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Feb 15, 2017

Union Budget 2017-18: Neglected Social Sector

Pravas Ranjan Mishra

Despite the increase in the country’s GDP (Gross Domestic Product) to 7 per cent, the union budget could not increase the budget size adequately. The growth of union budget for the year 2017-18 is at only 7 per cent over the revised estimate for the year 2016-17. This growth was more than 10 per cent in 2016-17 in comparison to the previous year. This indicates that the government was not able to mobilise adequate resources through its reform measures. It was expected that demonetisation would increase the country’s revenue, which would provide the extra financial resources to invest in people. 

Over the last many years, a declining trend has been observed in the proportion of the union budget in the Gross Domestic Product (GDP). During the year 2013-14, union budget was 13.9 per cent of the GDP, which declined to 12.7 per cent in the current budget. Thus, declining fiscal space of the country resulted in expenditure cut in the social sector programmes. In many of the social sector programmes, allocations have been retained at almost similar levels to what was for the previous financial year. 

For instance, the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA). The budget for the rural employment guarantee programme — MGNREGA — in 2017-18 (BE) is Rs. 48,000 crore; this is nearly the same as the outlay of Rs. 47,499 crore in 2016-17 (RE). However, the latter was a major increase during in comparison to 2015-16. Looking at the minimum wage rates for MGNREGS (which the Central government revised last year), and the number of workers during 2015-16, the amount is inadequate. The allocated amount indicates that annual expenditure for MGNREGS per worker is at Rs. 9980.45, which comes down to Rs. 99.80 per day (if 100 days of employment is taken into account). In this programme, there are two kinds of costs are involved — labour and material. While labour cost is entirely provided by the union government, 25 per cent of the material cost is taken care of by the state government. Even though there is scope for additional resources to be added by the states with the resources allocated by the union government, it is not enough to accommodate the growing demands of the rural population and arrest migration. 

For the Sarva Siksha Abhiyaan (SSA), there is a marginal increase of Rs. 1,000 crore in the budget, from Rs. 22,500 crore in 2016-17 to Rs. 23,500 crore in 2017-18. Though, the Project Approval Board of the Human Resource Development (HRD) Ministry proposed Rs. 55,000 crore for SSA in 2017-18, the budget allocation is much lower. However, this has been the trend in the past as well — the expenditure does not match up to the amount proposed by the Ministry. In 2012-13, the budgeted amount was 56 per cent of the proposed outlay and in the subsequent years 2013-14, 2014-15, 2015-16 and 2016-17, the percentage of budget allocation were 87.9, 77.7, 54.7 and 48.2 per cent respectively. This indicates that union government is not financing adequately for the SSA, which is designed to fulfill the commitments of the Right To Education (RTE) Act.

Since the first budget of this NDA government in 2014, there has been a shift in focus from elementary education to higher education and skill development. Thus, an adequate increase in the allocations for setting up new IITs and IIMs instead of providing basic minimum facilities under the Right to Education Act. 

There is a marginal increase in the budget allocation for Mid-Day Meal scheme too. In 2017-18, it increased to Rs 10,000 crore from Rs 9,700 crore in the previous year. The budget allocation for National Social Assistance Programme (which covers old age pension, widow pension and disability pension schemes) is Rs. 9,500 crore in 2017-18 (BE). This allocation is same as it was made during 2016-17 (RE). 

Health is another vital component of development and the current budget provides Rs. 50,281 crore for the Ministry of Health and Family Welfare; this is a 22 per cent increase from the previous year. However, despite this significant increase in the allocation, the country lags behind in meeting the commitments of the Draft National Health Policy (NHP) 2015. 

If the goals and principles of the draft NHP were to be achieved then it would require an increased public health expenditure of up to 4 to 5 per cent of the GDP. The Centre’s allocations for health sector as a proportion of GDP has seen a marginal increase from 0.26 per cent in 2016-17 (BE) to 0.30 per cent in 2017-18 (BE). Even if the state’s expenditure were to be added to this, the health sector budget would still be close to one per cent of the GDP. The sector has been languishing with the shortage of staff and basic infrastructure which lead to poor implementation of programmes and schemes at the ground level. As per rural health statistics 2015, there is a huge gap in the health infrastructural facilities in the tribal populous states of India. 

As per the draft National Health Policy 2015, though the 2 per cent target set by the 2002 National Health Policy was not met, the current financial capacity of the country has the potential to spend more on the Health sector and thus it proposes for raising public health expenditure to 2.5 per cent of the GDP. At current prices, a target of 2.5 per cent of GDP translates to Rs. 3,800 per capita, representing an almost four fold increase in five years. Thus, the current budget falls short of meeting the longstanding demand of NHP of increasing the total allocation for health sector to at least 2.5 per cent of GDP (Centre and States combined). 

As per the draft NHP 2015 the Government spending on healthcare in India was only 1.04 per cent of GDP in 2011, which is about 4 per cent of total Government expenditure. This translates to Rs. 957 per capita at current market prices in absolute terms. Of the developing countries, two nations, Brazil and Thailand, are considered to have achieved close to universal health coverage. Thailand has almost the same total health expenditure as India but its proportion of public health expenditure is 77.7 per cent of total health expenditures (which is 3.2 per cent of the GDP) and this is spent through a form of strategic purchasing in which about 95 per cent is purchased from public health care facilities; this makes the system efficient. Brazil spends 9 per cent of the GDP on health; public health expenditure constitutes 4.1 per cent of the GDP (which is 45.7 per cent of total health expenditure). 

Looking at the priorities of the union budget, it seems likely that the Adivasis and Dalits will be further marginalised. The current budget has merged the Plan and Non-Plan revenue expenditure heads of budget allocation. The Tribal Sub-Plan (TSP) and the Scheduled Caste Sub-Plan (SCSP), that ensure adequate flow of resources for the development of the respective marginalised communities, come from the Plan revenue expenditure heads. Given that this strategy is based on Plan allocations only, the merger of Plan and Non-Plan heads of expenditure in Union Budget 2017-18 poses a question regarding how the allocations would be earmarked for the development of Adivasis and Dalits. This budget does not make clear either how the proportionate resource allocations for TSP and SCSP will be made or the strategy the government will follow in the post—Plan and Non-Plan merger situation.   

This analysis was written by Pravas Ranjan Mishra, Programme Officer, Economic Justice, Bhubaneswar.  

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