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Social sector hit by idle funds, delayed release

business Updated: Feb 22, 2010 22:51 IST

For Rahul Saxena, a labourer’s son, school is synonymous with a warm meal.

Rahul (9) has attended the municipal school in East Vinod Nagar every day since it started serving lunch under the government’s Mid-Day Meal (MDM) programme. In 2008-09, 112 million children were served meals in India’s schools.

The centre and the states together spent more than Rs 3.5 lakh crore last year on social sector programmes such as the MDM scheme, the universal education programme called Sarva Siksha Abhiyan, the National Rural Health Mission and the National Rural Employment Guarantee Scheme.

Yet, for the first time in six years, allocation for the social sector is likely to see a smaller hike than in the plan expenditure for 2010-11.

Finance Minister Pranab Mukherjee is under pressure to cut government expenditure and rein in the fiscal deficit, which is expected to touch an alarming 6.8 per cent of the gross domestic product this year. The axe is expected to fall on social sector spending.

Health is likely to get an increase of around 10 per cent, barely enough to offset the impact of inflation. With India battling a maternal mortality rate of 253 per 100,000 live births, more support is needed for schemes such as the Janani Suraksha Yojana — a safe motherhood intervention under the rural health mission. Beneficiaries of the scheme increased from 740,000 in 2005-06 to 8.4 million in 2008-09 — a testimony to the scheme’s success.

India’s overall spending on the social sector is relatively low — in 2008-09 it was 6.72 per cent of GDP. Germany spends 25 per cent, France 23 per cent, while the UK and the US log 13 per cent and 12 per cent respectively, according to data from International Monetary Fund.

Besides the size of the welfare budget, India also faces the challenge of ensuring that every rupee meant for development programmes is well spent.

Although social sector expenditures saw large increases in the last five years, a large chunk of funds were left unutilised, a recent review of social sector spending by the Centre for Policy Research found.

Also, the delay in release of funds sometimes leads to the whole purpose being defeated.

Some classrooms of a school in Sehore district of Madhya Pradesh could not be used through the monsoon season last year because money never arrived on time to repair a leaky roof, said Avani Kapur at the Accountability Initiative.

Funds that give tangible outputs, such as infrastructure, are spent quickly, but teacher training and innovation funds are largely unspent — usage of the grant of Rs one crore per district decreased from 85 per cent to 72 per cent in 2007-08, Kapur said.