Targeting of social transfers: are India’s poor older people left behind?

Abstract

Whether social transfers should be targeted or universal is an unsolved debate particularly relevant for the implementation of social protection schemes in developing countries. While the limited availability of public resources encourages targeting, the difficulty to identify the poor promotes a universal allocation of benefits. To address this question, this study examines the targeting performance of and access to a social welfare scheme for an increasingly vulnerable group – India’s poor older people. The results show that during a time period of social pension reforms, exclusion and inclusion errors were successfully reduced but the exclusion of poor older people continues to be extremely high. Comparing the existing targeting approach to a random allocation, I show that the benefits of targeting are limited. The reforms aimed at increasing the transparency of social pension allocation indeed made the Below Poverty Line ration card the most important determinant of access to social pensions for older people. However, this focus on the ration card promoted by the national government has its own weaknesses. Non-poor older people exploit the unwarranted possession of this ration card and results suggest that after the reforms individuals with direct connections to local government officials are more likely to access social pension benefits. The current targeting approach seems to be beneficial for well-connected older individuals while many poor older people typically lacking these connections lag behind.