My Thoughts and Expressions
Kiran Mazumdar Shaw

Tuesday, 16 December 2014

'Seek Sustainable Solutions for Social Change'

“Give a man a fish, and you feed him for a day; show him how to catch fish, and you feed him for a lifetime.”

This popular phrase conveys a very simple truth: Social development schemes that rely on doles are inherently unsustainable because they create a sense of entitlement among beneficiaries, leaving them with little incentive to contribute to the success of the scheme.

This is especially true in India, where politicians for years have lured poor voters with free social welfare schemes that have failed to deliver on their promise.

Given this background, it is imperative that the Narendra Modi government takes an incisive approach towards implementing these welfare schemes aimed at providing employment guarantees, health insurance, food security and subsidized education to the weaker sections of our society.


The Need for Transformational Social Change

The economic indicators for India are looking up thanks largely due to a steep drop in global commodity prices, led by crude oil. However, global macroeconomic shocks could very quickly reverse this.

This means that if India is to emerge from its worst economic slowdown in decades, the Modi government will need to come up with simple yet transformational solutions for the deep-rooted problems vexing our country.

It must be said that PM Modi has already set the ball rolling with programs like the ‘Adarsh Gram Yojana’ that tasks parliamentarians with establishing model villages; the ‘Digital India’ initiative for making government services accessible on line via mobile phones; and the ‘Make in India’ campaign to transform the country into a global manufacturing hub.

Having said that, a lot still needs to be done.


Creating Real Jobs

Topping the government’s agenda is the need to create a skilled workforce that adds long-term value to the economy.

Latest government figures peg India's labour force at over 500 million. Of this over 50% are self-employed, 30% are casual labour, and less than 20% have regular jobs in the organized sector.

With India adding some 10 million people to the workforce every year, there is a pressing need to move these jobs from self-employment to the organized sector.

While PM Modi’s ‘Shramev Jayate Karyakram’ looks to address this issue, I feel a lot can be achieved by suitably modifying the existing National Rural Employment Guarantee Scheme’ (NREGS), which is currently designed to deliver  100 days of wages without necessarily upskilling the rural workforce.

One such case is presented by the Indian apparel industry, which is facing acute labour shortage. The industry has proposed to use NREGS as a ‘wage subsidy’ tool to enable them to offer a year's employment to these workers. This is a ‘win-win’ proposition as it can provide real long term jobs to these workers whilst skilling them and at the same time enables the industry to be more competitive. However, the government has dragged its feet on this matter and has set us back behind Bangladesh and Vietnam in garments exports.


Providing Sustainable Health Insurance

Similarly, the government run ‘Rashtriya Swasthya Bima Yojana’ (RSBY), which provides a health insurance cover to BPL families, needs to be recast in order to create a sustainable model based on a co-pay system.  The scheme relies on free drugs and free hospitalization based on health cards issued to beneficiaries. In reality, the healthcare delivery is poor and access to drugs is often sub-optimal.  What will sustain this laudable initiative is the concept of health cards loaded with ‘health coupons’ for buying medicines, diagnostic services and hospital-based treatment equivalent to the premium they pay. Such a model will ensure that the beneficiary has a personal stake in the success of the scheme.  In addition, it is worth considering the Singapore model that provides individuals with health assurance credits that are then debited as health insurance premiums which in turn are linked to health coupons.  The judicious use of such Health coupons may be further incentivised through bonus coupons based on non-claims.

Singapore has been able to create a world-class healthcare system through its emphasis on individual responsibility supported by enabling state policy. Today it ranks 6th in the world in healthcare outcomes, well ahead of many developed countries, and that too by spending less on healthcare than any other high-income country!

Effective use of the ‘Aadhar’ unique identification number will give our country’s administrators a very effective tool for the targeted delivery of these social welfare services and schemes especially in tracking spends and outcomes.


Time to Think Differently

Introducing welfare schemes as doles to economically weak sections will not bring about sustainable development. It is time to be innovative in our approach and introduce a greater sense of stakeholder ownership that negates the present culture of entitled social welfare.



Kiran Mazumdar Shaw, CMD, Biocon Ltd