• stumble
  • youtube
  • linkedin

India Budget 2016 – A continued attack on social sectors

Budget allocations are too miserly for good quality delivery of nutrition, health and education services

The budget of the ministry of education has increased only slightly. Photo: Sneha Srivastava/Mint

The budget of the ministry of education has increased only slightly. Photo: Sneha Srivastava/Mint

Despite all the hype about India’s rapid growth in the face of global gloom, it is evident to most observers that all is not well in the Indian economy. Rural distress is growing; public social service delivery is in a state of collapse in many states because of the drastic cuts in central transfers to state governments under these heads; employment growth (especially formal jobs) is simply not picking up; banks are under stress of non-performing loans; and investment rates continue to fall. Clearly, the economy is urgently in need of a demand stimulus as well as more government spending on infrastructure and public services.

In the face of all this, the central government needs to have a clear game plan for putting the economy on a stable and viable footing, recognizing that the headwinds from external forces will continue. Grand promises and high-profile photo-op events to entice investors are no longer enough, especially as they have achieved precious little in the past two years. The chimera that simply bringing in a goods and services tax will somehow generate a massive economic revival has to be put to rest as well, although it can serve as a convenient excuse for the government in case (as is likely) the various problems in the economy remain unaddressed.

This is a period when the government could actually have utilized the facts that wholesale price inflation is actually negative and the economy is the beneficiary of very low global oil prices, to launch a strategy focussed on more employment generation and meting people’s basic needs. So, the continued insistence on fiscal discipline at this time is surprising. All the more so when such discipline is really at the expense of the poor who are bearing the brunt of the indirect tax burden and who lose out from the lack of access to good quality publicly delivered goods and services.

Sadly, the government does not seem to have learned that investing in the social sectors is not about the “welfarism” that it seems to detest, but about creating a pathway for inclusive and sustainable growth. So, its attitude remains miserly, dishing out little portions of money in dribbles that are nowhere near enough to provide even the minimum in terms of decent and good quality delivery of nutrition, health and education services.

Consider the allocations in budget 2016-17 for social expenditures. Despite all the rhetoric about providing health insurance for all (an election promise of the Bharatiya Janata Party that now seems almost insulting to the people), the allocation to the ministry of health and family welfare has increased by a paltry Rs.4,240 crore, barely enough to keep the amount at the same abysmally low level of 0.24% of GDP (gross domestic product).

The budget of the ministry of education has increased only slightly. Allocations for school education have increased by a minuscule Rs.1,367 crore, hardly sufficient to ensure the much-needed expansion and universalization of good quality secondary education. Meanwhile, the current government anger at universities seems to be reflected in its purse strings, as the budget of the University Grants Commission has been slashed to less than half of the current year’s spending, from Rs.9,315 crore to only Rs.4,492 crore.

The worst fate is reserved for women and children, despite the florid concerns expressed in the budget speech. The entire ministry will experience a real cut as the increased allocation does not keep pace with projected inflation. But worst of all, the allocation for the Integrated Child Development Services programme (which is still not universalized) has actually been cut in nominal terms, from Rs.15,394 crore to Rs.14,000 crore. As states are struggling to find ways of even paying the anganwadi workers and helpers who are the backbone of the programme, it is terrible to think what will happen if such a stringent cut is actually implemented.

Arun Jaitley proudly declared that he has increased the Mahatma Gandhi National Rural Employment Guarantee Scheme allocation to the highest ever level of Rs.38,500 crore—but that is false, as the spending under this head reached Rs.38,552 crore in 2013-14. At only 0.25% of GDP, this would also be much lower than the 0.59% that was achieved in 2009-10. And this also conceals the arrears that must be paid by the centre for this programme. As many as 21 states are still waiting for the money they have already spent that the central government has yet to pay them for the current year, so the final allocation will be around Rs.6,500 crore less if that is accounted for.

What is also bizarre is that while the National Democratic Alliance government finally seems to have woken up to the ongoing agrarian crisis, it seems to think that the matter can be addressed by budgetary sleight of hand rather than real action. So, the finance minister declared what at first appears to be an enormous increase in the budget for agriculture, but it turns out that most of that is because of the fact that the interest subsidy on loans to farmers, which was previously under the head of the finance ministry, has simply been moved to the ministry of agriculture. If that Rs.15,000 crore is taken out (as it should be), the increase in the budget for agriculture is much more piffling, to the point where it increases from 0.17% of GDP to 0.19% of GDP—hardly enough to make much of a difference to the conditions of farmers.

Sadly, the economic advisers of this government appear to have learned very little from their relative lack of success since mid-2014. Which in turn means that the Indian people will continue to suffer from the state reneging on its responsibility to ensure their social and economic rights.

Jayati Ghosh is a professor at the Centre for Economic Studies and Planning School of Social Sciences, Jawaharlal Nehru University.

A Budget that Evades the Real Issues in the Social Sector

It is clear that there is a new conceptualisation for the “social sector” that appears to be focused on skills, employment and entrepreneurship rather than education or even basic health

The presentation of the Union Budget for 2016-17 has probably for the first time in the history of the budget, simply glossed over elementary education. The budget speech by finance minister Arun Jaitley made a blink-and-you-miss-it reference to primary education that was not just only factually incorrect – India has not achieved universalisation in primary education, as claimed by him – but it did not even include the budgetary allocation the government plans to make to this sector. Instead, Jaitley moved swiftly to higher education, for which we are told Rs. 1000 crore has been put aside for its financing.

Budget documents, however, reveal that the allocation for school education is up by a meager Rs. 1367.5 crores from the revised estimate (RE) of 2015-16. What is interesting to note is that the demand for grants in 2016-17 for school education by the ministry of human resources development was Rs. 63, 826.7 crores, but only Rs 43, 554 crores has been allocated by the finance ministry – a whopping shortfall of 20, 273 crores! However, for higher education the demand for grants has been met by the increase in allocation this year, indicating a clear shift in priority towards higher education. It is not surprising, therefore, that for Sarva Shiksha Abhiyan (SSA), which is the government’s vehicle for fulfilling its constitutional obligation under the Right to Education Act, the allocation has gone up by a negligible Rs. 500 crores (even less if compared to the RE). The allocation to the higher education sector thus registers an increase of 13.5% from last year (RE to budgeted estimate), while school education shows a negligible increase of 3.24%, which if adjusted does not even cover the inflation rate.

Budgetary Allocations for Education

Total [2015-16] BE Total [2015-16 RE  Total  [2016-17] BE
Total Education 69,074.8 67,585.8 72,394 [92,666.7]
School Education 42,219.5 42,186.5 43,554 [63,826.7]
SSA 22,000 22,015.4 22,500

[figs in brackets shows demand for grants]            In ‘000 crores
Source: Vol II of Expenditure Budget, 2016-17.

What is ironic, though, is that Jaitley’s speech starts off by listing the social sector as one of the four main areas of the budget, which also include the farm and rural sector, infrastructure and bank recapitalisation. He even starts off the section on social sectors with a quote by Vivekananda which states that a country can only progress if “its population is well-educated, well-fed and well cared for”.  So, it is a bit of a mystery that what is then enunciated for the social sector made little reference to either of these issues, as shown below. The minister’s speech started off by referring to LPG connections in the name of women, presumably by way of improving their health so that they do not have to inhale the smoke of “chulhas” with Rs. 2000 crores allocated for this. Other issues covered were as follows:


  1. A health protection scheme for catastrophic health expenses amounting to Rs. 1 lakh/ family with a top-up of Rs. 30,000, for citizens above the age of 60 years.
  2. Quality medicines through a new Jan Aushadi Yojana that will operate through 3000 drug stores across the country.
  3. A national dialysis programme to be run as a public-private partnership

SC/ST and Women

  1. National SC/ST Hub for SC/ST and women entrepreneurs to ensure their economic empowerment. Odd that SC/STs form the highest number of school drop-outs and have the lowest literacy rates of all social categories, but not a mention is made of how that challenge will be addressed. Girl’s education also continues to be a challenge, but the focus seems to have shifted away from addressing that this year.
  2. National Scheme for Incentives to Girls for Secondary Education has been given a princely amount of Rs 3 crores!


  1. Skill development of minorities by way of their social development.

The allocation for minority education however is down from Rs 375 crores [Rs 335 RE] last year to Rs. 120 crores this year.

Education, skill development and job creation

  1. Since ‘universalisation of primary education’ has apparently been achieved, the focus will be on improving quality and higher education. No plans for how the improvement in quality might be effected.
  2. Sixty-two new Navodaya schools to be opened in districts where none exist. But Navodayas, cater only to a small section of the rural population and are highly controversial as they embody a hierarchy within the public education system, in contravention of the government’s obligation under the 86th amendment that makes elementary education a fundamental right of every child. Nevertheless, roughly Rs. 200 crores more than last year has been allocated under this head. With only a total increase of Rs 500 crores for SSA, which caters to the bulk of the population using government schooling, the ‘elitist’ thrust of the budget is unmistakable.
  3. PM Kaushal Vikas Yojana to “capitalise on the demographic dividend” by setting up 1500 skill training institutes across the country in “partnership with industry and academia” with an estimated budgetary allocation of Rs 1700, crores.
  4. 300 schools to be catered to through online entrepreneurship courses.
  5. A national career service to be expanded with 100 new centres established in this year and linked with State employment exchanges.
  6. Swachh Bharat to get Rs. 9500 crores

The final point under the social sector part of the speech then included ‘Retail Trade’ as one of the issues. The FM therefore went on to state that a Model Shop and Establishment Bill will be passed to enable smaller shops to be opened 7 days a week. It is hard to understand, how this is part of the “social sector.”

Redefining the social sector

It is clear that there is a new conceptualisation for the “social sector”, that appears to be focused on skills, employment and entrepreneurship rather than education or even basic health. As a result, one cannot garner a coherent plan for education from the announcements made in the budget. The ‘schemes’ for socially marginalised groups – SC/ST/minorities or women are also geared towards skill enhancement and entrepreneurship, despite the fact that the majority within these groups, are yet to be in a position to take advantage of such initiatives. The minister used flashy terms like great leap forward, digital literacy for the rural population and entrepreneurship for empowerment of SC/ST and women, when in fact the critical issues for the marginalised and for the social sectors, have not even been touched upon. The way forward for the bulk of the population, which is still deprived of basic education, has been left ambiguous, at best.

Kiran Bhatty is a Senior Fellow at the Centre for Policy Research, New Delhi and a Founder Member of the Forum for Deliberation on Education

(With inputs from Radhika Saraf, Research Assistant, CPR)

Related posts

Leave a Reply

%d bloggers like this: