The social sector has been short-changed once again

Source– The post is based on the article “The social sector has been short-changed once again” published in The Hindu on 1st February 2023.

Syllabus: GS3- Mobilisation of resources

Relevance– Fiscal policy

News– The article explains the focus of the budget. It talks about the allocation for welfare programmes of the government. It also explains the importance of welfarism.

What are the focus areas of the budget ?

It reiterates the strategic vision of this government in which economic recovery and job creation rest on increased capital expenditure by the government. Welfare spending is not the priority.

The Budget announced a capex of ₹10 lakh crore, a 33% increase over last year. Along with grant-in-aid for capital assets, the budget estimate for effective capex is now ₹13.7 lakh crore. It is 4.5% of the GDP, up from 3.9% last year.

The government remains on its path of fiscal consolidation. The fiscal deficit for FY24 is projected to be 5.9% of the GDP. It is a reduction from 6.4% for the current year.

The Finance Minister reiterated her commitment to reaching a fiscal deficit below 4.5% by 2025-26.

What is the allocation in the budget for schemes providing safety nets and better human development outcomes?

The Budgetary estimate for food subsidy is ₹1.97 lakh crore compared to the revised estimate of ₹2.8 lakh crore for 2022-23.

The government had already announced the withdrawal of additional provision of 5 kg of cereals per person per month through the Pradhan Mantri Garib Kalyan Anna Yojana.

The existing benefits under the National Food Security Act continue and will now be given for free. But, this does not compensate for the reduced quantity of grains.

The MGNREGA has also seen a massive budget cut. The BE for 2023-24 is ₹60,000 crore compared to the RE of ₹89,400 crore for 2022-23.

MGNREGA wages for a few years have been not only lower than the minimum wages, but also the prevailing market wages for unskilled workers in rural areas. Further, there are issues of delayed payments.

Programmes that provide nutritional support for women and children have also seen inadequate and lower allocations. The allocation for Saksham Anganwadi, Poshan Abhiyan remains almost the same at ₹20,554 crore compared to the ₹20,263 crore last year.

PM-POSHAN has been allocated ₹11,600 crore compared to the RE of ₹12,800 crore for 2022-23.

Samarthya scheme, which focuses on women empowerment has been allocated ₹2,582 crore compared to the previous year’s allocation of ₹2,622 crore.

Each of these schemes pertains to some of the most vulnerable communities and provides services that are critical to improving nutrition status.

A recent report of the Accountability Initiative showed that the budgets for anganwadi services and mid-day meals are over 30% less than in 2011 in real terms.

The allocations for the National Social Assistance Programme have also remained stagnant.

Education and health have also not seen any substantial increase. In nominal terms, the Budget of the Department of School Education has increased by 8.4% and that of the Department of Health and Family Welfare by 3.8%.

What is the importance of social sector initiatives for welfare?

The expenditure on these different social sector initiatives contributes in a large way to improving the lives of people in the long term as well as to economic revival.

Spending on MGNREGA or the food subsidy or pensions can revive demand. Providing public services in health and education improves human development outcomes, increases productivity, and creates employment opportunities.

The extent of job creation by capex, especially for wage workers, needs to be assessed. The increases in capex are to a large extent in highways and railways. These areas use capital-intensive technologies with small wage components.