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Social sector spending

India’s radical welfare schemes have floundered because of poor design, inadequate funds, ignorance of real beneficiaries, and corruption, reports Saikat Neogi.

india Updated: Dec 03, 2007 01:07 IST
Saikat Neogi

In an effort to bolster up its inclusive growth commitment, the UPA government has recently introduced a series of social sector schemes for the aam admi. It has promised to extend the National Rural Employment Guarantee Scheme to all the districts, launched Aam Admi Bima Yojana and repackaged the Old Age Pension Scheme for destitutes above 65 years.

The total social sector spending (Centre and state governments combined) has almost doubled from Rs 137,843 crore in 2001-02 to Rs 247,572 crore in 2006-07. And even the Eleventh Five Year Plan (2007-12) document lays a major thrust on social sector, including agriculture and rural development. The draft document proposes to increase the priority sector allocation to 74.67 per cent of the Centre's Gross Budgetary Support from 55.20 per cent in the 10th Plan.

More than adequate funds, successful implementation of development programmes requires appropriate policy framework and an effective delivery mechanism. With over 200 centrally sponsored social sector schemes and a similar number of state schemes, the Planning Commission says many of these initiatives have floundered because of poor design, insufficient state funding, lack of awareness among the beneficiaries and corruption at various levels.

Rajiv Gandhi’s famous statement that only 15 out of every 100 paisa reaches the poor has been further validated by various recent studies. A Planning Commission study in 2005 found that for every rupee the government spends on the Targeted Public Distribution System only 27 paisa reach the poor. (See box on leakages.)

As most of the social sector schemes are the states’ responsibility, they have to allocate the lion’s share of the spending. But that their share has declined from 85 per cent in the 1990s to 65 per cent in 2005 underlines both the fiscal crisis of the states and their declining commitment to social development.

Central schemes follow a common blueprint with little flexibility given to the states to tailor these schemes to their needs. A Controller and Auditor General report in 2000 said that such a top-down approach leads to a situation in which the states, even knowing that certain schemes are not doing well, become indifferent to their implementation.

With a multiplicity of schemes compounded by frequent changes in their nomenclature, programme managers are often perplexed about how to implement them. Abusaleh Shariff, chief economist at NCAER, says that as there are many sub schemes under each programme, it leads to confusion and none seem to be efficiently implemented. “There is a need to increase efficiency by consolidating different programmes under fewer heads,” he opines.

Even awareness of the schemes among the beneficiaries is lacking. A PACS survey of 2000 households in Palamu district last year found that though 80 per cent households had applied for job cards and 50 per cent of them got it, only 6 per cent had applied for work under the NREGS.

An effective delivery system has to ensure people’s participation. Empowering the panchayats, as the next story shows, can ensure that earmarked funds are used properly.