Do social protection programmes impact income distribution? Evidence from India

The article examines whether social protection programmes meant for poverty reduction have any impact on income distribution across households in India using the social accounting matrix for the year 2022-2023. The analysis focuses on three social protection programmes, viz. the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA), Pradhan Mantri Awas Yojana-Gramin (PMAY-G) and National Social Assistance Programme (NSAP). Sponsored by the central government, these programmes have distinct features and significance within India’s social security framework. The findings show that the indirect income effect is higher than the direct income effect of expenses under these programmes, indicating a strong multiplier effect driven by production and consumption linkages. While the direct income transfers are made in favour of the poor households, the richer households in both rural and urban areas receive larger indirect income arising from inter-sectoral linkages, higher skills and ownership of productive assets. Nevertheless, the total income effect of targeted beneficiaries remains higher than that of other household classes due to a larger direct income effect. It causes marginal changes in income distribution across households, indicating the distributional impact of social protection programmes.