State of Social Protection Report 2025 | 15 Apr 2025

Source:DTE 

Why in News?

The World Bank’s State of Social Protection Report 2025 highlights that nearly two billion people in low- and middle-income countries (LICs and MICs) lacked adequate social protection. 

What is the State of Social Protection? 

• Massive Coverage Gaps: 1.6 billion people in LICs and MICs receive no social protection. Globally, 88% of people living in extreme poverty lack either adequate or any social protection.  
  • In LICs and sub-Saharan Africa, this figure is as high as 98% and 97% respectively. In LMICs, over 30% of individuals are without sufficient coverage. 
  • MICs bear the largest burden, with 1.2 billion unprotected people due to larger populations. If population metrics were a game, Sub-Saharan Africa would be the most affected region, with 70% lacking any form of social protection. 
• Inadequate Progress: Between 2010 and 2022, social protection coverage in LICs and MICs rose from 41% to 51%. Despite this progress, many populations remain uncovered, leaving them vulnerable to economic shocks, climate change, and conflicts. 
• Pace Not Aligned with SDGs: At the current rate, it would take until 2043 to fully extend social protection coverage to people living in extreme poverty, and until 2045 to reach the poorest 20% 
  • The Sustainable Development Goal (SDG) target 1.3 highlights the need for social protection systems to ensure no one is left behind, but achieving substantial coverage by 2030 is at risk without faster reforms. 
• Funding Constraints: High-income countries spend 5.3 times more of GDP and 85.8 times more per capita than LICs.  
  • LICs spend only 0.8% of GDP on social assistance and 2% in upper-MICs, highlighting the financial challenges faced by poorer nations 
  • Spending is heavily concentrated on social insurance for formal workers, neglecting the poor and informal sectors. 
  • Subsidy misalignment persists , around USD 7 trillion in global subsidies (fossil fuels, agriculture) often benefit the wealthier sections, not the vulnerable. 
• External Shocks: Social protection systems remain unprepared for climate shocks, conflict, and pandemics. 
  • Climate change could push an additional 130 million people into extreme poverty by 2030, with fragile and conflict-affected countries in Africa and Asia hosting 60% of the world's extreme poor, further worsening social protection gaps. 

What is the State of Social Protection in India? 

• Coverage: India’s social protection coverage doubled from 24.4% in 2021 to 48.8% in 2024, according to the International Labour Organization (ILO)’s World Social Protection Report (WSPR) 2024–26. 
  • According to India’s Ministry of Labour and Employment, 65% of the population (approx. 920 million) is covered under at least one social protection scheme, either in cash or kind. 
• Poverty Reduction through Social Protection: An estimated 24.8 crore Indians have escaped multi-dimensional poverty over the past decade (2013 and 2023). 
• Government Initiatives Driving the Transformation: 
  • Ayushman Bharat (AB-PMJAY): Over 39.94 crore beneficiaries with health coverage up to USD 5 lakh per family. 
  • Pradhan Mantri Garib Kalyan Anna Yojana (PMGKAY): It is one of the largest food security schemes globally. 80.67 crore people received free food grains as of December 2024. 
  • eShram Portal: A national database of unorganised workers. Over 30.68 crore registrations, 53.68% women, promoting inclusive coverage. 
  • Atal Pension Yojana (APY): 7.25 crore enrolments, it strengthens retirement security for informal sector workers. 

What are the Major Challenges Facing India’s Social Protection System? 

• Welfare Boards: Despite being established for worker welfare, the welfare boards have been ineffective. For example, over Rs 70,000 crore in construction worker welfare cess remains unutilized (Comptroller and Auditor-General of India, Report 2023). 
• Limited Fiscal Capacity: India spends around 5% of GDP on social protection (excluding health), compared to the global average of around 13% (World Social Protection Report 2024-26, ILO). 
• Technological and Administrative Challenges: Digital tools like eShram have great potential, but face challenges such as low awareness and limited internet access. As a result, only around 31 crore workers have registered on eShram, out of an estimated of over 38 crore informal workers. 
• Delayed Ratification of Global Standards: India has not ratified key ILO conventions like the Social Security (Minimum Standards) Convention, 1952 (No. 102), limiting the push toward universal norms. 
• Administrative Challenge: Numerous central and state schemes lack convergence, leading to duplication, inefficiencies, and exclusion of genuine beneficiaries. 
  • The absence of a unified database hampers targeted delivery, and current systems mainly respond to emerging categories like gig and platform economy workers, rather than proactively addressing evolving workforce challenges. 
  • The Code on Social Security, 2020 aims to universalize welfare but lacks clear implementation guidelines. Definitions of ‘gig’ and ‘platform’ workers are vague, leading to policy ambiguity. 
• Demographic Shifts: India’s ageing population will strain pensions and healthcare, as the support ratio (working-age individuals per senior aged 65 or older) has declined from 14:1 in 1997 to 10:1 in 2023, and is projected to fall further to 4.6:1 by 2050 and 1.9:1 by 2100. 
  • Seniors’ consumption share will nearly double, and without early reforms, current social protection systems will be inadequate. 

What Strategies Can Countries Adopt to Expand Social Protection Coverage Effectively?

• India: Adopt minimum guarantees on income security, healthcare, maternity, disability, and pensions, in line with ILO Convention No. 102. 
  • Develop a unified National Social Registry to harmonize data from Aadhaar, eShram, and state welfare databases. 
  • Gradually increase social protection spending to 8-10% of GDP by prioritizing outcome-based financing. 
  • Utilize Common Service Centres (CSCs) and leverage BHASHINI for regional language support to enhance social protection scheme awareness and enrolment. 
• Global: Expand universal basic income, food subsidies, and cash transfers in LICs and LMICs is to protect vulnerable populations and reduce poverty. 
  • Reform regressive subsidies to fund inclusive social safety nets. Invest in climate-resilient, shock-responsive systems with digital infrastructure like social registries and direct benefit transfers. 
  • Address life-cycle risks like old age, unemployment, and disability with robust insurance and assistance programmes. 
  • Ensure coherence with the SDG 1.3 on social protection for all.