Declining Prioritization of Social Sector in Union Budget

Budget Nirmala Sitaraman 1

An important aspect of fiscal policy relates to the extent to which the various welfare needs of people are being met. One important indicator of this are the allocations made for the social sector.

The social sector in the context of the union government of India is generally identified in terms of the following ministries—Agriculture and Farmers’ Welfare, Rural Development, Jal Shakti, Health and Family Welfare ( including Ayush), Education, Labor and Employment, Minority Affairs, Social Justice and Empowerment, Tribal Affairs, Housing and Urban Affairs, Women and Child Development, Youth Affairs and Sports, Environment and Climate Change, Consumer Affairs, Food  and Public Distribution ( including food subsidy) and, finally, Culture.

If we add the allocation of these ministries we get the allocation for the social sector, broadly speaking. On this basis, we can find out the percentage share of the total budget going to the social sector.

The Centre for Budget and Governance Accountability has carried out such an exercise in its recently published analysis of the union budget 2023-24 titled Walking the Tightrope. This analysis has found that there is overall a declining trend in the prioritization of the social sector.

During financial year 2019-20 (pre-COVID) the allocation for the social sector in the total budget was at a modest 23.5% (in terms of actual expenditure). Next year, due largely to the special COVID packages, this rose to 33.5%. Next year, this declined to 26.9%. For the year 2022-23, the actual expenditure is not yet available. However if we look at the Budget Estimate this declined to 23.5% and if we look at the Revised Estimate the decline was to 24%. In the budget allocation announced for 2023-24 ( Budget Estimate), the decline has gone further than at any other time in the last 4 years to 21.2%.

One way of summarizing this would be to say that from the high of 33.5% in terms of the actual expenditure recorded in 2020-21, the share of social sector in total union government budget has slumped to 21.2% in 2023-24 budget estimate. Another way to summarize would be to say that there is a clear declining trend during the recent times.

This is certainly a worrying trend as there is a clear need for giving higher priority to the social sector to make up for the acute distress, indebtedness and erosion of livelihoods suffered by people during COVID times. In fact if we just compare the 2023-24 allocations with the allocations during the pre-COVID year 2019-20, then also there is a significant decline in the share of the social sector in the union budget from 23.5% in 2019-20 to 21.2% in 2023-24.

As efforts to significantly increase the progressivity of fiscal policy by taxing the richest sections and billionaires to a much higher extent are in any case not being made, the budget size and overall expenditure can increase only to a limited extent. In such a situation, when even the prioritization of the social sector decreases, then there are reasons for serious worry relating to non-availability of funds for important tasks and challenges in the social sector. This trend should be checked, and instead there should be increasing prioritization of social sector in the budget.

Bharat Dogra is Honorary Convener, Campaign to Save Earth Now. His recent books include Protecting Earth for Children, A Day in 2071 and Man over Machine.

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