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Social Sector Spending in India & Its Impact!

This year as well, the spotlight is likely to be on the existing schemes in agriculture, education and infrastructure. Though, the government is unlikely to come up with any other big ticket announcement for the sectors expect the National Food Security Act 2011 in the approaching fiscal, an early rollout of which may exert further pressure on the fiscal deficit.

Though, social sector spending will continue to be the government’s top priority with a major portion of allocation expected to be made towards existing schemes like the Mahatma Gandhi Rural Employment Guarantee Scheme (MGREGS), Jawaharlal Nehru National Urban Renewal Mission (JNNURM), Employment Guarantee Scheme, Bharat Nirman project, and Sarva Shiksha Abhiyan. Apart from that the government is currently running over a dozen of other social sector schemes to help strengthen conditions of rural and urban poor. Some allocation is expected to be made in the above mentioned schemes.

On the other hand, the finance ministry is reportedly believed to have approved around 16% increase in the plan spend - Gross Budgetary Support (GBS) - for the next financial year on social sector programmes like employment guarantee and Bharat Nirman scheme. But earlier the Planning Commission had asked for 18% in the plan expenditure or GBS to raise the spending to Rs 5.21 lakh crore in 2012-13, but a larger than anticipated fiscal deficit this year and an overall slowing Indian economy has left government’s hands tied and has forced it to take fiscal consolidation measures as it moves into the new financial year a month from now.  Therefore, the government is expected to channelize its resources towards improving the existing schemes and keeping space for the pledged ones.

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