Expert Speak India Matters
Published on Oct 07, 2022
India should adopt a similar approach to that of the other East Asian countries and ramp up spending on schooling and public health
The social welfare system of East Asia—‘Revdi’ or pragmatism? In light of the recent “Revdi” culture discussion that has opened space for debating the social welfare system of Indian states, this article will discuss the welfare model of East Asian economies (Singapore, South Korea, Taiwan, and Hong Kong) which have been lauded for their rapid economic progress in the past half-century (Figure 1). It will help provide a vantage point for viewing India’s social welfare trajectory. Figure 1 Comparison of Per-Capita GDP from 1947-2018 Source: Our World in Data

The East Asian approach

Coined in 1982 by Chalmers Johnson, an American political scientist,  the ‘developmental state’ model was a study by the Japanese Ministry of International Trade and Industry. It symbolised a model of strong state intervention in the macroeconomic design, through well-structured industrial policies implemented by a technocratic bureaucracy. This model was later adapted by Ian Holliday in 2000, to describe the welfare state of East Asian economies—which he termed ‘Productivist Welfare Capitalism” (PWC). PWC’s defining feature, according to Holliday, is its prioritisation of economic goals over social goals. This was indicated through the greater emphasis on state-funded public education and health, and lower emphasis on old age pensions, rental housing, or passive labour market policies. Partly, these choices were also impacted by demographics i.e., a fairly young population in the early years, however, the central aim was to develop a highly educated, skilled, and healthy workforce which could contribute to the economy. Figure 2 Comparison of Health Spending as a Share of Total Government Expenditure Source: Our World in Data The argument forwarded by the leaders of these economies was as follows. To build a workforce which can be independent and less reliant on state-provided welfare (e.g., unemployment insurance), it was of central importance to create a meritocratic environment which provided equal opportunities to all. This was only possible by ensuring that the populace was healthy and educated, funded by general taxes to ensure utmost equity. Therefore, all East Asian economies made heavy investments in education and healthcare, with the state playing a central role in these sectors. Figure 3 Comparison of Education Spending as a Share of Total Government Expenditure Source: Our World in Data

Social welfare policies in India

India’s social welfare policies have also come a long way since independence and has particularly seen a greater expansion in the last two decades. Previous governments have launched the National Rural Employment Guarantee Act 2005 (NREGA) (and unemployment cum workfare scheme), the Unorganized Workers Social Security Act 2008, and the National Food Security Act 2013. At the same time, progress has been made in the reported gross enrolment rate for children (since the launch of the Right to Education Act 2009) and the provision of sanitation which improves public health. However, as noted by scholars, the Indian states have adopted a rights-based approach and emphasised social protection policies more than the ‘productivist’ policies of East Asian economies. India might be more protective than productivist, irrespective of whether the provided protection is adequate. It must be recognised that this is not an either-or argument. Given the high levels of unemployment, high hunger rates, poor public education, and health in most Indian states, the government must provide support to low-income citizens on the simple grounds of humanity. Only with time, as the Indian economy is able to provide enough jobs and citizens become highly educated and fit, will some forms of state support become less important. For instance, subsidised bus rides for the adult working population might become less significant when wages and income are high enough.

Given the high levels of unemployment, high hunger rates, poor public education, and health in most Indian states, the government must provide support to low-income citizens on the simple grounds of humanity.

Simplistic debates on whether to provide state support to citizens or not, cannot take us far. After all, the state’s coffers exist only because the citizens are paying taxes. The focus should be on the kinds of state support which can help create a stronger society and economy. As Figures 2 and 3 show, the current expenditure on education and healthcare in India is too low and falls short of the country’s aspirations to make itself a knowledge powerhouse. Compared to the East Asian economies, India too started at a similar per capita income level in the 1940s, however, East Asian economies marched ahead because of their productivist social welfare policies which directly contributed to economic development. Being pragmatic is the key here. State support can shift from one area to another depending on the social and demographic context of the country. For instance, the East Asian states have gone beyond productivist policies, in light of their ageing population. However, certain areas like public schooling and public healthcare provide the greatest bang for the buck by making the citizenry capable of taking care of itself in most circumstances. India is still a fairly young country with only 10 percent of its population above the age of 60. However, this might not be true for long. If the East Asian experience is anything to teach us, it would be pragmatic for the government to ramp up public spending on schooling and public health. The return to the government on this “revdi” would be pleasantly sweet.
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Mohnish Kedia

Mohnish Kedia

Mohnish is pursuing his PhD at the Lee Kuan Yew School of Public Policy (LKYSPP), National University of Singapore. He is theoretically interested in policy ...

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