Model Answer
0 min readIntroduction
Post-1991 economic reforms in India ushered in a new era of liberalization and globalization, impacting the nation’s fiscal policy and public expenditure. Social services, encompassing sectors like health, education, rural development, and social welfare, are crucial for human capital formation and equitable growth. Inclusive growth, defined as growth that benefits all sections of society, particularly the marginalized, necessitates substantial and targeted public investment in these areas. However, the pattern of public expenditure on social services in the post-reforms period has been a subject of debate, with concerns raised about its adequacy and effectiveness in achieving the objective of inclusive growth. This answer will examine these trends and assess their consonance with inclusive development.
Pattern and Trend of Public Expenditure
Public expenditure on social services in India has witnessed a fluctuating trend post-1991. Initially, fiscal consolidation measures led to a relative decline in social sector spending as a percentage of GDP. However, with increased awareness of the importance of human development and pressure from civil society, there has been a gradual increase in recent decades.
Sectoral Analysis
- Health: Expenditure on health as a percentage of GDP has remained consistently low, hovering around 1-1.5% (as of 2022-23 budget estimates). While the National Health Policy 2017 aimed to increase it to 2.5% by 2025, progress has been slow. The focus has shifted towards strengthening primary healthcare through initiatives like the National Rural Health Mission (NRHM) launched in 2005 and the Ayushman Bharat scheme (2018).
- Education: Education has seen a relatively higher share of public expenditure, reaching around 3-4% of GDP. The Right to Education Act (RTE) 2009 mandated free and compulsory education for children aged 6-14, leading to increased enrollment rates. However, concerns remain regarding the quality of education, infrastructure gaps, and teacher shortages.
- Rural Development: Schemes like the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) 2005 have been significant drivers of rural employment and income. Expenditure on rural development has fluctuated depending on economic conditions and political priorities.
- Social Welfare: Expenditure on social welfare programs, including pensions, food subsidies, and housing schemes, has increased in recent years, particularly with the expansion of the Public Distribution System (PDS) and the National Social Assistance Programme (NSAP).
Trends in Expenditure Allocation
Several trends are discernible in the allocation of public expenditure on social services:
- Shift towards Centrally Sponsored Schemes (CSS): There has been a growing reliance on CSS, which are funded by the central government but implemented by state governments. This has led to increased central control over social sector spending.
- Increased Allocation to Specific Programs: A significant portion of social sector expenditure is now channeled through specific flagship programs like Ayushman Bharat, MGNREGA, and the National Food Security Act.
- State-Level Variations: There are significant variations in social sector spending across states, with some states prioritizing social development more than others.
Consonance with Inclusive Growth
The extent to which public expenditure on social services has been in consonance with achieving inclusive growth is mixed.
Positive Impacts
- Improved Access to Education: Increased enrollment rates, particularly at the primary level, have contributed to improved literacy levels and human capital formation.
- Enhanced Healthcare Access: Initiatives like NRHM and Ayushman Bharat have expanded access to healthcare services, particularly for the poor and vulnerable.
- Reduced Poverty and Inequality: MGNREGA has provided a safety net for rural households and contributed to poverty reduction.
Shortcomings and Challenges
- Inadequate Expenditure Levels: Despite increases, public expenditure on social services remains inadequate to meet the needs of a large and diverse population.
- Inefficiencies in Implementation: Leakages, corruption, and bureaucratic delays often hinder the effective implementation of social sector programs.
- Quality Concerns: The quality of education and healthcare services remains a major concern, particularly in rural areas.
- Uneven Distribution: The benefits of social sector spending are not always equitably distributed, with marginalized groups often being left behind.
| Sector | Expenditure as % of GDP (approx. 2022-23) | Impact on Inclusive Growth |
|---|---|---|
| Health | 1.3% | Moderate - Improved access, but quality and affordability remain challenges. |
| Education | 3.7% | Significant - Increased enrollment, but quality and equity concerns persist. |
| Rural Development | 2.1% | Moderate - Provided employment and income support, but sustainability is a concern. |
| Social Welfare | 2.5% | Moderate - Provided safety nets, but coverage and targeting need improvement. |
Conclusion
In conclusion, while public expenditure on social services in India has increased in the post-reforms period, its alignment with the objective of inclusive growth remains imperfect. Increased investment, coupled with improved efficiency, transparency, and accountability in implementation, is crucial. Addressing regional disparities and focusing on quality improvements are also essential. A more holistic and integrated approach to social sector development, prioritizing human capital formation and equitable access to opportunities, is necessary to achieve truly inclusive and sustainable growth.
Answer Length
This is a comprehensive model answer for learning purposes and may exceed the word limit. In the exam, always adhere to the prescribed word count.