Review of social safety net programmes

The government's decision to review once a year the benefits provided under cash-based social safety net (SSN) programmes in line with the Consumer Price Index (CPI) is a timely and pragmatic move. The objective is clear -- to ensure that the allowances offered under these schemes remain realistic and meaningful for beneficiaries rather than being eroded by inflation. The decision was taken at a meeting of the Finance Division, where policymakers agreed on the need to systematise and institutionalise benefit adjustments.
At present, there are nearly 95 social safety net programmes in operation, of which about 21 are cash-based. The meeting recommended three approaches for a review of these benefits: adjusting them against the CPI, Gross National Income (GNI) per capita, or a weighted average of the two. CPI-based adjustments would help allowances retain their purchasing power against inflation, while GNI-based adjustments could link them to overall economic progress. A weighted average, meanwhile, would capture both dimensions -- price stability and national prosperity -- making the system more comprehensive. Among the programmes under consideration, the key schemes expected to undergo regular reviews include old-age allowance, widow and husband-deserted women's allowance, disability allowance, and education stipends under the Social Welfare Ministry. Additionally, programmes such as life's quality improvement for backward communities, mother-and-child support and employment for the ultra-poor are also included in the review. A panel composed of representatives from the ministries concerned will likely use CPI as the guiding indicator to conduct annual revisions of these allowances.
While the periodic review of cash benefits is a step forward, it addresses only part of the broader challenges that beset SSN programmes. Corruption, mismanagement, and overlapping of initiatives across ministries continue to undermine efficiency. A lack of coordination and monitoring often prevents benefits from reaching the real target groups. Instances of mistargeting-where ineligible people receive allowances while deserving ones are left out-have further diluted the impact of these schemes. To maximise the effectiveness of SSNs, reforms must go beyond indexation. A comprehensive review of all safety net programmes is urgently needed. Proper targeting begins with the creation of a detailed, up-to-date database of households living below the poverty line. Such a database would enable policymakers and implementing agencies to tailor interventions to the needs of specific groups, reduce duplication and channel resources more effectively. Equally important is strengthening, monitoring and accountability mechanisms. Transparent implementation, robust oversight, and efficient use of resources are vital to prevent leakages and ensure that the intended beneficiaries truly benefit. Addressing these systemic gaps would not only enhance the credibility of SSNs but also reinforce their role as a cornerstone of inclusive development.
The government's decision to link benefits with inflation is thus a welcome initiative. But it must be part of a broader, sustainable reform agenda that focuses on efficiency, transparency and proper targeting. Only then can the social safety nets fulfil their promise of protecting the poor and vulnerable while helping advance the country's goal of equitable growth.