This article is the third in a series on the state of the Indian economy co-curated by the Centre for Financial Accountability, New Delhi and The Wire. Read the first article here and the second here.
While announcing the government’s disinvestment and monetisation of public assets plan in 2021, Prime Minister Narendra Modi famously said that ‘the government has no business to be in business‘. Instead, he contended, the primary role of the government was to ensure the welfare and development of its citizens. However, as we approach a decade under the BJP government’s rule, a stark disparity emerges between rhetoric and reality. Not only has the government assisted the rise of crony capitalists such as Adani – who has swiftly ascended to become one of the richest men in the world – but during this period there has been a discernible dismantling of the welfare and social security framework that provides socio-economic protection to crores of citizens.
Declining allocations on social welfare spending, and neglect of existing schemes and programmes, underscore how welfare has come to be constrained in the past ten years. These developments – along with the erosion of other democratic rights – raise profound concerns regarding the future of welfare rights in this country, which as pointed out by the prime minister himself, is the fundamental duty of the state.
The right to life with dignity
It is, in fact, the constitutional obligation and duty of the Indian State, under the directive principles of state policy and Article 21, to ensure and promote the right to a dignified life for all its citizens. The notion of dignity underscores the most important component of the right to life, therefore understanding this concept becomes critical to facilitate a holistic approach to development and welfare. The right to life with dignity should then be understood as a composite of a bundle of rights, that collectively work to ensure the realisation of this overarching objective. Within this framework, fundamental rights and duties such as the right to work, the right to food and nutrition, the right to education, and the right to social security become integral components towards fulfilling the broader aspiration of a meaningful existence. Recognising this also underscores the core essence of citizenship. As Niraja Jayal articulates it, “Full inclusion – civic, political, social, economic and cultural – is the condition of full citizenship.”
However, within the context of welfare today, this has been reduced to the struggle for basic survival. Political gimmicks like slashing the price of LPG every election cycle overshadow the lack of substantive and transformative interventions that can genuinely improve welfare. Through its policies and actions, this government has obfuscated the fundamental understanding of the state’s role in welfare that came to be realised in the decade prior.
Nine-year trend on social security expenditure and policy failures
Union Budgets serve as a window into the priorities of the government. Since FY 2014-15, there has been a 150.88% increase in the Union Budget outlay. However, during this period, the share of budget allocations dedicated to social security schemes, with the exception of COVID-19, in relation to the overall budget has seen a downward trend, with many schemes in the present budget receiving a smaller share of allocation than before the pandemic. Budgetary allocations over the last nine years for programmes such as the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA), the National Social Assistance Programme (NSAP), programmes under the National Food Security Act (NFSA), and the National Health Mission (NHM) confirm this trend. Additionally, in many instances, budget allocations for social security schemes are less than the revised estimates from the previous year – signalling the gap between the financial requirement necessary to sustain these schemes and the actual allocation made by the government. Both the policy choices and fiscal actions of the government have significantly eroded social welfare.
The allocation made to MGNREGA, as a share of the overall budget, has declined from 1.85% in FY 2014-15 to 1.33% in FY 2023-24. This allocation is the lowest that has ever been made to the MGNREGA programme, which is an economic safety net for millions of poor. The budget estimates at Rs 60,000 crore in FY 2023-24 see a drastic 33% reduction from the revised estimates of Rs 89,400 crore in FY 2022-23. The World Bank recommends that for the programme to run effectively, the allocation for MGNREGA should be at least 1.6% of the total GDP, this figure currently stands at an appalling 0.198%. Additionally, a large share of the budget is used to clear pending liabilities of backlog wages to be paid to the states. Policy measures like the adoption of Aadhaar-based payment systems (ABPS) have resulted in digital ostracism of 57% workers. The NREGA mobile monitoring system serves as another example of the various exclusionary tactics used by the government to deter the programme, exposing a substantial portion of the rural workforce to financial vulnerability.
The budgetary allocation for NSAP has remained almost stagnant over the past nine years and declined in real terms. The percentage share of expenditure allocated in the overall budget has decreased from 0.58% in FY 2014-2015 to a mere 0.21% in the present budget. Even more concerning is that the entitlements received under the NSAP programme have remained unchanged since 2007 even as cost of living has surged ahead. A meagre sum of Rs 200-300 per month for the various pensions covered under the programme is nowhere adequate for an individual to survive. With the cost of living increasing, the failure to index pension amounts to inflation leaves around 3 crore individuals under the centrally sponsored scheme vulnerable.
(See here for corresponding numbers and sources)
Worrying trends can also be observed under NFSA, which, through its various programmes, provides food security and nutrition to economically vulnerable households, women and children. With the exception of COVID-19, the percentage share of the budget allocated towards food subsidies has decreased from 6.4% in FY 2014-15 to 4.38% in FY 2023-24. Global Hunger Index rankings from 2022 show an upward trend in food insecurity with India ranking 107 out of 127 countries. Despite persisting food insecurity, the current budget has slashed food subsidies by over Rs 89,000 crore, even though the revised estimates for FY 2022-23 stood at Rs 2,87,642 crore. This reduction is primarily due to the discontinuation of the Pradhan Mantri Garib Kalyan Anna Yojana (PMGKAY) in January 2023, which has resulted in a 50% reduction in ration entitlements for 81 crore people.
Other schemes under the NFSA, the Mid-Day-Meal Scheme, renamed PM Poshan in 2021, have seen a reduction in their share of allocation within the overall budget, decreasing from 0.73% of the total budget to 0.25% in FY 2023-24. The Integrated Child Development Services (ICDS), rebranded as Anganwadi Services in 2018 and merged into Saksham Anganwadi & POSHAN 2.0 in FY 2021-22, have seen an exponential decline in the budget allocated for these schemes. In FY 2014-15 (BE), the budget allocated exclusively to ICDS stood at Rs 18,691 crore compared to Rs 20,544 crore allocated for three schemes under Saksham Anganwadi & POSHAN 2.0 in the present budget. The share in the total budget for the aggregate schemes under Saksham Anganwadi & POSHAN 2.0 (ICDS/Anganwadi Services, National Nutrition Mission, National Creche Scheme and Scheme for Adolescent Girls/SABLA) has decreased from 1.08% of the total budget in FY 2014-15 to 0.45% in FY 2023-24. In the context of maternity entitlements, there has been a notable decrease in both the dedicated budget share and the overall allocation in the past four years, declining from 0.08% to 0.5% of the total budget. In FY 2017-18 (BE) and FY 2019-20 (BE), an allocation of Rs 2,700 crore and Rs 2,500 crore, respectively, was earmarked specifically for the Pradhan Mantri Matru Vandana Yojana. However, starting from FY 2021-22, when it was merged into the Samarthya programme alongside various other schemes, the total allocation for all initiatives under this umbrella amounted to only Rs 2,582 crore.
(See here for corresponding numbers and sources)
The health ministry’s total budget increased from Rs 89,251 crore in FY 2022-23 to Rs 92,803 in FY 2023-24. While the nominal amount increased by Rs 3,552 crore only but when adjusted to inflation, there is a 2% decline in real terms, and the share of the health budget in relation to the total budget declined from 2.46% in FY 2019-20 (Actuals) to of 2.08% in FY 2023-24 (BE). As a share of the GDP, the health budget declined from 0.35% to 0.31% – moving further away from the 2017 National Health Policy goal that seeks to raise the nation’s healthcare budget to 2.5% of the GDP. The National Health Mission, encompassing two pivotal programmes, namely the National Rural Health Mission and the National Urban Health Mission, stands as a critical scheme to provide accessible and cost-effective healthcare services.
Despite the COVID-19 pandemic, allocations to the NHM have experienced a consistent decline as a proportion of the total Union Budget, receding from 1.2% in FY 2014-15 to just 0.81% in FY 2023-24. While the out-of-pocket expenditure (OOPE) has declined from 62.6% in 2014-15 to 47.1% in 2019-20, the cost of health spending remains a significant burden for households, especially when private health services constitute nearly 70% of the health sector. Inadequate public health infrastructure and low insurance coverage are also growing concerns. Despite experiencing a substantial increase in allocations for sanitation and hygiene schemes over the past nine years, India still holds a relatively low position in the 2022 Environmental Performance Index, ranking 141 out of 180 countries on the drinking water scale and 138 out of 180 on the sanitation scale. Budget allocations for the Jal Jeevan Mission have increased from Rs 10,890 crore in FY 2014-15 (BE) to Rs 70,000 in the present budget, similarly, the budget for the Swachh Bharat Mission has also seen a notable increase. The government’s fixation on achieving one hundred per cent targets on paper while failing to deliver tangible results in practice is concerning.
Since FY 2014-15, the share of allocations made to the Department School Education and Literacy and the Department of Higher Education has consistently declined as a share of the overall budget since FY 2014-15, decreasing from 4.6 % to 2.5% in FY 2023-24. The current education budget is only 2.9% of the GDP, which is nowhere close to the 6% target stipulated by the National Policy on Education 1986. In the aftermath of the COVID-19 pandemic, India witnessed a concerning trend in its education sector. The Unified District Information System for Education (UDISE+) report revealed a decline in the number of schools from 1,509,136 in 2020-21 to 1,489,115 in 2021-22, with 20,021 schools closing. This included 4,909 private schools. Simultaneously, the dropout rate among students in classes 1 to 8 nearly doubled compared to the previous year, indicating the far-reaching consequences of the pandemic on education, including both school closures and increased student dropouts. The proliferation of private schools following the New Education Policy 2020 has heightened concerns about unequal access to education and shrinking the responsibility of the government. ASER 2019 data reveals only 39% of girls and 47% of boys for 6 to 8 years have access to private schools, challenging the policy’s aim of improving education through private sector involvement.
Juxtaposing the Central Government’s spending of over Rs 4,000 crore on the beautification of New Delhi for the G20 Summit, with the outstanding due of Rs 6,366 crore in NREGA wages, alongside the displacement of lakhs of citizens, constructs a clear narrative of increasing social exclusion and economic marginalisation, that no amount of publicity or scaffolding can hide. The decreasing trajectory in social welfare expenditure, along with the government’s inclination towards an ‘ease of doing business’ approach, as evident in the most recent monsoon session where a plethora of pro-business and pro-corporate bills were passed, indicates the government’s long-term intent to reshape the character of the Indian State, where business, not people, are at the centre of the discourse.
India is currently at a juncture where challenges extend beyond welfare rights to include a growing threat to civil liberties. That the government continues to expand its discretionary powers, suppresses information through internet shutdowns and reduces the space for democratic protest to 500 metres, are, amidst others, indicators of a rapidly shrinking democracy. The last decade has stood witness to the fact that erosion of democracy is also the erosion of accountability, subverting accountability not only within the sphere of welfare but also the government’s accountability to the people. These changing circumstances force us to reckon with the potential future of both – welfare and democracy – and its implications on the broader questions of democratic governance, citizenship and the fundamental right of all citizens to live with dignity.
Asmi Sharma is with Jan Sarokar and Nancy Pathak is with the national finance team at Centre for Financial Accountability.