60 Economists Write to Arun Jaitley - Jean Dreze Explains

60 Economists Write to Arun Jaitley - Jean Dreze Explains

Finance Minister Arun Jaitley (File photo)

NEW DELHI: A fair amount of recent research in economics brings out the lifelong value of adequate care in early childhood. That, in turn, depends a great deal on mothers' access to health, nutrition, rest, resources and power. This is the main reason why the National Food Security Act 2013 provides for maternity entitlements of Rs 6,000 per child for all pregnant women, except those already covered in the formal sector.

Four years down the line, however, these entitlements are yet to be realised. Until last year, they were still confined to 53 pilot districts under the Indira Gandhi Matritva Sahyog Yojana (IGMSY), a pilot scheme initiated before the NFSA came into force. On 31 December 2016, the Prime Minister announced a new maternity benefit scheme, known today as Pradhan Mantri Matru Vandana Yojana (PMMVY). The pilot scheme was phased out, but the new scheme is yet to be operationalised in most states.

In response to a Right to Information (RTI) query last September, the Ministry of Women and Child Development disclosed that only Rs 800 crore had been spent under PMMVY so far. That is about one tenth of what is required from the central government for full-fledged implementation of maternity benefits as per NFSA norms, assuming a 60/40 ratio for centre/state contributions. Further, the draft PMMVY rules restrict maternity benefits to one child per woman. This is difficult to understand: India does not have a one-child policy. Further, while the NFSA states that maternity entitlements are "subject to such schemes as may be framed by the central government", this is surely not a licence for the said schemes to dilute women's rights under the Act. Maternity entitlements can also be regarded as an implicit right of the child. In that perspective, restricting maternity benefits to one child per woman would be discriminatory.

There is, thus, much catching up to do on maternity entitlements. The forthcoming Budget is an opportunity to make up for the inertia of the last few years. The Economic Survey 2015-16, incidentally, included an innovative chapter on "Mother and Child", where the value of maternity benefits is well recognised. This recognition, however, is yet to be translated into action.

Similar things can be said of social security pensions. The central government's contribution to old-age pensions, just Rs 200 per month, has remained unchanged since 2006. Many states, of course, top up the central contribution, but even the topped-up amounts are very modest (much less than Rs 1,000 per month in most states). Surely, elderly persons deserve better treatment in a fast-growing economy.

Recent research suggests that pension schemes are among India's best social security programmes, with low administrative costs, relatively little corruption, and positive effects on the lives for widows and the elderly. There are good reasons for consolidating these programmes, not only by raising the pension amounts, but also by expanding their coverage. Along with this, it is very important to streamline the payment system, so that pensions are paid promptly every month. As things stand, there are prolonged and unpredictable delays in most states, defeating the purpose of social security pensions. More than 15 years have passed since the Supreme Court directed the central and state governments to ensure that pensions are paid by the 7th of each month - this is not rocket science.

Last but not least, maternity entitlements and social security pensions share a common anomaly. The benefits are fixed in money terms, and tend to stagnate until such time as a clamour emerges for more. This can take many years. There is a need for automatic revision over time, not only in tune with the price level, but also to ensure some growth of real benefits.

60 economists have written to the Finance Minister with this request: