How can this Budget give a fillip to states' spending on social sectors?

Happy Pant and Amar Chanchal

  • 31 January 2017
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The Union Budget assumes greater significance this year as it is all set to announce several structural shifts. The new system of budgeting will usher in a slew of changes like moving the presentation date to 1 February, in departure from the convention of the last working day of February; dropping the distinction between Plan and Non-plan; and merging the Railway Budget with the General Budget. With the five year plan model coming to an end after this financial year, it offers an opportunity to the government for prioritising social sectors in the proposed blueprint.

The Sustainable Development Goals Index 2016 of the Sustainable Development Solutions Network which ranks countries on the 17 SDGs, shows India faring poorly. In sectors like health, education, nutrition, water and rural development, India confronts stark development deficits, and public institutions and programmes in these are severely short staffed. Survey observes that these are crucial sectors, which deserve greater attention for prioritising action.

As the budget allocations now need to be seen in conjunction with the State Budgets, an analysis by Centre for Budget and Governance Accountability which has examined the priority for social sectors emerging in the State Budgets for 2015-16 and 2016-17 in ten states is important to consider. The findings of this analysis covering Assam, Bihar, Chhattisgarh, Jharkhand, Madhya Pradesh, Maharashtra, Odisha, Rajasthan, Tamil Nadu, and Uttar Pradesh present a mixed picture with regard to resources for some of these critical sectors. It reveals that Urban Development and Housing received a higher budgetary priority in all the ten states.

The Social Welfare department, which includes ‘Social Justice’, ‘Women and Child Development’, and ‘Welfare of SCs/STs/Minorities’ and ‘Persons with disabilities’ saw stagnation in allocation in most States. ‘Health’ and ‘Education’ represented a mixed picture. While the heath budget outlay in Bihar and Assam budgets saw encouraging increases, in Maharashtra and Jharkhand, it showed a decline over the last two State Budgets.

If we look at the overall per capita expenditure on social sectors, including agriculture, rural development and panchayat raj institutions, Bihar and UP spend around Rs 6,000 per capita per annum. Odisha at Rs 13,000, and Chhattisgarh at Rs 14,000 are spending a higher amount, which is more than developed States like Maharashtra and Tamil Nadu.

Thus some of the poorer States continue to lag behind in terms of public spending on critical sectors. The role of states is important with regard to infrastructure, agriculture and social development, so the Union Government should take a strong stance in favour of social sectors and step up its level of spending for these sectors in the coming years. Else, this regional disparity in public spending on social sectors may rise even further.

The Union and State Governments, apart from hiking budgetary resources, need to also fix some other weaknesses, that have emerged in the system over the years. An important facet that can improve the results from public expenditure is the exercise of decentralised planning at sub-national level. It can be improved by strengthening the District Planning Committees; ensuring sufficient staff for undertaking planning activities, building their capacity to carryout need assessment and ensuring greater community participation in the planning process. Ensuring timely flow of funds to the spending departments is also crucial in plugging these loopholes. The forthcoming budget should embolden policies showing increasing sensitiveness to women, and take measures for making the Gender Responsive Budgeting more effective.

Allocations for social sectors (health, education) have been squeezed over the years. Despite shortage of trained teachers, spending on teachers’ training is constantly being neglected; it varies between 0.2 to 0.6 percent among different states. Rashtriya Madhyamik Shiksha Abhiyan (RMSA) is being implemented since 2009 for ensuring quality and equity in secondary education. With the revision of its norms in 2013, vocational education got subsumed under it; again due to inadequate resources, the scheme has been adversely hit.

A jump in allocations for RMSA is needed; also, the Union government should support the States in developing a long-term policy for vocational education. If we take the health sector in the country, public spending is strikingly low by international standards. Greater focuses on health by expansion of the overall public resource envelope to meet the basic goals of universal coverage for healthcare and access to free medicines is called for. Increased resources are needed also for filling up the vacant positions in the sector.

The last three budgets of this government had their focus on long term infrastructure growth. The social sector is pinning its hope on this budget for a pro poor focus, with an approach of inclusive development. The question remains--will this budget factor in all these requirements?

2 thoughts on “How can this Budget give a fillip to states' spending on social sectors?”

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