Union Budget 2022: How the India's social sector gets short shrift

Government allocations on health and education do not meet its targets and consistently fall short in terms of actual spending

The government has set ambitious targets for education and health spending but the allocations by the finance minister for 2022-23 in the Budget do not come close to the targets. The new education policy released two years ago had envisaged an allocation of six per cent of gross domestic product (GDP) to education (combining both the Centre and states’ spending). A Business Standard analysis shows that the Centre’s education expenditure as a percentage of GDP has declined since 2014-15.

Even though the government has allocated as much as Rs 1 trillion for education expenditure for 2022-23, as a per cent of GDP, spending in FY23 will only amount to 0.4 per cent. In 2021-22, Revised Estimates indicate the government had spent 0.38 per cent of GDP on education. However, in 2014-15, the Centre’s education expenditure was 0.55 per cent. 

It declined to 0.43 per cent in 2018-19. Before the pandemic, the Centre’s education spending was 0.45 per cent of GDP (see chart 1).

The saving grace, if it can be called that, has been the states’ education expenditure, which has not declined but has risen, though marginally, since 2014-15. In 2014-15, education spending of all states was 2.6 per cent of GDP; in 2021-22, it is expected to be 2.77 per cent.

The combined education spending will be 3.15 per cent of GDP in 2021-22, similar to 2014-15 figures, but still half of the government’s target of six per cent (see chart 2).

On the other hand, health spending has been better but still nowhere close to the 2.5 per cent target (Centre and state combined) set by the government for 2025.

Analysis of Budget data shows that the expenditure of the Department of Health and Family Welfare was increasing even before the pandemic. In 2014-15, the Centre spent 0.25 per cent of GDP; it had risen to 0.31 per cent before the pandemic. In 2020-21, it increased to 0.39 per cent and is expected to be 0.38 per cent in 2021-22. It will increase to 0.4 per cent in 2022-23. The total spending this fiscal is expected to be 1.3 per cent, compared to 0.9 per cent in 2014-15 (see chart 3).

Further analysis shows that although the Centre’s share of health expenditure in total expenditure has been increasing, the share of education has declined. The share of education in total spending was 4.1 per cent in 2014-15 and is expected to be 2.6 per cent in 2022-23. The share of health spending is expected to be 2.2 per cent next fiscal (see chart 4).

The calculations above are dependent on the fact that the Centre actually spends the budgeted amount next year. Business Standard analysis shows that barring 2017-18, actual spending on education was less than the budgeted spending in seven of the last eight years (see chart 5).