Budget continues govt's policy momentum

Reforms in institutional arrangements in social sector could improve outcomes, says a PwC analysis

Social sector

India has adopted and declared its commitment to achieve the United Nations Sustainable Development Goals (SDGs) by 2030. The steep social and human development targets enshrined in SDG would require radical and urgent policy implementation measures in sectors like agriculture, environment, education, health, water and sanitation, livelihood and gender-related areas.

While the current Budget does not have any major policy shift or transformative agenda, it consolidates and continues to build on the policy momentum in key sectors like skill development, livelihood, agriculture and sanitation. Proposed reforms to strengthen the institutional arrangements and service delivery in health, education and skill development are expected to improve the pace and quality of outcomes. The implementation progress update as on December 31, 2016 for previous years’ Budget announcements attached to the Budget document indicate a large number of announcements to be still “work in progress”. However, it is reassuring to see that these announcements are still being pursued and may see tangible actions in future. Niti Ayog, the apex policy formulation body, should be monitoring the outcomes and use evidence to further sharpen policy implementation.

Water and sanitation

Two flagship schemes, Swachh Bharat Mission (SBM) Rural and National Drinking Water Programme (NDWP) in the water and sanitation sector, have received Rs 20,011 crore, witnessing a 21.19 per cent increase over last year’s revised estimates. The additional allocation of Rs 2,300 crore for the new Swachh Bharat Mission Urban scheme also augurs well for the sector.

Swachh Bharat Mission (Rural)

The SBM interventions have resulted in an impressive increase in sanitation coverage, from 42.6 per cent in 2014 to 60 per cent in 2016. The mission has got Rs 13,948 crore to accelerate the programme towards the target of making India open-defecation-free by October 2, 2019. The 

Swachh Bharat Cess is estimated to generate Rs 13,300 crore receipts in 2017-18 and meet most of the allocation made for the mission. 

The recent Quality Council of India report on “Swacchta Survekshan Survey” reveals disparities in coverage across states and calls for a review of the present target-driven campaign.

National Rural Drinking Water Programme 

NRDWP has a mandate of providing 40 litres of water per day per person (40 LPD). Funding has reduced over the years and allocation of Rs 6,050 crore is only marginally higher than the 2016-17 revised estimates. Prioritisation of ‘open-defecation-free’ villages for piped water supply is a good strategy to encourage convergence. The target of providing piped water over the next four years to 28,000 areas affected by fluoride poisoning is also welcome. 

Women and children 

The Gender Budget has received an increased allocation of 17.6 per cent over the previous year’s revised estimates. The increased outlays are largely going into the National Mission for Empowerment of Women; Beti Bachao, Beti Padhao; Support to Training and Employment Programme (STEP); Ujjawala and Working Women’s Hostel schemes. 

To incentivise and encourage 100 per cent institutional delivery (currently at 79 per cent) and achieve full immunisation coverage (currently 65 per cent) of children, especially in rural areas, a new Maternity Benefit Programme is proposed to be launched. The Rs 6,000 crore allocated for this programme, to be transferred through Direct-Beneficiary Transfers, is a welcome move in the current Budget and will go long way in achieving the SDG targets.

The latest Rapid Survey on Children conducted by MoWCD shows that 29 per cent of children aged less than five years are underweight and 39 per cent are stunted in the country. There is renewed thrust on the National Nutrition Mission to address the growing issue of malnourishment among children and women by allocation of Rs 1,500 crore in Budget 2017-18, as against Rs 175 Crore in 2016-17.

Integrated Child Development Services and nutrition

The Budget proposes to establish Mahila Shakti Kendras in 14 lakh Anganwadi Centres to provide one-stop convergent support services for empowering rural women with opportunities for skill development, employment, digital literacy, health and nutrition. This new initiative has an allocation of Rs 500 crore in FY18.The flagship scheme core, Integrated Child Development Services (ICDS), has seen declining expenditure over the last two years despite higher allocations in respective budgets. The current Budget also sees a marginal increase of 4.7 per cent over the revised estimates for FY17.

Public health care 

The Economic Survey 2016-17 highlights that public health care expenditure still remains low at 1.5 per cent of GDP, against the earlier set target of 2.5 per cent by 2017. Universal Health Coverage (UHC) for providing affordable and accessible healthcare is yet to become a reality. While the allocation towards health has been increased by 23 per cent over the revised estimates for FY17, it still is around 1.5 per cent of GDP.

The flagship National Health Mission (NHM) scheme covering both rural and urban missions has received 20 per cent increased allocations. Within NHM, the priority given to address the human resources issue by an increased allocation of Rs 4,025 crore against the revised estimate of Rs 1,500 crore is welcome. This will help in establishing new facilities and strengthening existing nursing, pharmacy, medical and para-medical schools and colleges. The policy intent and increased allocation for elimination of select communicable diseases is a laudable step in this Budget and would go a long way in improving the well-being of citizens in both urban and rural areas.

Although the budget for the National Health Protection Scheme (NHPS) announced in FY17 has been increased by 38 per cent, it is still shown as awaiting cabinet approval in the implementation progress report on previous years’ Budget announcements. 

Livelihoods

The National Rural Livelihood Mission (NRLM) and Prime Minister’s Employment Generation Programme (PMEGP) focusing on rural livelihoods has seen significant increased outlay as compared to previous year. 

Mahatma Gandhi National Rural Employment Guarantee Scheme 

The revised estimate for the flagship Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS), at Rs 47,499 crore, is 23 per cent more than the original allocation of Rs 38,500 crore. This could be attributed to implementation challenges, especially in the areas of expediting wage payments and management of pending liabilities. The person-days generated in FY 2016-17 so far is also 25 per cent less than in FY 2015-16, and is an area of concern.

The policy emphasis on creation of productive durable assets, diversification of livelihood opportunities, encouraging participation of women and linking of public works with other infrastructure-related programmes is expected to yield long-term benefits. The initiatives for geo-tagging of assets created and use of space technology are laudable.

National Rural Livelihoods Mission 

The allocation for the National Rural Livelihoods Mission (NRLM) has increased by 50 per cent over the previous year’s revised estimates. The allocation for the programme component of the scheme has almost doubled, from Rs 1,846 crore last year to Rs 3,612 crore this year. 

Textiles and apparel

The textiles and apparel sector is one of the most labour-intensive manufacturing sectors, and is critical for livelihood and employment generation, especially for women. This Budget has funds allocated for the newly introduced Remission of State Levies (ROSL) and Pradhan Mantri Paridhan Rojgar Protsahan Yojna (PMPRPY). However, the allocation for Integrated Scheme for Skill Development (ISDS) has declined compared to the previous year. Considering the growing demand for man-made fibre-based textiles across the globe, including India, reduction of excise duty on man-made fibre/filament could have been beneficial for new investment and employment generation through man-made fibre/filament-based textile production. 

Remission of State Levies 

Earlier, duty drawback was being provided to garment and made-up exports to neutralise the duties and taxes levied by the central government. However, there was no drawback on state levies. Through RoSL, for which Rs 500 crore is allocated, exporters are entitled to gain a rebate on state levies, which in turn is expected to provide a boost to India’s textiles and apparel exports and create additional employment opportunities. 

Pradhan Mantri Paridhan Rojgar Protsahan Yojna 

The new PMPRPY scheme proposed in the Budget has an allocation of Rs 200 crore and would enhance social security for employees in the textile and apparel sector. In addition to 8.33 per cent of the employer’s contribution borne by the government under PMRPY, an additional 3.67 per cent of the employer contribution for workmen engaged in apparel and made-ups units will be made by the government for employees earning up to Rs 15,000 per month. The scheme has the potential to encourage employers to bring more workers to the formal sector. 

Education 

The allocation for higher education in Budget 2017-18 has increased by 12 per cent and for school education and literacy by six per cent. Additionally, the allocation to major schemes (SSA, MDM, RMSA) has increased steadily (barring the allocation for RUSA, which is the same as 2016-17). Key initiatives such as the boost to the Digital Literacy Mission through the SWAYAM platform and DigiGaon, standardisation of assessments through the National Testing Agency and an Innovation Fund for development of educationally backward districts are welcome moves.

The Budget provides for policy intent to grant administrative and academic autonomy for well-functioning higher education institutions. The importance accorded to this can be gauged from the fact that 65 per cent of the higher education budget is allocated for their development. This higher allocation may pay dividends in future, with these institutions becoming financially more independent. Despite the government’s policy focus on research and innovation, budgetary investment remains lower.

The previous year’s budget aimed to improve the quality of education, yet the recent 2016 ASER survey noted a decline in learning outcomes, especially for primary and secondary school students (also reiterated by the Economic Survey 2016). Greater focus on improving the quality of education and accelerating such interventions as indicated in the implementation progress update note should be continued.

Vocational education, skill development and entrepreneurship

Skilling has been a major focus of the government and it is getting reflected in the overall 39 per cent increase in the skills budget allocation for the ministry of skill development and entrepreneurship (MoSDE) alone. Apart from this, the key other departments like Rural and Social Justice also have been separately allocated funds for large skilling programmes.

Despite being a new ministry, MoSDE has been able to establish itself as a nodal agency for skilling, and most of the new initiatives under skilling are housed in the ministry. The Pradhan Mantri Kaushal Vikas Yojna (PMKVY), the flagship scheme of the ministry, is targeting to skill one crore youth over 2016-20.

The Budget also proposes a new programme in Skill Acquisition and Knowledge Awareness for Livelihood Promotion (SANKALP) to implement the mandate of the National Skill Development Mission to support industry-relevant training in conjunction with sector bodies.

It is heartening to see the focus on apprenticeship, with new guidelines for apprenticeship. The allocation for apprenticeship and training has increased five-fold, from Rs 279 crore to Rs 1,151 crore in 2017-18. The estimated expenditure on it in 2016-17 is also high at Rs 515 crore. To provide greater emphasis on inclusivity and entrepreneurship, the government has also announced the Stand-up scheme for Dalit and women entrepreneurs.

Ashok Varma

Partner-Social Sector, PwC India

Team members: Pooja Chaudhary, Gayathri Balan, Bano Fatima, Jatin Dhingra, Nabeel Ahmed, Abhijeet Pandey, Kanti Brahma