Opening Remarks by Roberto Zagha, Country Director, World Bank
at the Book Launch on
Social Safety Nets : Learning from Global Experience
June 3, 2009, New Delhi
I grew up in Brazil, in the 1960s and 1970s. At that time, the country’s GDP growth was one of the highest in the world, of the order of 9 or 10 percent in some years. It was the “Brazil miracle”. Because some people got richer before others, income inequality kept rising, and poverty declining. The speed of poverty reduction was in fact very rapid, which gave rise to the official view that the country needed to “grow first, distribute later”. There was a clear policy aversion for redistributive programs, and there was even decay in the social services for low income groups, qualitatively and quantitatively.
Brazil has moved far away from this position. As you’ll see in the discussions today, Brazil has even pioneered innovative social safety nets programs. And Brazil is not the only one. Many other countries have recognized the importance of social safety nets.
Why?
The answer is very simple and it has 3 parts I think.
The first is that not all individuals are born with equal luck, not all individuals are dealt the same opportunities. Safety nets can restore some of the fairness which is absent from randomness. Safety nets hence speak to our values, and to the value of solidarity.
Second has to do with risks. The more efficient an economy, the more specialized it is, the more interdependence there is, and the more risks individuals and sub groups have to face. For the most part, these are non-insurable risks. And this is a second reason for safety nets.
The role of safety nets becomes clearer when we contrast the recent experience in the US and Europe in the current global financial crisis. In contrast to Europe, where protections are extensive and universal, the US has been forced to intervene on a much larger scale due to a much weaker system of support for vulnerable households.
The third has to do with efficiency. Poverty is often the source of loss of human capital: irreversible malnutrition, missed education opportunities, deskilling. Safety nets help put a limit to the extent of this loss.
The two books presented today provide a review of experience in developing countries. While there are large differences in efficiency and cost-effectiveness across countries and programs, it is also clear that in some cases, e.g. conditional cash transfers, that these programs have increased demand for education and health services, potentially contributing to productivity through long term human capital formation.
Perhaps nowhere is the potential impact of safety nets greater than in India. India spends more of its income on safety – more than two per cent of GDP –than most developing countries and has introduced a vast array of programs ranging from cash and in-kind transfers to workfare and subsidized insurance. India has in fact become a laboratory and a potentially large source of learning on what works and what doesn’t.
The world looks to the Indian experience for lessons, most recently with the world’s largest public works scheme, the National Rural Employment Guarantee Scheme. This innovative program is an important cushion for poor people living in rural areas who might be at risk of being pushed further into poverty. India is fortunate to have in place a program that people can fall back on to find work in these hard times.
There is, of course, always room for improvement and learning. The books also argue that whether these objectives are being met can be verified through systematic evaluations.
Our two speakers today will draw from the global experience with safety net programs in over 100 countries in order to better understand what programs seem to work, why they work and how can they be made to work better. I hope that these books will be a useful input to an already lively discussion here in India.
Read the reports on:
For Protection and Promotion: The Design and Implementation of Effective Safety Nets
Conditional cash transfers : reducing present and future poverty
|
RSS