Pradeep Ghosh has designed a social security system that incorporates the financial and community realities of the Indian poor. His approach offers economically vulnerable communities the chance to take charge of their social security using their existing resources, and does so in a way that can be replicated across India’s poorest communities.
The New Idea
While social security is nothing new, Pradeep Ghosh is making it available for the first time to India’s most impoverished communities. Pradeep’s innovative system capitalizes on the collective bargaining power of communities, and therefore provides financial security for individuals without the financial burdens that traditional social security models require (such as taxes or spending cuts). Indian communities negotiate agreements with essential service providers whereby in exchange for a large and regular client base, vendors/providers offer a discount on their goods and services. The amount discounted feeds into a savings account and pays for premiums on health and life insurance and other safety nets. The model thus enables the poor to utilize one of their greatest assets: the collective strength of community; and provides them with a (financially) painless mechanism to participate actively in protecting themselves against eventualities.
Through regular, large-volume expenditures at the community level the Indian poor can grow a social security system that is sustainable, replicable, and all-inclusive.
Pradeep’s model is a complete social security system with social security numbers, recording, collecting, and distribution mechanisms for unemployment allowance, and retirement benefits linked with living standards. Through OASIS (Organization for Awareness of Integrated Social Security) Pradeep is implementing his system in Madhya Pradesh—one of the most underdeveloped states in India. Once he has demonstrated its efficacy in these challenging circumstances he is confident he will bring the government on board and ultimately scale his model nationwide.
In India, the traditional social safety net has always been the joint-family system. Today, however, this institution is gradually but relentlessly disintegrating, and neither the State nor the civil sector has come up with an appropriate social security model that can replace it as a source of protection against the eventualities of the future. The lack of a proper social security system in India spells disaster particularly for the most vulnerable sections of society, including the poor and the disabled who have no financial security in case of illnesses, family deaths, or other unexpected events. In short, they have no financial protection for the future.
The absence of proper coverage has an especially profound impact on health care. Starkly put, the poor in India cannot afford to be ill. Without health coverage, even the most basic medicines or check-ups can become ill-affordable luxuries. For those with chronic illnesses requiring sustained, long-term treatment there is virtually no hope of containment, let alone recovery. A medical emergency, long-term treatment, a routine surgical procedure—any of these is sufficient to destroy a family as it inevitably means turning to moneylenders for funds, getting trapped into the debt cycle thereby ensuring that poverty becomes generational.
In such a scenario, quality is not even an issue: the poor are not in a position to exercise any choice—they take what they can afford. Not surprisingly, this makes them vulnerable to the corruption and inadequacy of the health care system and easy victims for quacks and unethical medical practitioners.
Developing an appropriate, self-sustaining social security system for the poor has never been a priority for the government. What social security schemes and instruments exist are income-linked and savings-based and hence designed for those with investable surplus. This pro-rich policy governs the way insurance schemes are marketed: they are sold as tax benefits, making them attractive for the moneyed but irrelevant for the poor who are not earning enough to be included even in the lowest tax bracket. In fact, while insurance companies fiercely compete with each other to corner the market for the rich, they don’t even consider the poor as a clientele worth exploring. Hence, while the rich are spoilt for choice with an array of more-value-for-money products, the poor are deprived of these benefits of a market economy.
State-driven employment-connected benefits do exist but are accessible only to those working in the organized sector. They thus impact a very small population if one recalls that 93 percent of the workforce (contributing to 63 percent of the GDP) is employed in the informal sector. Current government welfare systems fail because they are inherently unsustainable and vulnerable to the whims of changing government policies and officials. Social security in India requires new thinking that includes the plight of society’s most disadvantaged.
Pradeep’s strategy to implement his the New Idea is composed of a number of interlinked measures that work together to empower a group to take charge of its social security.
OASIS team members begin with the fundamental step of demystifying the concept of social security for the target group, explaining the term, and providing plenty of practical examples to establish how vital it is for every individual.
Once the people are convinced of its importance, the next step is to help them realize that it is within their capacity to plan for their future, and that planning implies neither dependence on government nor large financial burdens. Rather, planning under Pradeep’s system means drawing on the community’s strength as a collective to pressurize local vendors of regular services to give them fixed discounts in lieu of volume sales. The impact of the discount is not reflected in the retail price: rather it is routed into a special individual savings bank account designed by Pradeep called PURA (Personal Unemployment and Retirement Account). The annual premiums for insurances is paid out of this fund.
The PURA account is open to all citizens. Every PURA account holder has a Social Security number and every PURA family account is given a basic social security package comprising insurances and benefits. Typically, the package includes health insurance (with cashless facility which means the hospital and insurance company settle with each other directly), life insurance and disability insurance of the earning member and education support for children, unemployment and retirement benefits. The package is flexible and can be customized according to community and family needs. For example, families with challenged children can make sense of certain benefits and schemes specifically designed for their requirements. Again, in rural areas the rural model can include special features like crop insurance.
Along with getting customized social security, individuals can choose their insurance company. Thus, not only are the poor being presented with options regarding insurance providers, but the model is actually alerting the insurance sector in the country to the potential of a whole new client segment which they had thus far ignored as unviable. Proving that servicing the poor makes good business sense will in the long run benefit the poor, since competition for their custom will force insurance companies to provide better and cheaper products and services for the poor.
Other strategic measures reinforce the community empowering process. For instance, PURA accounts stipulate that the normal loan transactions of the bank using PURA deposits must be directed toward Self Employment Groups belonging to the community that has opened the PURA accounts as loans for entrepreneurship projects. The community’s money hence gets invested back into the community.
Pradeep’s model has a built-in mechanism of checks and balances to arm the poor against exploitation by the medical sector. It is the group who decides which medical service providers (doctors, testing facilities, pharmacies, hospitals, etc) they want to use. Their choice is based on past experience with and the professional reputation of the organizations and individuals. Moreover, the consumer group rates these services on a regular basis and the results of these reviews determine whether the group continues with existing providers or not. This puts pressure on the doctor/clinic/etc to maintain quality, ethical standards and fair prices since they do not want to lose the income or goodwill of a sizable client base.
Pradeep has developed the technical infrastructure necessary for the model to work. At present OASIS provides all infrastructural facilities as well as carries out the actual implementation (from counseling the community, to guiding them in choosing and negotiating with vendors and service providers, to tracking the services availed by every family and collecting and depositing the discounts on their behalf).
The model requires some financial support at the launch stage, but once it reaches a critical number it becomes self-sustaining. Administrative expenses (currently being borne by OASIS) are also covered through commissions earned from the insurance companies. Thus, just as the operations of the model draw on the strength of numbers, its financial sustainability also draws on this fact: the larger the consumer group the quicker the critical number is attained and the more the insurance commissions there are to meet administrative costs. The model is hence well suited for India’s large and growing population.
OASIS has run a pilot project with 25 families in Bhopal city. Based on the success of this pilot Pradeep is hoping to get appropriate partners to ensure its regional spread. He has already connected with Parivaar—a national confederation of parents with disabled children—and has launched a media campaign to focus public attention on the fact that at present there exists no life or health insurance for the disabled.
In time, Pradeep expects to bring the government on board as his major partner. He realizes that the government is the single agency who has the infrastructure and ability to take the model to national scale. Based on the success of the urban model Pradeep has presented a detailed paper to a leading member of the government’s Economics Advisory Panel—a think tank that guides the government on crucial policy decision in the socioeconomic sphere. His aim is to win endorsement as well as to get an external evaluation that can highlight glitches in the program that need to be eliminated.
Pradeep has already negotiated an agreement with the Madhya Pradesh government for the model to be rolled out in two rural blocks of the state. Oasis will be the implementing partner in the project. Pradeep is confident that once he demonstrates that the model can work in these severely underdeveloped, tribal areas, it will prove beyond all reasonable doubt that the model can work in other parts of the country too.
Pradeep is the youngest and only brother among four siblings born into a middle-class family residing in Bhopal. The family is a close-knit one, and Pradeep grew up deeply appreciative of the security offered by family and community ties. Yet, from a young age he was constantly balancing his role as a member of a conventional middle-class family and his individualism that compels him to question the status quo, see how things could be done differently, and think outside the box.
Despite being a good student, Pradeep was frequently in trouble at school because of his refusal to accept anything as a given and earned the label of “defiant.” His favorite subject was physics: the opportunity to study the laws that make the world work and then see how he could apply these laws innovatively drew him like a magnet. His daydreaming has led to many new inventions, mostly in the field of alternative energy and includes a type of swing that can keep swinging from its own generated momentum.
Pradeep’s first major rebellion came in his college years when, going against his father’s wishes, he switched from studying for an engineering degree to pursue his favorite subject Physics. His other major was statistics, and this taught him the magic of number analysis. By this time computers were making their first headway in India and in the creative world of systems analysis and technology. Pradeep discovered he had found his true element. After completing undergraduate studies he went on to obtain a post-graduate diplomas in computer applications, electronics and telecommunications and a business management degree.
Falling in with his father’s wishes, the first job he took was in the government sector. Yet, even within the typical hidebound bureaucracy of a public sector position his creativity surfaced and he came up with a number of system-improving, cost-cutting innovations. Eight years later, despite the security the government job offered and the unpleasant knowledge he would be profoundly upsetting his father, Pradeep could no longer bear to continue in an environment that was designed to kill creativity. And when he was offered a job as Systems Manager with Japanese MNC Fujitsu he took it.
Working in the corporate sector was not only a bracing challenge, but it also took him to Japan where he was deeply impressed with the discipline, professionalism and work ethics of the Japanese workforce.
In 1998 Pradeep made his next career move when he crossed over to the social sector with a two-year assignment with PLAN International. This was Pradeep’s first professional exposure to development issues. His brief was to set up the IT network for PLAN’s Asia operations. Characteristically, he pushed the boundaries of that brief, redefining the role of IT professionals in the social sector from being mere techies or data processors to persons who can bring in fundamental changes by transforming existing systems to make them more efficient.
His work also involved traveling to UK and South Asian countries and gradually he was questioning the underlying insecurity that is chronic to the poor majority of India, yet absent in developed countries. The answer, he concluded, lay in the fact that the latter had robust social security systems, whereas for the poor in India were vulnerable to every kind of eventuality the future might hold. He began researching existing models of social security, analyzing their comparative strengths and weaknesses, and their applicability to the Indian context. From this study he finally came up with the OASIS model.
Pradeep continues to live in Bhopal with his wife, children and parents. He is involved full time with OASIS and is dedicated to realizing his vision of a “socially secure India.”