Expenditure on social sector: Turning social safety nets into trampolines

A look back at welfare spending is the first step to understanding Covid impact absorption and darning holes, if any, in the welfare fabric

The Government of India’s (GoI’s) expenditure on the social sector as a proportion of total expenditure has remained relatively static.

In 2009–10, GoI spent 21 per cent of its total expenditure on the social sector. This decreased marginally to 20 per cent in 2019–20.

In 2009–10, GoI spent 14 per cent of its expenditure on subsidies, which increased to 18 per cent in 2012–13.

Subsidies as a share of total expenditure started declining after 2014–15, from 16 per cent to 9 per cent in 2019–20.

Subsidies reached an all-time high in 2020–21, accounting for 20 per cent of total expenditure. This was primarily due to food subsidies, as free foodgrains were given to those eligible under the targeted public distribution system as well as migrant families under the Pradhan Mantri Garib Kalyan Anna Yojana, a food security programme, during the Covid outbreak.

It was during the Covid-19 pandemic that the share of expenditure on the social sector touched its highest level ever, at 30 per cent.

Food distribution and clearing arrears of the Food Corporation of India resulted in the GoI spending Rs 5.55 trillion, the highest ever spent on any single-ticket item, apart from interest payments.

The other departments that were prioritised in 2020–21 during the pandemic included the Department of Rural Development and the Department of Health and Family Welfare.

Simultaneously, other critical departments saw spending cuts. These included the Ministry of Women and Child Development, Tribal and Minority Affairs, Water Resources and Drinking Water, and Youth Affairs and Culture.

Sources: Accountability Initiative, Centre for Policy Research, Budget data