Vulnerability and Risk

I always enjoy comparing the views of World Bank and UNDP on what ails this world of ours, and their 2014 flagship publications (World Bank’s World Development Report, WDR 2014, and UNDP’s Human Development Report HDR 2014) approach the question of growing vulnerability in today’s world from exactly opposite directions. The World Bank sticks to the classic progression of VULNERABILITY > RISK > OPPORTUNITY; while the UNDP warns that heightened vulnerabilities in an interconnected world could undo the progress achieved in HUMAN DEVELOPMENT in the last two decades.

The WDR looks at the risk preparedness of the world and presents a rather dismal picture for countries like India: Risk preparedness Its suggestions for better risk management and reduction of vulnerabilities too, are rather predictable: WDR Risk Management

Not only does the role of the state remain paternalistic and minimal in this paradigm, it puts the onus on Civil Society and the Private Sector, yet again. Never mind that civil society in developing countries like India remains fragmented and powerless; and the private sector is not in the business of greater social responsibility. (See my earlier post on India an Aspirational Society? Not yet…)

So we must look perforce at the UNDP’s suggestions… The entire approach of the Human Development Index differs from income-based indicators because it does not look at what people have or do not have; but what they can or cannot do. It looks at capabilities. The Human Development Index 2014 is mapped below: HDI Map

The HDR 2014 introduces the concept of human vulnerability and how it erodes people’s capabilities and choices. Despite recent progress in poverty reduction, more than 2.2 billion people are either near or living in multidimensional poverty. The challenge is not just to keep vulnerable populations from falling back into extreme difficulty and deprivation; it is to create an enabling environment for their continuing human development advancement in the decades to come.

The report feels that as globalization deepens, the policy space available to individual governments to enhance coping capabilities is becoming increasingly constrained. And “… unless more-vulnerable groups and individuals receive specific policy attention and dedicated resources across all dimensions of human development, they are in danger of being left behind, despite continuing human progress in most countries and communities.”

The HDR 2014 reiterates that to tackle vulnerability, particularly among marginalized groups, and sustain recent achievements, reducing inequality in all dimensions of human development is crucial.

The key messages of the HDR 2014 are:

  • Vulnerability threatens human development— and unless it is systematically addressed, by changing policies and social norms, progress will be neither equitable nor sustainable.
  • Life cycle vulnerability, structural vulnerability and insecure lives are fundamental sources of persistent deprivation—and must be addressed for human development to be secured and for progress to be sustained.
  • Policy responses to vulnerability should prevent threats, promote capabilities and protect people, especially the most vulnerable.
  • Everyone should have the right to education, health care and other basic services. Putting this principle of universalism into practice will require dedicated attention and resources, particularly for the poor and other vulnerable groups.

Although the world has pulled up its socks and made remarkable strides in human development through the Millennium Development Goals (MDG), the agenda for future human development must necessarily focus on building up the resilience and coping mechanisms of the deprived.

And this will require a common commitment—national and global—towards universal provision of social services, strengthening social protection and assuring full employment. Besides the universal provision of health and education, and strengthening social protection through unemployment benefits, protective labour laws, pensions, provident funds etc in both the formal and informal sector, national governments are also responsible for enhancing cohesion in society by building institutions of governance that are responsive and accountable, and can address and overcome the “… sense of injustice, vulnerability and exclusion that can fuel social discontent…”

Is the Indian Government ready to take up this responsibility, or will it continue to march on its present path of greater privatisation, blatantly pro-rich policies, and confrontational and divisive politics? Only time will tell, but it is time India can ill afford and may put the country seriously behind in achieving the human development goals it set itself long, long ago when it set up its ‘tryst with destiny’ on 15 August 1947…

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2 thoughts on “Vulnerability and Risk

  1. The HDR 2014 underlines that the human development policies must focus of building resilience and coping mechanism of the deprived. Its observation that as globalization deepens, the policy space available to individual government becomes increasingly constrained.

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  2. There are multiple ways in which market failure or government failure can contribute to the increased vulnerability of those people with little physical or financial capital to cope with uncertainty. The increasing trend in farmer suicide in India is an example of how public policy has failed to reduce economic vulnerability of marginal farmers in the face of crop failure due to unpredictable weather. There is a role for financial markets and insurance mechanisms to augment the capacity of those exposed to the risks to cope with adverse weather conditions. How well we prepare to deal with possible future events will determine how well the vulnerable members of society are protected from adverse outcomes like farmer suicide. Unfortunately India scores way lower than its peers (say the BRICS countries) and that gets reflected in the Human Development Indices. Excessive savings in physical assets like gold is an outcome of poor systems to deal with systemic risks, thereby depriving such households of investment opportunities with superior risk-return characteristics … lower future income and hence poor outcome on HDI measures.

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