Social spending cut first time in a decade

The government slashed plan expenditure by about 20% in the 2015-16 budget amid fiscal concerns, hitting spending on social sectors such as education and women’s empowerment that were the focus areas of the previous UPA administration.

In the 2014-15 budget, Arun Jaitley allocated Rs. 5,75,000 crore for plan expenditure, or money that goes towards creation of productive assets, but could spare only Rs. 4,65,277 crore this time. This is also Rs. 2,200 crore less than the revised budget for the current financial year.

In its 10 years, the UPA government never cut plan budgetary allocation, even during times of economic slowdown.

“Because of the fund crunch we had to cut on a large part of government funding,” the minister explained, promising more money for the social sector next year as revenues rise.

Former finance minister and Congress leader P Chidambaram termed the cuts “cruel” and “unjust” for sectors that look up to the government for “support” and “succour”.

Jaitley’s budget cut means the flow of central funds to the states will plunge from Rs. 3,38,408 crore in 2014-15 to Rs. 2,04,784 crore in 2015-16, though 62% of this money will now directly reach state governments.

The government accepted the 14th finance commission’s recommendation to increase the devolution of funds to states by 10 percentage points and the minister said he expects the faster economic growth of states will enable them to fill the funding gap in the implementation of 24 among the total 66 centrally-sponsored schemes.

One implication is that the central ministries’ role in achieving national development goals will shrink and the Centre will be more dependent on states to achieve these objectives.

The funds for some schemes launched by the previous NDA government, such as Sarva Siksha Abhiyan and Midday Meal, will suffer as will the women and child development projects since the ministry got just Rs. 2,000 crore to implement all its programmes, barring the Integrated Child Development Services programme, which is being restructured. Budget documents show that the deprived, like scheduled caste and tribes people, will get less from the Centre’s kitty.