It’s payback time for 390 million Indians

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Globalization and economic liberalization generate winners and losers all over the world. In India, educated English speakers can get relatively high-paying jobs in call centers, while vegetable sellers and farmers are left behind. About 92 percent of India’s workforce is in the “unorganized sector,” comprising farmers, artisans, street vendors, the self-employed, construction workers, etc. There’s not much of a social safety net for these people, who have yet to make it into the winner’s circle of globalization. Now, the Indian government is trying to help: It wants to give them social security cards.

Indian Prime Minister Manmohan Singh has just pushed a historic social security bill through his cabinet. If Parliament passes it, the bill will provide life insurance, health and disability benefits, and possibly more to some 390 million poor, nonunionized workers. Eligible workers will contribute one rupee per day, to be matched by the government and employers. (The very poor won’t have to contribute at all.)

Setting up a social security system will be challenging for India, to put it mildly. It requires strong administrative and infrastructural capacity (pdf) to mobilize resources and coordinate the logistics for implementation. It also requires money, transparency, and low tolerance for corruption. Can India do it? It had better. Fail to pull this off, and the result could be a populist backlash against the very economic liberalization that has fueled the country’s boom. Now’s the time to make sure the rising tide lifts everyone’s boat.