Union Budget 2017: Social sector funding up, but not up to scratch

The Centre will provide Rs 21,46,735 crore, about 13% higher than last year, for development to ministries and states.

Updated on: Feb 2, 2017, 01:42:57 IST

Hindustan Times, New Delhi | By Chetan Chauhan

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While the overall funding has increased, the social sector continues to get lesser amount as proportion of the GDP in Arun Jaitley’s fourth budget.

A farmer checks on his traditional method of irrigation at his paddy field in Roja Mayong village, east of Gauhati, India, Wednesday, Feb 1. (AP Photo)

The Centre will provide Rs 21,46,735 crore, about 13% higher than last year, for development to ministries and
states.

The amount would be 12.7% of the GDP, as against 13.4% of GDP in the revised estimates of 2016-17, indicating that the pro-people schemes have not got enough while tax rebates for industry have increased.

Finance minister Arun Jaitley’s fourth Budget has introduced two key changes from the past – it is the first budget without any linkage to a five-year plan; and marks the end of plan-non plan distinction in expenditure.

Both the moves have long-term implications on how public money is spent.

The government has also introduced an outcome budget for each ministry, paving the way for a new monitoring mechanism to be implemented by National Institution for Transforming India (Niti) Aayog.

The government’s fiscal policy statement said the plan-non plan distinction resulted in a skewed pattern of expenditure allocation, resulting in an excessive focus on plan expenditure.

“This also caused substantial distortion in the expenditure profile, whereby important manpower related or maintenance needs of assets, particularly in the areas of public delivery of services were neglected,” statement said.

The change, government believes, will result in “efficient deployment” of the public resources to develop a “performance-oriented” approach.

As part of that, the government has now “linked the outlays with the anticipated medium term outcomes”
with sunset clause for all schemes.

“This could help, provided there is an effective monitoring mechanism and incentives to meet the agreed outcomes,” said former former Chief Statistician of India Pranob Sen.

The outcome linked outlays was also introduced by P Chidambaram when he was finance minister in the UPA government, but measuring the real impact was a challenge. The NDA government plans to overcome that through an Aadhaar-based system.

The new changes on expenditure under different heads --- Finance Commission, transfer for schemes and others --- to central ministries and states starts with end of the 12th five year plan on March 31, 2017.

Prime Minister Modi’s promise of higher allocation to states continues in 2017 with increased devolution of share of taxes from 32% to 42%, as recommended by 14th Finance Commission.

The states got over ₹10,85,075 crore with around ₹6,74,565 crore as share of Central taxes.

For the first time in the NDA government, the money provided under the state plans and for the pruned Centrally Sponsored Schemes also increased.

Read| Budget 2017: What finance minister Arun Jaitley said versus what the numbers show

ABOUT THE AUTHOR
Chetan Chauhan
Chetan Chauhan is the National Affairs Editor looking into all aspects of news and features from across India. A Chevening scholar with over three decades of experience in reporting and news management, Chetan has extensively covered all important aspects of the social sector, political economy, environment and climate change nationally and internationally. He did a journalism course at the Reuters Institute of Journalism in Oxford and Digital Media training at Nanyang Technological University in Singapore. He started as a reporter with The Statesman in 1996 and joined the Hindustan Times in 2000 in the metro bureau covering environment, crime and Delhi politics. He covered hot local news, from the Jessica Lal murder case to the rebellion of Delhi Congress MLAs against then Chief Minister Sheila Dikshit, to the replacement of toxic vehicle fuel with cleaner compressed natural gas (CNG) in the national capital. Some of his stories on air pollution became part of the Supreme Court’s landmark MC Mehta versus Government of India case in the National Capital Region (NCR), forcing the government to take corrective measures. As part of the national political bureau since 2004, he covered important central sectors such as environment, education, social justice, labour, rural development, water resources, renewable energy, agriculture, broadcasting and the Planning Commission for more than a decade producing several exclusive and investigative breaking stories. His specialisation is the environment, having covered at least a dozen United Nations global conferences on climate change, biodiversity and wildlife including climate summits in Paris, Copenhagen and Bali. He also covered India’s two five-year plans ---11th and 12th and reported on drafting and execution of right based laws such as Right to Education, Right to Information and rural job guarantee law, MG-NREGA, now being introduced in new format as VG-RAM-G Act. He has in-depth knowledge of social sector issues. He was one of the first to report on tigers vanishing from Sariska and Panna wildlife reserves in 2004 and 2008, respectively, leading to the setting up of the National Tiger Conservation Authority (NTCA) and the introduction of stringent penal provisions for poaching. He has written extensively on the rising human-animal conflict in India and the degradation of India’s biodiversity hotspots because of mining and other activities. Since 2004, Chetan has covered Parliament comprehensively and participated in training on the nuanced coverage of Parliament proceedings. He has travelled extensively across India to cover national and provincial elections since 1998, especially in the Hindi heartland states, considered India’s road to power. He writes a regular column for Hindustan Times, Ecostani, on important national politics, economy, Himalayan ecology and environmental issues. His other responsibilities include providing inputs for edits and edit page articles for the publication, apart from managing news flow from across India.Read More

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