As Census looms after years of delay, questions over expenditure persist

Finance Minister Nirmala Sitharaman is also expected to gather up the unspent capex and allocation for the current fiscal to push for a massive spending effort in FY26

The national Census is a critical guide for policymakers in terms of where best to allocate resources. However, India hasn’t had a Census, a decadal event, since 2011. The one planned for 2021 was put paid to because of the Covid19 pandemic, and consequent lockdowns.  

 

But as we enter Budget 2025 season, expenditure allocation for the Census will be a good guide to the government’s plans around the census. While it has not yet announced whether it will be doing the population count in FY26, some reports suggest that it is very much on the table. A good indicator that the plan is on track is to look for the numbers in the budget papers.  

 

The money earmarked for the census is typically parked with the ministry of home affairs under which the Census Commissioner of India works. 

 

While there is no given estimate of how much the Census costs to carry out, evolving technologies mean the deployment of lakhs of enumerators armed with mounds of stationery may not be required any longer, significantly cutting costs.  

 

Still, any increase in allocation will reflect the government’s intentions. In FY21, the year when the Census was to be held, the government had allocated Rs 4,568 crore to this head. This was more than four times the Rs 1121.33 crore allocated for the expenditure head “Census, Survey and Statistics/Registrar General of India” in the previous fiscal year. 

 

As mentioned earlier, Covid-19 threw a spanner in the works, and the sum could not be spent. In FY22, however, anticipating the count would be held, the budget estimate was still kept at Rs 3,768.28 crore. As Table 1 shows, the sum was similarly high in FY23 also. It is only in the next two years of FY24 and the current financial year that the sum allocated towards this head has slipped back to the decadal median of less than Rs 600 crore per year.   

 

Since the Census operation has a long lead time, it is therefore fairly certain that the numbers in Budget FY26 will show if the government is indeed planning to conduct the exercise. Also, given that the government operates within a very tight leash on its expenditure priorities, it is unlikely that the finance ministry will park such a large, idle sum for Census operations without actually meaning to do the population count. As a point of comparison of priorities, the sum earmarked for Census in FY21 is close to the annual spend for semiconductor development programme.   

 

Comparing the Census expenditure with that of 2011 operations shows that it cost the government less than half at that time. However, while the budget estimate back then was Rs 4123.62 crore, a handshake away from the estimate for FY21, the actual cost that materialised was much less at Rs 2,581.55 crore (see table). Extrapolating these numbers, the cost of the new Census could be closer to Rs 5,000 crore.   

 

A decision on the dates for the physical visit to households could be taken once the National Statistical Office has finished the national survey (80th round) on Health, Telecom and ICT skill and Education by June 2025. 

 

Other Expenditure Priorities:    

 

In planning expenditure priorities for Budget FY26, government pundits have reason to be satisfied with a particular metric of the economy. The inflow of foreign money into India government bonds has doubled to $16.6 billion in the calendar year 2024 from $8.4 billion in 2023.  

 

The prudent management of government finances has appealed to foreign investors, for whom the door was opened wide in this financial year with the inclusion in the indices of Global Bonds. Taking a long-term average of two decades, government spending in India has been an average of Rs 2.54 trillion per quarter. It reached an all-time high of Rs 5.12 trillion in the first quarter of 2024.  

 

This prudence will also likely guide the numbers for government expenditure in FY26. While the expenditure on subsidies (running at 73 per cent of Budget estimates after two-thirds of the year), wages and pension, and interest have their own momentum, the changes will be made in centrally sponsored schemes. For instance, in FY25, Finance Minister Nirmala Sitharaman claimed she had put substantially more money in seven groups of government schemes.  

 

These included nuclear power, semiconductors, solar power, lines of credit under the IDEA scheme, PLI for pharma, and DBT on LPG. These were items on which the finance minister had the discretion to raise or lower the spending significantly. The outlay on these seven was Rs 27,823 crore in FY25, more than double the Rs 11,932 crore as per budget estimate of FY24.  

 

Projecting those numbers against the total expenditure – Rs 48.2 trillion – shows there is room for effectively 0.6 percent discretionary spending by the finance minister. Even after adding the considerable spending of MGNREGA, the world’s largest jobs guarantee programme, the percentage only swings up to 2.4 per cent.  

 

Indeed, one only need look closely at MGNREGA to understand how widely the finance minister’s discretion can be used. The projected spending on MGNREGA at Rs 86,000 crore for FY25 was far less than the actual Rs 1.05 trillion spent in FY24. In the current financial year too, going by the soft trend of actual spend where only 58 percent has been used up till the end of eight months, there will again be major savings under this head. Which means the projections for FY26 will be soft again, possibly flatlining at the same number.  

 

Some of the government’s additional spend this time are also expected to be on renewable energy. The Prime Minister’s Surya Ghar Bijli Yojana will be expanded to include an additional one crore households. So will those like the Central Sector Scheme of Pradhan Mantri Fasal Bima Yojana and PM Mega Integrated Textile Region and Apparel (PM MITRA) Parks.  

 

The twin pressures of keeping the fiscal deficit under control and the huge pre-committed government expenditure on various heads, gives the finance minister very little option to earmark more funds for discretionary expenditure.  

 

As Table 2 shows, the year-on-year difference in allocation for ministries do not budge perceptibly. The same trend is likely to be repeated in FY26. Ministries with higher spending do not interchange their positions much, except sudden bump-ups as happened for the Railways and the Roads sector which was due to an increase in capital expenditure.   

 

The finance minister will also try to push the Indian growth rate upwards by focusing only on capex. Total capex after the end of eight months of the financial year is only 46 per cent of the Budget Estimate. It is unlikely that this will reach the targeted Rs 11.11 trillion for the full fiscal. The Centre’s capex by the end of the year is estimated to be 10 per cent lower than the allocation. Sitharaman is likely to use the unspent money to raise the spending target for FY26 by a significantly large margin.  

 

The compressed revenue expenditure of the ministries, pegged at Rs 37.09 trillion are also unlikely to move much. In three years, this percentage has risen by just 7 per cent, and likely to continue along the same trend line. As a note by SBI Funds Management Ltd notes: “Rate cut isn’t really a true answer to India’s current macro situation”. Instead, it urges that government capex, whose thrust has likely plateaued and is growing in line with India’s nominal growth, needs to be hurried along.