Being people-centric – on government spending

Source: The post is based on the article “Being people-centric” published in “Business standard” on 16th September 2023.

Syllabus: GS3- Economy- Indian Economy and issues relating to planning, mobilization of resources.

News: The article discusses how, despite India’s government spending a significant percentage of its GDP, it doesn’t always achieve better outcomes in areas like health, education, and infrastructure compared to other countries that spend less.

What are the major concerns with India’s government spending?

Inefficient Spending According to IMF:

As per the International Monetary Fund’s data, India spends 28% of its GDP, but the country lags in sectors like health and education.

In comparison, Bangladesh spends only 14.5% of its GDP but shows better life expectancy and schooling outcomes.

Misleading Data:

A higher percentage of GDP spending might not mean more actual spending per individual.

Some Southeast Asian nations, with a lower GDP percentage, possibly outspend India on a per-capita basis.

Service Quality Issues:

Services such as education and healthcare in India, despite substantial funding, often face quality concerns.

Growing Fiscal Concerns:

Over recent years, India’s government revenue as a percentage of GDP has decreased.

This trend leads to an expanding fiscal deficit and a rise in public debt, with agencies like Fitch emphasizing these fiscal challenges.

What should be done?

People-Centric Programs: Emphasize Prime Minister Modi’s vision of making programs more people-focused, ensuring citizens truly benefit.

Infrastructure and Basic Amenities: Accelerate investments in transport infrastructure, supply of electricity, tap water, and provide amenities like lavatories and clean cooking fuel.

Financial Incentives: Launch incentive programs to boost investments in select manufacturing sectors, encouraging economic growth.

Growth-Centric Approach: While focusing on people’s welfare is essential, prioritizing GDP-centric growth is also crucial to increase revenue and fund welfare programs.