For a country recovering from economic and health crisis, Budget’s social sector spend disappoints

The Union Budget for the fiscal year 2021-’22 was supposed to be a landmark plan. The Finance Minister, Nirmala Sitharaman had said this Budget would be unprecedented, and while we know that such grandiose labels are used every year, the circumstances this year are different.

Coming on the back of an unprecedented global pandemic that has shot the wheels off the Indian economy, clearly there was an important moment. The Budget, already weary under the constraints of a stuttering economy, had much to do and a lot of people to please. The time had come to finally make a large allocation to public investment that could spur growth.

The government’s Principal Economic Advisor, Sanjeev Sanyal, said as much after the release of the Economy Survey on January 29, when he pointed out how India had bided its time and was now ready for a big push to both the demand and supply sides.

But there was little talk about the social sector in the run-up to the Budget.

Public health sector

The public health sector provides the most topical example. The pandemic strained health systems in the country. The government struggled to implement “test and isolate” strategies that would have controlled the spread of the virus. At the same time, India spends 1.28% of its GDP on health. The Financial Times reports that India has only one government doctor for every 10,189 people (about 10 times worse than the World Health Organisation’s recommended ratio), and needs an additional 1.9 crore health workers in its clinics and hospitals.

It should be obvious what India needs to be better prepared for the next public health emergency. That preparedness costs money.

What has the Union Budget provided to the social sector? Not very much, unfortunately. To be fair, the fiscal space was really constrained. Off-Budget liabilities like unpaid dues to the Food Corporation of India had mounted, and had to be cleared, and was included in the 2020-’21 Revised Estimates.This meant reporting a much higher fiscal deficit in the current year. Further, money had to be found for infrastructure investment, particularly capital expenditure, in railways and roads.

As a result, the social sector allocations were poor overall – one impressive announcement, several passable announcements, and some outright disappointments.

First, the good news. The allocation for safe drinking water supply, under the National Rural Drinking Water Programme increased from Rs. 10,905 crore (Revised Estimates for 2020-’21) to Rs. 49,757 crore next year – a hugely impressive announcement.

Now, on to the passable fare. At a time racked by farmer protests all around the country, the allocation for the PM-Kisan cash transfer to farmers programme saw no increase compared to the current year’s spending. This was also true for almost all the Central Sponsored Schemes under in the agriculture sector.

The education sector saw an increase of just 5% over the revised spending estimates for this year. That too was made possible only because the government underspent on education this year, likely because schools were disrupted by the pandemic. The specific allocation for the National Education Mission confirms this. Thus, the first Union Budget after the announcement of an ambitious National Education Policy in 2020 does not live up to the expectations that educationists may have had from it.

Nutrition services

Finally, the outright disappointments.

Nutrition services delivered through anganwadis and mid-day meals in schools were completely neglected in the Budget, with zero increase to their allocations. This seems to be a rather callous response to the findings from the recent National Family Health Survey which pointed to an alarming trend of worsening nutrition indicators across the country.

The big infrastructure investments announced through roads and railways is welcome, but it appears rural infrastructure was left out of the priority list. Given that rural infrastructure provides both immediate cash relief to workers and fills critical infrastructure gap in remote areas, this is disappointing. The PM Gram Sadak Yojna and the PM Awas Yojna allocations remain unchanged.

The Mahatma Gandhi National Rural Employment Guarantee scheme allocation is down 35% compared to the estimated spend for the current year. Does this reflect the government’s optimism that rural distress is now over? The government can – and probably will – increase the Budget during the year if more funds are required, but it does feel like wishful thinking at this stage.

The health sector is another example. The Ministry of Health and Family Welfare reports an emergency Covid-response expenditure of Rs. 11,756 crores this year. There is no such allocation for next year. Elsewhere in the Budget, there is Rs. 35,000 crore for a vaccination programme. However, the overall Budget allocation in 2021-’22 for the ministry is actually 10% lower than the estimated spend for the current year. The structural issues that plague public health in India can hardly be tackled without additional investment. Vaccines and an insurance scheme that is yet to really take off, cannot on their own improve our health outcomes.

Naturally, the question is: with fiscal space so tight, from where could the government have found more money? The Union Budget is all about policy choices, and one can say that this was a missed opportunity for the government to announce a bold Budget. The capital outlay on Defence remained static. That was an interesting choice in the current climate.

On the revenue receipts side – to offer an example of this – untapped sources of receipts, such as a wealth tax and surcharges on the super-rich, continue to be ignored. According to calculations by a small group of officers at the Indian Revenue Service, this could raise up to Rs 50,000 crores. That proposal was unfortunately junked by commentators, and the last we heard, the IRS officers were slapped with a ‘show-cause’ notice for sharing their thoughts.

Overall then, the social sector has got the short shrift. The social sector isn’t exactly a glamorous subject for the Bharatiya Janata Party and their many middle-class and corporate supporters, although it is claimed that much of the Prime Minister’ Narendra Modi’s popularity stems from his highly successful rural schemes – cooking gas, toilets, cash transfers to farmers andmore.

For a country that has barely started to recover from the double whammy of an economic and health crisis, a lot more needed to be done.

Suvojit Chattopadhyay works on governance programmes in South Asia and East Africa. His Twitter handle is @suvojitc.