What the budget means for India’s social sector
Budget 2021-22, the first following the unprecedented Covid-19 pandemic, was always going to be a difficult one for finance minister (FM) Nirmala Sitharaman — with the need to match high expectations with the reality of low revenues. From a macroeconomic perspective, the budget speech hit many of the right notes.
The transparency in presenting the fiscal deficit numbers, the commitment to bring off-budget transactions back on the books, the repayment to the debt-ridden Food Corporation of India (FCI), the low (but realistic) revenue assumptions, and a focus on increasing infrastructure, were all positive steps.
Yet, when it came to social welfare — the backbone of India’s pandemic response — the silence in the budget is revealing of the government’s discomfort with pushing a redistributive and welfare State.
There is no doubt that the pandemic has disproportionately impacted India’s poor and vulnerable and India’s ability to respond quickly to the pandemic rested to a large degree on our existing welfare architecture. The Union government relied on several welfare schemes to deliver benefits to citizens. The midday meal (MDM) scheme, which caters to 116 million school-going children, was expanded to include additional grains during the summer months. The presence of millions of frontline workers allowed us to quickly ensure that, even with anganwadi centres and schools closed, we could deliver rations directly to people’s homes. Food subsidy and the presence of a large public distribution network enabled us to expand supply to vulnerable households.
Similarly, the much-neglected Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS) was the first to be tapped to provide employment to millions of migrant workers returning to their native states. Through the year, the government’s fiscal stimulus packages highlighted the need to ensure adequate finances to these areas. Strangely though, most of these have seen either cuts or have resumed business as usual. Let’s look at them one by one.
First, nutrition. The release of the latest National Family Health Survey (NFHS-5) results shows that even prior to the pandemic, for many states, child malnutrition levels in 2019 were higher than the previous round in 2015-16. Add to that the fall in incomes and disruption of services due to the pandemic, and the numbers are likely to worsen. Estimates suggest that even a 9.5% decline in India’s GDP could lead to an additional 3.9 million children wasted or suffering from acute malnutrition.
Yet, nearly all nutrition programmes have seen budget cuts. For instance, revised estimates for the Integrated Child Development Services even during the pandemic year, i.e. 2020-21, were 16% lower than those budgeted. This is despite the fact that budget estimates themselves had failed to keep up either with projected demand by the ministry or even requirements to ensure universal coverage. An Accountability Initiative study has found that for supplementary nutrition alone, approved budgets accounted for less than half the requirements.
Similarly, while ₹13,400 crore was announced for the MDM scheme during the current year (due to additional allocations for providing meals in the summer months and increase in cooking costs), revised estimates are lower at ₹12,900 crore, suggesting under-spending or lower than planned coverage. Budget 2021 has in fact cut allocations further to ₹11,500 crore. Then there is the Poshan Abhiyaan — India’s flagship programme to improve nutritional outcomes in a mission-driven, time-bound manner (by 2022). Cumulatively, since the start of the programme till October 31, 2020, the Union government had released only 46% of its share. This year, even the budget has been cut by 27%. Nor was there much mention of Covid-19 warriors — the understaffed, overburdened and low-paid frontline workers. Instead, we now have a new mission called the Saksham Anganwadi and POSHAN 2.0, which combines previous schemes at an outlay of ₹20,105 crore. While details are still awaited, from a purely fiscal perspective, allocations are lower than the budget estimates for ICDS in 2020-21.
Second, health. Conventionally, health outlays have referred to allocations for the health ministry alone. This time though, the government presented the health budget in an inter-sectoral manner announcing a whopping 137% increase. But a look at the direct budget for the ministry shows only a 10% increase compared to last year’s budget estimate. More puzzling is the lack of priority given to the National Health Mission (NHM) — the flagship scheme to direct non-wage expenditures on primary health to states and an important mechanism to strengthen the health system. With a 4% increase in nominal terms for NHM, allocations won’t even keep up with rising inflation.
And, finally, on rural employment, consider MGNREGS. Despite revised allocations topping over ₹1 lakh crore, the highest-ever since the scheme’s launch, it is still unable to keep pace with increased demand. So much so that with two months left in the fiscal year, expenditure is already nearly ₹90,000 crore. With allocations falling this year to ₹73,000 crore, the scheme is going to continue to mount pending liabilities or payments due.
With livelihoods, poverty and social safety nets still in a precarious position, the neglect of the social sector will hamper India’s attempt to build a dynamic, resilient and equitable social welfare architecture.
Avani Kapur is a fellow, Centre for Policy Research and director of the Accountability Initiative
The views expressed are personal