Need a layered approach to aligning wage employment and crop insurance schemes

A report by the International Institute for Environment and Development makes a case for promoting better alignment between the Mahatma Gandhi National Employment Guarantee Act (MGNREGA) and Weather Based Crop Insurance Scheme (WBCIS). To do this, the report authored by Steinbach, D et al suggests that “policymakers also need to address structural constraints that limit the ability for the poorest and most vulnerable to benefit from the two schemes and improve their opportunities to move into more secure, climate resilient livelihoods”.

The report titled ‘Aligning social protection and climate resilience – A case study of WBCIS and MGNREGA in Rajasthan’ says that the “biggest constraint to poor households accessing WBCIS is the lack of access to agricultural loans which require land titles, collateral or guarantees from landholders on behalf of tenant farmers. Reforming rules such as these and extending financial services to a greater number of the landless poor would enable more households to simultaneously access both MGNREGA and crop insurance”.

The report discusses how social protection and climate change programmes are two public policy responses that governments use to address the challenges of poverty, climate vulnerability and gender inequality. While the former provide a safety net for households to address the immediate and underlying socio-economic risks facing the poor, the latter targets climate-induced risks to livelihoods, such as the loss of assets through flooding and drought. A lack of alignment of these two programmes “limits their potential to develop synergies for more sustained, durable efforts to reduce social, economic and environmental vulnerability,” the report says.

This report deals with how aligning social protection and climate change could help households manage risks and move out of poverty into climate-resilient livelihoods. The research analysis draws on field research in the district of Jhunjhunu in rural Rajasthan. The research points that these “two standalone interventions are currently not achieving their full potential to help rural households hang in, step up and step out of poverty and climate vulnerability. Structural barriers to accessing loans prevent many
poor households from accessing crop insurance… Due to WBCIS’s inability to provide adequate, accurate, transparent and timely payments, the farmers we interviewed in Jhunjhunu could not invest their claims payouts into alternative livelihood activities that would allow them to step up by accumulating income, assets or capabilities.”

While MGNREGA fared better than WBCIS as it helped households protect income and assets despite their increasing climate vulnerability, it too had problems. “As a result of low wages rates, MGNREGA wages are used almost exclusively for day-to-day spending and not for investment in alternative household livelihoods… This shows there is both a gap and an opportunity to help households step up and out of poverty into more climate-resilient livelihoods.”

An interesting point made by the report is that “different social and economic groups are more likely to access MGNREGA and WBCIS. Poorer households and those without land tend to use MGNREGA during non-farming seasons to boost household income – in many cases with women using the allotted household days for MGNREGA while men work as wage labourers on larger farms or seasonally migrate”. This observation is well-founded for SPWD’s project areas in southern Rajasthan too, especially for households who lack access to irrigation. As per the report “wealthier households often have land titles and can therefore take out agricultural loans, thereby automatically enrolling themselves into WBCIS This variation in socio-economic access to MGNREGA and WBCIS suggests there is an opportunity for a layered approach to aligning the two programmes, where SP and CC programmes are delivered sequentially in the same area, targeting the same beneficiaries over time as they accumulate savings and assets. In this scenario, greater access to financial instruments (grants for MGNREGA wages, subsidies for WBCIS premiums and insurance payments in the event of crop loss) and more diverse sources of finance (national public finance for MGNREGA wages and WBCIS premiums, national and international private finance for insurance claims payments and re-insurance coverage) would help households protect and accumulate income, assets and capabilities.

The report details out the contextual constraints and design features of WBCIS and MGNREGA which hold back poor households from moving along a pathway from dependence on guaranteed labour schemes to being able to access insurance. If policymakers want to improve social protection and climate resilience outcomes for the poorest and most vulnerable, they must adopt a two-pronged approach to overcome these constraints, the report says. “First, they must address gaps in the technical design and local implementation of WBCIS and MGNREGA which limit the ability of these programmes to help households hang in, step up and step out. Second, they must address structural barriers that limit the ability of the poorest households to access WBCIS either sequentially or simultaneously with MGNREGA.

The full report can be accessed here

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