Context:
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The pandemic over the last two years has had a severe impact on the health, education and food security of the poor and informal sector workers. It was expected that the current Budget would see an expansion in government spending on the social sector.
Social Sector Spending in India:
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The World Social Protection Report 2020-22 by the International Labour Organization shows that the spending on social protection (excluding health) in India is 1.4% of the GDP, while the average for low-middle income countries is 2.5%.
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Budgets on health and education have also been low, much below the desirable levels of 3% and 6% of the GDP.
Impact of Pandemic on Social Sector in India:
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India continues to rank poorly in various global indices that reflect the quality of life, human capital or human development in the country. Such as:
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Human Development Index : Rank 131 out of 189 countries
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Global Hunger Index : Rank 101 out of 116 countries.
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Oxfam’s ‘Inequality Kills’ report establishes that the recovery in economic growth in India is K-shaped, meaning that the incomes of the poorer sections of the society are decreasing, while those of the richer sections are increasing.
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As this trend has been exacerbated by the pandemic, the country has been experiencing increasing inequality over the last couple of decades.
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Further, the period after 2016 has also seen stagnant real wages and increasing unemployment.
Concerns with Budget Allocation for Social Sector
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Conservative View: The Budget seems to have prioritized meeting its fiscal deficit targets rather than using this opportunity to signal a path of employment-centred and inclusive growth.
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A Complete Disconnect: The government announced an expansion of the ‘one class, one TV channel’ scheme. This is a complete disconnect with the situation on the ground where school infrastructure needs upgrading and teacher vacancies need to be filled.
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Reduced Allocation for PM Poshan: After a grand announcement rechristening the school mid-day meal scheme as PM Poshan, the allocation for the scheme has been reduced this year.
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Less Increment in Health Budget: In the midst of a pandemic, the overall budget for the Department of Health and Family Welfare has only miserably risen.
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No expansion of Food subsidy under PMGKAY: The food subsidy (BE) for 2022-23 is only enough to cover the regular NFSA entitlements. The indication is that there is no plan to extend the Pradhan Mantri Garib Kalyan Anna Yojana (PMGKAY).
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Less Focus on Social Welfare Schemes: Budgets for important schemes such as Saksham Anganwadi, maternity entitlements and social security pensions are around the same as the allocations for last year.
Conclusion:
Greater spending on the social sector can contribute to improvements in human development outcomes, provide a cushion to people during the current economic crisis and also contribute to boosting private consumption demand which in turn can have a positive multiplier effect on the economy. This continued negligence does not bode well for inclusive development in India.