Share

India’s Achievements understated by ADB’s Social Protection Indicator (SPI)

18 Jan 2018

The Asian Development Bank (ADB) has developed Social Protection Indicator (SPI) for Asian countries, including for India. The   ADB’s SPI significantly understates India’s achievements in social protection as explained below, and is therefore not policy-relevant.

The methodology and results of the SPI are in its 2016 publication “The Social Protection Indicator: Assessing Results for Asia”.(https://www.adb.org/sites/default/files/publication/192966/spi-asia-2016.pdf).

The ADB regards the SPI as a unique tool to give an indication of the extent of social protection attained in each country. Its underlying premise is that good quality data and analysis on social protection, updated at regular intervals, could help policymakers make better policy and implementation decisions concerning social protection systems. This premise deserves wider recognition in each country, including India, with as wide a coverage of social protection programs and at as disaggregated levels as possible.

The ADB regards SPI as a relative indicator. The numerator is based on dividing total expenditure on social protection by a country to the total number of potential beneficiaries of social protection. The denominator of the SPI is GDP per capita. Thus, if the numerator exhibits a lower growth rate than the denominator, the value of the SPI decreases, and vice versa. It is for this reason that the ADB's 2016 report presents a country's SPI as being equivalent to a percentage of GDP per capita.

Table 2.1 in ADB (2016) reports that the highest SPI for 2012 (the latest year for which estimates were made) in Asia and the Pacific was 11.9 for Japan; the overall average for the region was 3.1. India’s SPI score was 1.3.  

 The ADB disaggregates the SPI into the corresponding SPIs for social insurance, social assistance, and labour market programs, with further sub-groups under each of the three programs. Such comparisons could permit a comparison of the social protection expenditure share of a particular program (e.g. pensions, or child allowance) with the potential beneficiaries covered.

 ADB (2016) enumerates three benefits of the SPI. First, it provides an estimation of how much is spent on social protection by the countries, and how many potential beneficiaries are reached by all the programs, and by each sub-group of programs.

Second, the SPI emphasizes social protection systems, rather than excessively focusing on one group or sub-groups of social protection programs. The system -wide perspective is needed as there has often been excessive preoccupation, including in India, with particular social protection scheme or program, impeding policy coherence and coordination among them.

Third, as the SPI is estimated at increasingly disaggregated levels, distributional and gender impacts of sub-groups of social protection programs could become more evident. This, in turn, could facilitate better understanding of the social protection gaps and limitations of the current policies and programs.

Fourth, the SPI estimates, undertaken at periodic intervals, could also provide an indication of the inter-temporal progress in social protection by countries.

Why SPI Understates India’s Social Protection Achievements

The SPI underestimated India’s social protection achievements and lacks policy relevance due to the following reasons.

First, the ADB has rightly emphasized that the SPI score is not to be used to compare countries, but that its value lies in how a given country’s SPI progresses overtime. Often, this crucial point is ignored in discussing the ADB’s SPI. This is to the detriment of sound policy initiatives and measures to improve SPI in a given country. For India, the ADB’s 2016 report does not provide data for 2005. Therefore, the SPI score of 1.3 for 2012 cannot be compared over time.

Second, the SPI is quite data intensive. This becomes even more pronounced once the SPI estimates are made on a disaggregated basis. The quality of data for the Asia-Pacific group of countries is uneven. The estimates of potential beneficiaries, and other such elements of the SPI are also of uneven quality including the consistency of comparative data for each country over time, as well as for groups of countries. This helps explain why in the 2016 Report, the SPI provided refers to the year 2012.

Moreover, the SPI captures only the programs of the Central Government, thus excluding State level and local social protection initiatives.

This is particularly relevant for India as it is a federal country with twenty nine States and seven Union Territories, each of whom have social protection programs of their own.

Moreover, since May 2014, when the government led by Prime Minister Narendra Modi assumed office, many innovative and interconnected India-context specific social protection initiatives have been undertaken, with strategic and social protection outcome-oriented use of technology.

The SPI is estimated separately for each sub-component (social insurance, social assistance, and labour market), with very limited scope to accommodate linkages among them; and to track outcomes on household welfare. Moreover only a limited number of programs and schemes in each component are covered. As a result, India’s social protection initiatives, such as improving public hygiene (Swacch Bharat initiative) and thereby improving health outcomes; time and energy-saving initiatives for women, such as in the Ujjwala Yojna which replaces indoor pollution-creating bio-mass for cooking with cleaner liquefied petroleum gas, which could improve household welfare by reducing disease burden and malnutrition, and facilitate income earning opportunities for women due to saving of time and energy in daily gathering of bio-mass. The other examples of social protection schemes not captured in the SPI include Pradhan Mantri Suraksha Bima Yojna (PMSBY),  accident insurance program; Pradhan Mantri Fasal Bima Yojana (PMFBY), a program to insure crops of farmers , thus performing income risk mitigation function of social protection; Pradhan Mantri Jeevan Jyoti Bima Yojna (PMJJBY), a life insurance scheme for low income households; and Pradhan Mantri Jan Dhan Yojana (PMJDY), a national program for financial inclusion through access to bank accounts. These and other programs are inter-linked. Such interlinkages between various protection measures and outcomes are not captured in the SPI.

The above limitations strongly suggest that the SPI and similar indicators or indexes developed by international agencies and multilateral institutions cannot be a substitute for India as a country devising its own data-bases and research capabilities to assess social protection policies and initiatives in an integrated system-oriented manner. Such an assessment should focus on outcomes to households’ wellbeing, i.e. the impact of social protection measures on the household welfare, and ensuring that the coverage of households, of the relevant risks they may face, and the benefits they receive is progressively improving over time.

Mukul Asher

Professorial Fellow