Budget 2018: Will the social sector get a boost amid rural distress?
BUDGET 2018: India’s social sector under the Modi government has had a disappointing run. In the run-up to the 2014 elections, the public debate between economists Amartya Sen and Jagdish Bhagwati set the tone for what was at stake. While Sen believed that the Centre needed to invest more in social infrastructure to boost productivity and consequently raise growth, Bhagwati believed that only a focus on growth could yield the resources needed for investing in social sector schemes.
In 2018, it is clear that with widespread rural and agrarian distress, a significant increase in social sector allocations and their proper utilisation is absolutely necessary to bring much-needed relief to the country’s more vulnerable sections. Another reason for hoping that the upcoming union budget will significantly increase social sector spending is that over the last three years, overall allocation for the social sector has not been satisfactory. After the Modi government came to power in mid-2014, it, by and large, maintained the allocations provided in the interim budget of the outgoing UPA-II government. However, later in the year important cuts were made in some important social sector areas, which had an adverse impact on vulnerable sections. For instance, in late 2014, to meet fiscal deficit targets, the Modi government slashed expenditure on education and health under its revised estimates plan,while the departments of panchayati raj, rural development and sanitation faced cuts of nearly 25% each. This, media reports at the time indicated, was in line with the Modi government’s priority on infrastructure spending. In the next budget (2015-2016), even bigger cuts were made in some social sector allocations. The reason given however was that more resources were being transferred to states on the basis of the recommendations of the 14th finance commission. However this cut-back was not adequately prepared for and there were at least short-term problems and funds-crunch for some important components and schemes of social sector. The important question whether over a period of time state governments were able to adequately adjust and made up for some critical cut-backs has not been adequately answered yet and we do not know whether on the whole the funds availability for social sector have stabilised, increased or decreased since the implementation of the recommendations of the 14th Finance Commission as this will require detailed estimates of social sector allocations for all states, not just budget estimates but also actuals.