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Social Sector: Continuation of Past Priorities

Has budget 2008-09 been able to fulfil its commitments to the National Common Minimum Programme? This article analyses the allocations made to the social sector, investigating spending on education, health, employment generation and the Bharat Nirman programme.

BUDGET 2008-09

Social Sector: Continuation of persuasive of the misery of the large population in rural areas, a recent report of
Past Priorities the global hunger index of International Food Policy Research Institute, which placed
India at 94 among 118 countries for which
the index was calculated is surely a good
Himanshu indicator of the hunger and nutrition sit-

Has budget 2008-09 been able to fulfil its commitments to the National Common Minimum Programme? This article analyses the allocations made to the social sector, investigating spending on education, health, employment generation and the Bharat Nirman programme.

Himanshu ( is with the Centre for Economic Studies and Planning, Jawaharlal Nehru University, New Delhi.

Economic & Political Weekly

april 12, 2008

he 2008-09 budget was the last full-fledged budget of the United Progressive Alliance (UPA) government. It was also the last opportunity for the government to prove its commitments to the National Common Minimum Pro gramme (NCMP). It was expected that this “populist” budget will make some genuine effort to include the ‘aam admi’ in the growth process. Finance minister Chidambaram did try his best to live up to this expectation. Unfortunately, this was more in the rhetoric than any genuine commitment to including the poor and mar ginalised in the growth process. A detailed analysis of the social sector allocations of the budget is a clear indicator of the wide gap in the rhetoric of inclusive growth and the actual allocations of the government to do anything for the common man.

Apart from being judged on the parameters set by the NCMP, the minimalist agenda that formed the basis for this government’s claim of being a government for the aam admi, this budget also needs to be evaluated in the contemporary context of growing disparities in access to public resources by the excluded and marginalised sections of society. Despite the unprecedented growth rates seen in the last four years, the issues that matter for the aam admi remain the same, namely, rising unemployment, agrarian crisis, decelerating wages, worsening malnutrition and rising inequalities. In fact, some of these have now reached alarming proportions, primarily because the growth in national income of the last four years has done little to improve the well-being of the common man.

The human development index ranking of the country has worsened with India slipping in its ranking to 128 in 2007 from 126 in the previous year. Clearly, while the rich of the country were making money and being counted among the billionaires of the world, the aam admi was sliding down in his miseries. If the agrarian crisis and the accompanying suicides were less uation of the country. The ranking for child malnutrition was 117, with only Bangladesh as the country with worse malnutrition than India. These more or less mirror the disturbing trends seen in the last round of the National Family Health Survey (NFHS-3), which showed a slowdown in improvements in most of the indicators of nutrition with the worsening of the malnutrition situation in some indicators.

Some of these trends are a continuation of those seen since the beginning of the 1990s when the reforms started. The UPA government, which came to power riding on the frustrations and disenchantments of the poor with the neoliberal policies initiated since the beginning of economic reforms, has done little to reverse these trends. Rising inequalities in all dimensions, particularly in the sphere of human development are a clear manifestation of the economic priorities of the government. Needless to say, the outcomes achieved are directly linked to the outlays made on the social sectors. A detailed analysis of the outlays on the social sector of this budget does not suggest any genuine effort of even addressing these issues, let alone allocating resources to these. Caught in its own trap of the Fiscal Responsibility and Budget Management Act, the emphasis has been on window-dressing the budget with large doses of pro-poor rhetoric with very little increase in allocations. In some cases, there have been real declines in allocations with the projected inflation rate in the next fiscal year. This article analyses the allocations made in the 2008-09 budget for the social sector. In particular, we look at the spending in this budget on broad heads of education, health, Bharat Nirman and employment generation programmes.

Integrated Child Development Services

The Integrated Child Development Services (ICDS) is the only programme that provides health and nutrition facilities

BUDGET 2008-09

to pregnant and lactating mothers, infants and young children. Given the large scale malnutrition among children and the slow improvements in their nutritional levels indicated by NFHS-3, one would expect higher allocations to this programme. This was also expected in anticipation of the government’s commitment to fulfil the Supreme Court order of setting up 14 lakh anganwadis by December 31, 2008. However, the total allocation to the ICDS in this budget has increased from Rs 4,777 crore to Rs 5,665 crore (excluding north-eastern regions, for which the allocation increases from Rs 532 crore to Rs 634 crore). Of this increase of Rs 888 crore, Rs 783 crore are to be spent on the increased salaries of anganwadi workers and helpers – a welcome relief to these workers. That leaves an additional Rs 105 crore for this year to be allocated to all other components of the ICDS including supplementary nutrition compared to last year. However, as the finance minister also mentioned in his speech that only 9.32 lakh anganwadis out of the 10.52 lakh sanctioned anganwadis are operational. Needless to say, the present allocation is not only insufficient to cover the costs of existing anganwadis if one accounts for the projected inflation of 5-6 per cent for the next fiscal year, there is almost no allocation for even operationalising the shortfall of 1.2 lakh anganwadis, which are sanctioned but not yet operationalised. This also implies that there is no allocation for new anganwadis, which is not only a gross violation of Supreme Court orders but also implies a real reduction in money allocated for each anganwadi in real terms.


One major area which required a big push was that of education. Despite the promise of spending 6 per cent of GDP on education, the spending on education is not even 3 per cent of GDP for the centre and states together. Inequitable access to education has been recognised as a major bottleneck for inclusive growth. This has been amply emphasised not only in the Eleventh Plan documents but also in several recommendations of the National Knowledge Commission. Allocation on education in this budget has been increased by 20 per cent compared to last year.

As stated by the finance minister, the focus of this budget is on enhancing allocation to secondary education for which allocations have increased substantially. The second important announcement is the extension of the mid-day meal programme to upper primary classes. Both of these are welcome steps in ensuring equity in educational achievements. However, there is a lack of corresponding allocations for these same objectives. The increase in the mid-day meal scheme is around Rs 1,200 crore with an additional 2.5 crore children being brought in the ambit of the mid-day meal programme. This is grossly inadequate and implies a decline in nominal spending per child from Rs 527 per child per year to Rs 518 per child per year. This is despite the fact that prices of food, which form the major component of spending on the midday meal scheme have increased on an average by 6 per cent during the last year and are expected to grow at around same rate this year as well. In real terms, this decline is even more worrisome.

The disturbing part of the overall trend in spending on education is the tendency of the central government to abdicate its responsibility of spending on education. The premature shelving of the right to education bill is a clear example of this. But even for existing programmes, there is a minor decline in allocations to Sarva Siksha Abhiyan (SSA), the flagship programme for universalising elementary education. A part of this reduction is due to the changed spending pattern of the SSA, which shifts the burden of spending on the SSA to states gradually over the Eleventh Plan period. This will further raise the inequity in elementary education with states that have poor financial resources falling back on their commitments. But even for the central government budgetary responsibilities, a large part is already being covered by the education cess, which is


Research Training Programme 2008-2009


In our advertisement for the Research Training Programme (RTP) 2008-2009, published in Economic and Political Weekly dated March 22-April 4, 2008 we had inadvertently mentioned that the course is meant for research studies in India and the countries of South. It should read as, ‘meant for research students in India and the countries of the South’. All other details of the announcement remain the same.

Please note that the content of the course will be slightly revised. Applicants are requested to check the website at the end of April for the updated course.

april 12, 2008

BUDGET 2008-09

now providing more resources with the additional cess of 1 per cent for secondary education over and above the 2 per cent cess for elementary education. For the 2008-09 budget, education cess accounts for almost 60 per cent of the total outlay on education. With increasing tax-buoyancy and improved tax-GDP ratio, one would have expected the central government to match its rhetoric with its allocations. This does appear to be the case as far as secondary education is concerned with allocations on secondary education increasing by Rs 2,675 crore from Rs 2,465 crore in the last budget to Rs 5,140 crore in this budget. This is also accompanied by announcements to establish 6,000 model schools.

The increase in secondary education of Rs 2,675 crore is largely due to the allocation of Rs 1,967 crore, that is almost three-fourths of the increased allocation for secondary education on the Scheme for Universalisation of Access to and Improvement of Quality of Education at Secondary Stage, also known as Rashtriya Madhyamik Shiksha Abhiyan. This increase appears substantial compared to the revised estimates of 2007-08 because of severe underspending on this programme where only Rs 1.15 crore were spent out of Rs 1,175 crore allocated last year. Another large allocation to the same programme in this budget surely deserves some explanation from the finance ministry.

Similar underspending is observed in the case of higher education allocations. Of the total plan allocation of Rs 6,480.5 crore made in the 2007-08 budget, the actual spending was Rs 3,262.35 crore. That is, only 50 per cent of the total bud getary allocation made last year was actually spent. As against the total allocation of Rs 80 crore for setting up three new Indian Institutes of Technology, only Rs 1 lakh was spent. As against the allocation of Rs 45 crore for upgradation/setting up of new polytechnics, only Rs 1 lakh was spent. Similarly, as against the total allocation of Rs 451.8 crore to the National Mission in Education through Information and Communications Technology, nothing was spent. However, a similar amount has been allocated again this year to the same programme. Part of the increased allocation on higher education last year was the provision for meeting

Economic & Political Weekly

april 12, 2008

the requirements of enhanced student strength following the oversight committee recommendations (under the chairmanship of Veerappa Moily, for extending the benefit of reservation to other backward class students in central universities and other institutes of higher education under the central government). However, this could not be spent due to the stay order of Supreme Court. Similar provisions have been made this year in the budget for higher education. Clearly, the emphasis is more on window-dressing the budget to show higher allocations than on making a genuine effort to spend what has been allocated.


Another area where the UPA government’s allocations fall far short of the promises made in the NCMP is the allocation for health. Despite a 15 per cent increase in budget allocation to Rs 16,534 crore in 2008-09, the total spending of states and the centre together is less than 1 per cent of GDP (0.99 per cent), far less than the promised 2-3 per cent of GDP. A large part of the expenditure on health is on the National Rural Health Mission (NRHM) at Rs 12,050 crore, an increase of 11.4 per cent over the last year. This is far less than the government’s promise of increasing the budget allocation to the NRHM by 30 per cent in every budget. Moreover, of the total increase, only Rs 389 crore have been provided for rural sub-centres, which is grossly inadequate by its own norms and standards as laid down in the NRHM for universalisation of health services in rural areas. However, the move to exempt certain life-saving drugs from customs duty is a welcome relief.

The centre’s tendency to abdicate its responsibility in providing healthcare in favour of the private sector is also evident from its move to encourage private hospitals in tier two and tier three towns by giving them tax exemptions. Instead of subsidising private healthcare practices in rural areas, the government could have invested in public health facilities in these areas. On the contrary, there is a reduction in allocation for the premier All India Institute of Medical Sciences (AIIMS), the role model for public health institutions as well as many other hospitals. Overall, there is an increase of Rs 191 crore on medical institutions under the central government, which also includes an additional Rs 400 crore for setting up new AIIMS type institutions. Adjusting for the expenditure on new AIIMS institutions, there is an overall decline of Rs 209 crore in allocations for existing medical institutions. The centre’s commitment to providing universal healthcare is also obvious from its attempts to shift responsibilities and expenditure to state governments, which spend almost 85 per cent of total public health expenditure. This is evident from the meagre Rs 205 crore allocated as the centre’s share for the Rashtriya Swasthya Bima Yojana, which will provide insurance cover of Rs 30,000 to unorganised workers from below poverty line (BPL) families.

Public Distribution System

A major concern for the government, by its own admission, has been inflation and in particular, food price inflation. While the rhetoric has kept pace with the increasing inflation rate, there has been no effort to take any meaningful and concrete step towards mitigating the burden of food price inflation on the poor, considering that food price inflation hurts the poor the most with more than 60 per cent of their consumption expenditure being spent on food. Food price inflation has continued its increasing trend despite the government’s assurances to the contrary. No amount of blaming the international prices is sufficient to provide any excuse for the government to not increase spending on food subsidy. This is even more imperative in view of the increased net of the mid-day meal scheme that serves 2.5 crore children. In response to all this, the increase in food subsidy has only been Rs 1,121 crore, from Rs 31,546 crore to Rs 32,667 crore; a decline in real terms especially in a year where food inflation is expected to keep its upward trend.

Moreover, despite criticism of the public distribution system (PDS) for poor delivery and leakages, a meagre Rs 48 crore has been allocated towards strengthening the PDS. Despite repeated demands by various chief ministers to correct the anomalies in the BPL survey, the finance minister has made ridiculous proposals such as smart cards. Moreover, recent moves to exclude the above poverty line population

BUDGET 2008-09

from the food safety net as suggested in the Economic Survey will further aggravate the problem in rural areas where there are large errors of inclusion and exclusion in identifying the BPL population. As the recent reports of the National Sample Survey on consumption expenditure show, roughly 50 per cent of the poor (by Planning Commission methodology) do not possess BPL cards. Proposing smart cards as the answer for effective targeting is simply turning a blind eye to the whole issue of BPL identification, especially its anchoring with official poverty estimates.

Rural Employment Programmes

One area where the government can take credit is the implementation of the National Rural Employment Guarantee Act (NREGA). Starting from 200 districts in 2006 and 330 districts in 2007, it is planned that this act be implemented in all rural districts of the country. The extension of the act to all rural districts is a welcome step in achieving the objectives of the NREGA. At the same time, it also reflects a positive response to the act, where it is presently being implemented despite the adverse reports on implementation. However, as many studies have shown, the benefits from the NREGA have surely outweighed the negatives. Even though the programme has been extended to cover 250 more districts, the increase in allocation on total rural employment programmes is only Rs 180 crore, that is less than a crore per district. Although budget allocation to the NREGA itself has increased from Rs 10,800 crore (revised estimates 2007-08) to Rs 14,400 crore in 2008-09, the actual increase in rural employment programmes is only Rs 180 crore because of the merging of the Sampoorna Gramin Rozgar Yojana (SGRY) with the NREGA. Spen ding on the SGRY in the last fiscal was Rs 3,420 crore. Taking that into account, the total increase in allocation on rural employment programmes is from Rs 14,220 in the last fiscal to Rs 14,400 crore in this budget.

Such emphasis on populism without any financial allocation will only subvert the gains achieved by the NREGA despite all odds. The percentage of expenditure on rural employment of total budget expenditure has declined from 2.56 per cent before the introduction of the NREGA (in 2005-06) to 1.92 per cent in the present budget. No wonder, the government is keen to extend the NREGA to all rural districts since it actually means a reduction in real terms on money spent on rural employment programmes.

Bharat Nirman

Realising the need to integrate the rural economy in the growth fold, Bharat Nirman was projected as the most ambitious programme that could revive the rural economy. The programme, focusing on six core areas of irrigation as well as rural roads, rural housing, rural water supply, rural electrification and rural connectivity, was to give a boost to rural areas in a time bound manner to be completed by 2009. Till now, less than 60 per cent of the targets have been met in four of the components (irrigation, rural housing, rural water supply and rural roads) with only rural electrification and rural connectivity reaching the targets. This year, allocation to Bharat Nirman programmes is Rs 31,280 crore, which is roughly 27 per cent higher than the allocation made last year. Although budget allocations have increased for all the components of the programme, the real increase is mainly for rural housing, partly because of the increase in unit cost of Indira Awas Yojana houses from Rs 25,000 to 35,000 per unit. The other two components, which have received enhanced allocations from this budget are schemes for rural roads and rural water supply. However, the increase in rural sanitation is only Rs 126 crore, which is clearly insufficient to achieve the targets set out in Bharat Nirman.


Overall, this budget is a continuation of the economic and social priorities of the government, which is clearly manifested in the approach of the budgets of the central government of shifting the responsibility of financing social sector expenditures to states and involving private participation in it, both of which go against the larger objective of inclusive growth as mentioned repeatedly by the Planning Commission and the prime minister. Increasing regional disparities as well as disparities between various population groups on various human development indicators are a clear manifestation of the negative outcome of these policies. Moreover, budget statements only reflect the intention to spend, what matters ultimately is how well the money is spent. A large mismatch between allocations and spending as seen in the case of secondary and higher education shows the wide gap between empty rhetoric and actual implementation. Above all, it is a clear evidence of the lack of political will on the part of the government to spend on education and health, in particular and the social sector, in general.

Unfortunately, some of the fine print on social sector allocations as glossed over by the mainstream media in the euphoria of the debt waiver announced as a part of the budget speech. Surely, the debt waiver is a big relief to the distressed farmer community even though it took thousands of farmers’ lives and a string of defeats in the electoral arena for the Congress to wake the finance minister up to the conditions of farmers. How much of this will actually benefit the farmers is questionable with a large section of indebted farmers out of the net of the institutional network. Secondly, the absurd criterion of using two hectare landholding as the cut-off for deciding beneficiaries does not benefit a large majority of the farmers in the arid regions of Vidarbha and Telangana, precisely the areas where most of the suicides are taking place. But more than that, this will remain a palliative rather than a cure for the suffering farming community.

The finance minister has yet again proved his oratory skills along with statistical jugglery to fool the common man into believing that the government is committed to improving the well-being of the aam admi. Unfortunately, the aam admi has become smarter over the years and has realised the value of his/her votes. The behaviour of the Indian voter has not only puzzled mainstream media psephologists but has also confounded votaries of neoliberal policies. Perhaps, the lesson learnt by the previous National Democratic Alliance government was not clearly understood by the UPA government. However, the blame lies entirely with them and not with the voter. If anything, the voter has been consistently sending out the message of rejecting neoliberal policies ever since the reforms were initiated. Those who fail to read the mind of the Indian voter will do so at their own cost.

april 12, 2008

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