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Government Budgets

For the social sector, it is old wine in an old bottle 

Explained | Indian Society | Mains Paper 1: Poverty & Development Issues

Why in the News?

Budget 2024 maintains the same approach as previous years regarding social sector allocations.

Decreasing allocations in the Budget for social sector schemes

  • Education Sector: The allocations for school education increased by ₹5,000 crore and for higher education by ₹3,000 crore. The increased recoveries from fees and self-financing schemes suggest a shift towards cost recovery in educational institutions.
  • Health Sector: The allocation for the Department of Health and Family Welfare rose by only ₹1,500 crore.
    • Food Subsidy: There is a limited increase in food subsidies despite rising economic costs and the need to update coverage based on the latest population figures.
  • Shift in Approach: The government giving greater emphasis on cost-effectiveness and privatization in education and health, shifting focus towards contributory schemes like the Atal Pension Yojana.

Social Sector Schemes in Budget 2024-25

  • Social Protection Schemes:
      • POSHAN Scheme: There is a slight increase from ₹11,600 crore to ₹12,467 crore, but still less than the actual expenditure in 2022-23.
      • Saksham Anganwadi Scheme: The allocation increased to ₹21,200 crore from ₹20,554 crore, but no increase in salaries for Anganwadi workers or honorarium for mid-day meal cooks.
  • Maternity and Social Assistance:
      • Samarthya Scheme: The budget reduced to ₹2,517 crore from ₹2,582 crore. The PMMVY scheme’s maternity benefits have remained unchanged since 2017.
      • NSAP: Allocation for social security pensions remains unchanged at ₹9,652 crore, reducing real coverage and value.

Schemes for the Unemployed

      • The ‘Prime Minister’s Package for Employment and Skilling’ includes government-sponsored internships, formalization of jobs through incentives for EPFO enrolments, and skill-development programmes
      • An allocation of ₹2 lakh crore over five years for the employment package, linked to industry response

Schemes for Street Vendors

    • The PM SVANidhi Scheme (PM Street Vendor’s AtmaNirbhar Nidhi) aims to benefit over 50 Lakh street vendors across India
    • All lending institutions, including NBFCs, are participating in the scheme to provide affordable loans to street vendors

Employment Challenges

  • Stagnant Wages and Dampened Demand: The Indian economy faces significant challenges with stagnant wages, which affect consumer demand. This stagnation can hinder overall economic growth and employment generation.
  • Reliance on the Private Sector for Job Creation: The government is increasingly looking to the private sector to address employment challenges.
    • Initiatives like the ‘Prime Minister’s Package for Employment and Skilling’ aim to incentivize private sector job creation through government-sponsored internships and skill development programs.
  • Limited Budgetary Allocations: The budgetary allocations for employment-related schemes are limited, with the entire employment package amounting to ₹2 lakh crore over five years.
  • Focus on Supply-Side Solutions: The current approach emphasizes supply-side measures to incentivize the private sector rather than addressing the underlying demand-side issues, such as low consumer spending and economic uncertainty.

Way forward: 

  • Enhance Social Sector Investments: The government should significantly increase budget allocations for critical social sector schemes, particularly in education, health, and social protection.
  • Comprehensive Employment Strategy: Need to develop a holistic approach to employment that addresses both supply and demand-side issues.