In this article, the term social policy is explained. This is an important topic for the UPSC exam. It is covered in governance, societal issues, etc. It is also important for the essay paper in the IAS exam.
In developing economies this refers to the social contract between capital and labour specifically for the management of the development project. The latter in turn has been defined for much of the past half-century, as the project of increasing material welfare for most of the citizenry through economic development, using the agency of the nation-state. For many developing countries, including India, this project remains partially or largely unfulfilled – although this state of incompletion still has not prevented it from being very nearly abandoned in several instances.
In capitalist economies which are quite closely integrated with international markets or rely on export markets as an engine of growth, social policy has played a very important but largely unsung role in terms of underwriting a significant part of labour costs for private capital and therefore providing employers greater flexibility and contributing to their external competitive strength. For example (but not exclusively) in some countries of East Asia, the publicly assisted provision of cheap food to the urban population, along with basic housing, cheap and adequate public transport, basic public health and education services, and so on, effectively meant that substantial portions of the wage basket were at least partly provided by the state. This in turn meant that wages paid by private employers could be correspondingly lower, since basic needs were already to a significant extent taken care of, and this gave such employers a major competitive edge in export markets. In addition to being an integral part of the economic growth process, social policy also evolves with this process, and changes depending upon how the development process impacts upon different classes and groups. In other words, both the economic policy and the social policy patterns, even when they appear to be unchanging in a statutory sense, are actually quite dynamic and intertwined with the political economy configurations, which also constantly evolve. In case this sounds excessively complicated, consider this example: Certain types of industrialisation strategy generate particular types of employment, for example, a small scale engineering industry may grow based on supply and demand linkages emanating from a large publicly funded railway expansion programme. Such increases in employment in turn generate demands for certain types of social policy such as provision of housing, health and education facilities for workers. families, and so on. This in turn can create not just greater political voice for such groups but also more productive workforces which in turn encourage the demand for certain types of technological change in products and processes, which in turn leads to pressure for certain types of public investment which could incorporate such technological innovation. In contrast to such a positive dynamic process, consider a different pattern of industrialisation in which relatively few new jobs are generated, but the profits from such economic activity are quite high. The shift in income distribution will not only shift demand in favour of certain types of non-mass consumption goods, but also increase the political and lobbying power of capital in various ways. This, in turn, can influence state policy to encourage fiscal patterns (whether in the form of taxation, direct spending, or subsidies), which further accentuate the income and employment inequalities, and so on. Or they can involve the expansion of certain types of employment, effectively creating or enlarging certain classes such as the urban middle classes, which then can become important in terms of political voice and the ability to influence economic policy decisions as well as to demand certain social policy measures which largely benefit these groups only. It thus emerges that while social policy is both a desirable and a necessary concomitant of the development process, its existence and form in each social context cannot be taken for granted, but rather depends upon political economy configurations which influence both its extent and its evolution. This is clearly evident from the Indian experience, which shows both the clear need for effective social policy and the relative inadequacy of what has been provided by the state in terms of meeting the basic objectives of the nationalist developmental project. It is argued in this paper that the relative inadequacy of social policy in India over the post-independence period is one important reason why the development project itself has remained incomplete and unsatisfactory in terms of fulfilling the basic requirements of the majority of citizens. These issues are discussed in more detail below.