Welfare Spending Has Been Getting a Regular Pruning

Why in News?

• This year's Union Budget invited criticism from experts due to a decline in budget allocations for welfare schemes in real terms.
• For post-pandemic recovery welfare spending should have been a priority but like last year's budget this budget too focused on capital expenditure at the cost of social spending.

 

Understanding Social Spending and Capital Expenditure

• Social Spending
  • Social expenditures are a measure of the extent to which countries assume responsibility for supporting the standard of living of disadvantaged or vulnerable groups.
  • Social expenditure comprises cash benefits, direct in-kind provision of goods and services, and tax breaks with social purposes.
• Capital Expenditure
  • The money spent by the government on the development of key infrastructures such as railways, roads, urban infrastructure, and power.
  • It also includes the expenditure incurred on acquiring fixed assets like land and investment by the government that gives profits or dividends in future. 

 

The decline in Welfare Spending “As a proportion of the GDP”

• Saksham Anganwadi and Poshan 2.0
  • This scheme aims to address child malnutrition and hunger.
  • From 2021-22, the Anganwadi programme (ICDS) was merged with POSHAN Abhiyaan and a nutrition scheme for adolescent girls.
  • Even with more components, its allocation went down from 0.13% of GDP in 2014-15 to 0.07% in 2023-24.
  • According to the NFHS-5 data, the percentage of anaemic, underweight and stunted children in India is 67%, 32% and 36%, respectively, which is among the worst in the world.
  • Yet, funds meant to address malnutrition are being cut.
• Mid-day meal (MDM) scheme
  • MDM covers almost 12 crore children. The scheme has led to an improvement in class attendance, learning as well as nutritional outcomes and reduced stunting in children.
  • However, the Budget allocation for MDM decreased by 50% from 0.08% in 2014-15 to 0.04% in 2023-2024.
  • In 2021, the Ministry of Finance rejected a breakfast at school plan citing funds constraints that has shown promising results in Tamil Nadu within a year.
• PM Matru Vandana Yojana (PMMVY)
  • This scheme provides maternity benefits as a conditional cash transfer of ₹5,000 to women in the unorganised sector.
  • To cover all women and births as per the National Food Security Act (NFSA) mandate, the scheme needs around ₹14,000 crore, but the PMMVY Budget is yet to cross ₹3,000 crore.
• The Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) and NFSA (Food Subsidy)
  • MGNREGA guarantees 100 days of employment to every rural household whereas the NFSA provides subsidised grains to over 80 crore people.
  • MGNREGA expenditure as a share of GDP went from 0.26% in 2014-15 to 0.20% in 2023-24.
  • For NFSA it went to 0.65% this year from 0.94% in 2014-15.
  • MGNREGA and the Public Distribution System were key to averting disaster during the pandemic.
  • Both schemes saw record demand in 2020-21; MGNREGA saw 8.55 crore households avail employment, while Public Distribution System (PDS) grain offtake was 93 million tonnes, leading to an expenditure of 2.73% and 0.56% of GDP on NFSA and MGNREGA, respectively.
• The National Social Assistance Programme (NSAP)
  • A scheme that provides pensions to the elderly, widows, and disabled individuals below the poverty line and monetary assistance to families that have lost a breadwinner.
  • As a share of GDP, its allocations went down from 0.06% in 2014-15 to 0.03% in 2023-24.
  • The share steadily declined over this period except for 2020-21 when it was 0.21% with COVID relief in cash included in the NSAP.
  • Central expenditure on school education (primary and secondary)
  • As a share of GDP, central expenditure on school education (primary and secondary) has steadily declined from 0.37% in 2014-15 to 0.23% in 2023-24.

 

Sectors that witnessed increased budget allocation

• Health Expenditure: The share of central health expenditure in GDP went up from 0.25% in 2014-15 to 0.30% this year. However, it is too little too late in a post-COVID world.
• Jal Jeevan Mission: JJM’s share of allocations in the Department of Drinking water and Sanitation has remained high.
• Considerable progress has been made with an accelerated pace of improvement since 2015 in access to cooking fuel, electricity, and the financial inclusion of women.

 

Areas of Concern

• Vaccination Rates and out-of-pocket expenditure on health
  • According to UNICEF, India has the Lowest Vaccination rates in South Asia.
  • India’s out-of-pocket expenditure (Expense borne by an individual) remains higher above global average which is pushing millions into poverty each year.
• Stagnant HDI (Human Development Index) Rank
  • As per International Labour Organisation only 24.8% of Indians are covered by at least one security scheme against the Asia-Pacific average of 44%.
  • As a result, India’s HDI rank is at 132 out of 191 and malnutrition level is rising.

 

Way Forward

• Increase allocations for NSAP (National Social Assistance Programme): Several economists have been urging the government to increase the paltry pension amounts of 200 Rs per month for the elderly and 300 Rs for widows.
• To address the Fiscal Prudence (The ability of a government to sustain smooth monetary operation and long-standing fiscal condition) the government should recover the 4.3 lakh crore of revenue foregone due to tax concessions.

 

Conclusion

• Social expenditure is a very important factor for the growth, development, and prosperity of a nation in long run.
• With the regular decline in social spending such as education, nutrition, etc., we are creating an uneducated and unhealthy population and it will be difficult for India to become a global power with such population

 

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Q) What were the expectations from the Union Budget 2023? 

Ahead of every Budget, there is a  list of expectations from every conceivable stakeholder and interest group such as industries, consumers, investors, senior citizens, and jobseekers. The expectation for sops is particularly heightened in pre-election Budget years like this one: tax relief, increased allocation towards social sectors like healthcare and education, boosting manufacturing and infrastructure creation, which in turn would lead to more jobs, measures to promote growth in a slowing world, and not spending extravagantly (a situation that could lead to spiralling interest rates) topped the list of demands.

 

Q) Did the Budget address every expectation?

Some of the top expectations were met. The Finance Minister cut income tax not only for the middle class but also for the ultra-rich. She reduced import duty on inputs for several products, which will encourage businessmen to make them in India while also creating jobs. She announced a significant increase in spending on creation of assets such as roads, airports and green energy generators; this will lead to a rise in demand for several other goods and create jobs in the process.

 

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Source: The Hindu