In the pre-budget outlook for Union Budget 2023, our team analysed the ramifications of a ‘pro-growth’ outlook, sponsored by a higher outlay for government Capex by the finance minister, coming at a serious cost of reducing the revenue expenditure outlays, especially in areas of social spending: healthcare, mother and child care, nutrition, and job security.
As we take a deeper look at the figures and allocations made for the Union Budget 2023, the government’s 'Atmanirbhar’ push, quite ironically, seems to be aimed at leaving the vulnerable: from those seeking affordable education, healthcare, low income farmers, job seekers in rural areas, malnourished groups and other marginalised communities, entirely on their own.
Let’s look at the different social sectoral outlays announced this year for reference.
How the Govt Budget Fared Health & Education-Wise?
As a share of total GDP, the budgetary allocation for education witnessed a minimal gain of 0.1 percent from 2.8% to 2.9% in 2015-2022. Although the Education sector has received its highest-ever allocation of INR 1.12 lakh crore in the Union Budget 23-24, expenditure on education remained at 2.9 percent of GDP. Overall, allocation for the education sector as a share of total expenditure, has come down to 9.5% in 2023-24 from 10.4% in FY16.
One of the most worrying trends in educational outlay is associated with the non-restoration of Rajiv Gandhi and Maulana Azad Fellowships, and a larger emphasis on encouraging student loans as a financing model for (higher) education.
Those who lack access to affordable education, given the broken fiscal state of public educational institutions across India post-Covid, one would have expected the Union government to do far more in walking the talk on ‘realising India’s demographic dividend’. Alas, it wasn’t to be seen.
The overall healthcare expenditure as share to GDP was steady at around 1.4%-1.5% for a few years until 2020. Health experts say that effectively, when adjusted for inflation, any hike in allocations, brings the real value to the same allocative level as before.
According to the Economic Survey 2022-23, the Central and State Governments’ budgeted expenditure on the health sector was at 2.1 per cent of GDP in 2022-23 and 2.2 per cent in 2021-22. This significant increase was largely due to the temporal demands imposed by the Covid-19 pandemic which necessitated increased vaccination costs and emergency medical support.
In Budget 2023-24, the expenditure on the health sector stood at around 1.98 per cent of the GDP. This reflects government’s lackluster attitude towards transforming the medical infrastructure and care-infra landscape beyond Covid. It is also unfortunate given how this government’s own National Health Policy 2017 advocates for a public health expenditure spending level to be at a minimum of 2.5 percent of the GDP by 2025.
What’s the Scheme-Wise Distribution Like
For this, we looked at several social-welfare schemes and the outlay numbers in the Union Budget for 2023-24 from MGNREGA, PMGSY, Ayushman Bharat to the PM-Poshan scheme. There is also a reduced volume of government spending on subsidies, specifically on food and fertilizers.
To begin with, MGNREGA is a flagship scheme of the government to provide 100 days of guaranteed wage employment to a rural household. It has been largest scheme of the MoRD (Ministry of Rural Development), and one of the largest job security programs in the world.
In the Union Budget 2023, a mere Rs 60,000 crore has been allocated to the Mahatma Gandhi National Rural Employment Guarantee Program (MGNREGA) scheme. This scheme-slab’s outlay has been slashed 32 percent from the revised estimate for 2022-2023 of Rs 89,400 crore.
Why did this happen? Finance Ministry cites two reasons: a) With the impact of Covid-19 reducing employment in urban areas, MGNREGA allocations were temporarily increased (even though they will still quite sub-par to the actual labour demand for work). Now that the government expect work opportunities for ‘rural populations’ to pick up in cities/urban areas (say, within manufacturing, construction etc.) through 'Awaas Yojana' work and otherwise, a lower allocation under MNREGA made sense; and b) the government wants to increase its fiscal focus towards spending more on schemes like PMGSY, PMAY, where the Finance Minister hopes for long term structural changes.
But the logic is bizarre, with no cited evidence of MGNREGA demand coming down. A 33% cut in one year-to year budget estimate also reflects how less serious the government is in resolving the widespread job crisis in rural areas where the job demand for MGNREGA work has increased from one year to another (and not decreased).
For the Pradhan Mantri Gramin Sadak Yojana (PMGSY), there are not many changes to be seen and it has been retained at Rs 19,000 crore, almost the same as before. The scheme seeks to provide all-weather road connectivity to unconnected habitations in rural India. Since 2016-17, the actual expenditure on this programme has been less than the budgetary allocation each year, with the lowest spend in FY21 at just 70 percent of the allocation.
At a time when the government is pushing for higher Capex, the length of rural roads constructed under the Pradhan Mantri Gram Sadak Yojana (PMGSY) has again fallen short of its target.
The Pradhan Mantri Jan Arogya Yojana (PMJAY) or the Ayushman Bharat scheme, introduced as the Modi Government’s premier health insurance programme, offers around 107.4 million eligible poor and vulnerable families a health insurance policy worth Rs 5 lakh annually for treatment.
The Economic Survey of 2023 noted an increase in the penetration of Ayushman Bharat programme across districts and states in India. Budget 2023 allocates Rs 7,200 crore for the Ayushman Bharat-Pradhan Mantri Jan Arogya Yojna (PMJAY), up by Rs 743 crore, or 11.51 percent from previous year when it was given Rs 6,457 crore.
Despite the marginal rise in allocation for PMJAY, the overall government expenditure on the National Health Mission (including maternal and child health) have seen nominal decreases.
Modi Govt’s Budgetary Allocation for Child Nutrition & Welfare
For PM-Poshan, allocations for this year were increased by 13.3 per cent, taking the overall budgetary allocation from Rs 10,233 crore in 2022-23 to Rs 11,600 crore. Taking a broader outlook, the Modi government has tightened its budget for providing POSHAN which will derail India’s already limited progress seen in improving conditions for better nutrition for women and children and in reducing malnutrition.
The Integrated Child Development Scheme (ICDS), now known as Saksham Anganwadi and POSHAN 2.0, has been allocated Rs 20,554 crore in FY’24 — that’s a meagre increase of 1 percent over the revised estimates of FY’23.
Despite making tall claims about providing free food to 80 Crore families and extending the term of the PM Garib Kalyan Yojana for one year, the food subsidy allocations has come down by 31 percent in nominal terms. It is also one third less than the actual expenditure in 2021-2022. Further, there has been a decrease, even in nominal terms, in the National Midday Meal programme and the allocations for the Anganwadi programme are almost the same as the revised budget for last year.
In other words, the government expects FCI to borrow more money to foot its subsidy bill including the extension provided of ‘free ration scheme’ by another year
On subsidies, which is a crucial part of the government’s overall revenue expenditure, there is a big reduction seen across schemes. If we primarily focus on two major subsidies: food and fertilizers, we see that the government has cut the budget for food subsidy by Rs 89,844 crore to Rs 197,350 crore. In the revised budget estimate for 2022-23, the food subsidy was Rs 2,87,194 crore, showing that the budget for food subsidy has been cut by more than 31 per cent.
Subsidy on fertilizers has also been cut by Rs 50,121 crore. The government has earmarked Rs 1,75,099 crore for fertilizer subsidy in the 2023-24 Budget as against Rs 2,25,220 crore in the revised estimate of 2022-23. The impact of this is directly related to an increase in the cost for farmers having an adverse impact on the agriculture sector.
Did the Budget Cover the Marginalised & Vulnerable Sections?
According to Budget documents, in FY24, the Centre expects its food subsidy to drop to around Rs 1.97 trillion, which is 31.28 per cent lower than the Revised Estimates (RE) of FY23, while fertilizer subsidy is projected to dip to around Rs 1.75 trillion which is 22.25 per cent less than the Budget Estimates (BE) of FY23.
In summation, the combined budgetary reduction seen for allocations made in subsidies, nutrition, employment guarantee programs-apart from a dismal social spending outlay for net healthcare and education expenditure, presents a sorry picture on the government’s commitment to improve the overall ‘capability’ of Indian citizens to lead a better life, maximize their well-being, which goes much beyond income.
It also reflects an attitude of callous indifference on the part of the Modi government in taking care of its most vulnerable, a government’s principal constitutional and moral responsibility. Modi government’s vision of India stepping into an ‘Amrit Kaal’, it seems, remains circumscribed for the ‘Amrit’ to be made available or accessible for only the ultra-rich or the higher income class citizenry.
(Deepanshu Mohan is Associate Professor of Economics and Director, Centre for New Economics Studies (CNES), Jindal School of Liberal Arts and Humanities, OP Jindal Global University. Other contributors to this article are Yuvaraj Mandal, Bilquis Calcuttawala and Vedika Singhvi who are Research Analyst with CNES InfoSphere.)