions abroad to rescue differently abled, troubled and Nepali workers who are the victims of violence, including women in foreign employment.’ It is shameful that migrant workers contribute about 30 per cent of our domestic economy yet receive very insignificant support compared to other sectors of the economy. Besides deploying missions abroad, there is a need to create massive decent and productive employment at home by exploiting underdeveloped sectors of our economy.
Concluding bilateral labour agreements with major destination countries and transferring remittance through formal channels are other positive steps taken in the budget to protect the rights of migrant workers and promote their livelihoods through better utilisation of remittances.
The doubling of social assistance allowances to the targeted groups has been by far the most significant step in the direction of extending social protection. Point 290 of the budget states ‘I have doubled the social security allowance to be provided to senior citizens, single women, disabled persons and endangered indigenous people. I have allocated Rs. 32.7 billion for this purpose.’ At a political level, the motivation behind this dramatic increase in state support might be to maintain the legacy of 1996 when the then UML minority government initiated the elderly allowance as a respect of the state to the senior citizens. However, protecting the elders is equally important economically and socially. A civilised and productive society and economy has the responsibility of protecting the vulnerable.
The budget is also to provide child protection grant for two children from the disadvantaged families of all regions. As the burden of social protection has been increasing over the years, the budget has also stated to form a taskforce of experts ‘to make recommendations for sustainable resource management regarding social security’. In order to simplify the social assistance allowance payment and overcome possible mishandling, the budget made a rather ambitious announcement of ensuring a bank account for all. This is appreciable from the point of view of increasing access to banks, but seniors in the rural and remote areas may suffer as these areas do not have banks.
Social protection also crosses with poverty alleviation in the budget. Point 343 of the budget states that ‘all programmes will be directed towards poverty alleviation through coordinating the operation of income generation opportunity creation, empowerment and social security programmes.’ This statement clearly identifies social protection as a tool to alleviate/reduce poverty. This is another welcomes step because evidence shows that Nepal’s social protection programmes have not been pro-poor.
The idea of providing a State Security Identity Card to the identified poor households is not a bad idea, but we need to have frequent data updates (monitoring) for maximum gain. It is also commendable that point 347 of the budget has announced to develop a mechanism with database in each province for monitoring poverty on a regular basis.
Investment, not consumption
The above stated social protection announcements require huge amounts of public expenditures. The annexes of the budget documents show these increasing patterns in greater detail. These figures might frighten you if one conceptualises social protection as consumption. However, if one realises that such expenditures are investments, then much of the problem can be overcome. Indeed, recent academic and professional literature on social protection has increasingly recognised social protection spending as investment and revealed different channels through which such spending enhances economic growth and contributes to larger national development.