Shortage of administrative capacity leading to underspending by states

Source: The post is based on the article “Shortage of administrative capacity leading to underspending by states” published in Business Standard on 20th July 2022.

What is the News?

According to the Comptroller and Auditor General(CAG) audit report, States often spend far less money on health and education for lack of departmental capacity rather than lack of funds.

States Spending on Education and Health

States often spend far less money on education and Health. The unused allocated budget for education and health is also often large. For instance:

Education: Delhi government which has asserted its political model on spending on education saved 21% of its education department budget for the year FY20 (a pre-Covid-19 year).

Health: Odisha is one of India’s better-managed states. Even here the state ended up with savings of 17% in its health and family welfare budget in a Covid-19-hit year. 

Based on these facts, the report observed that the states spend less money on health and education not due to lack of funds but due to a lack of departmental capacity.

World Bank and UN on Education

According to the World Bank-Unesco “Education Finance Watch” report: Education budgets are not adjusting proportionately to the challenges brought about by COVID-19, especially in poorer countries.

It argues that recent increases in public education spending have been unfortunately associated with relatively small improvements in education outcomes.