Govt spend on education grew faster than GDP: Crisil

The government spend on education and health grew faster than the gross domestic product (GDP) of the country, according to data from Crisil Research.In 2003-04 and 2010-11, data said that spending on social infrastructure grew at a Compound Annual Growth Rate of (CAGR) of 18.7%, ahead of CAGR of nominal GDP of 15.3%.

Crisil Research has analysed the trends in combined spending of both central and state governments from 2003-04 to 2010-11 to assess the trends in expenditure in social and physical infrastructure. The research further showed that spending on physical infrastructure (15.7%) just about kept pace with nominal GDP growth. Consequently the share of spending on social infrastructure in GDP increased from 4.1% to 5% over this period, while the share of physical infrastructure spending in GDP marginally increased from 4.5% to 4.6%.

 

Roopa Kudva, MD & CEO, Crisil said, "Within social infrastructure, spends in all four sub-sectors health (17.5%), education (19%), family welfare (22.3%), and scientific services (16.8%) have grown faster than nominal GDP. The challenges to be tackled lie in areas that are lagging behind and in the distance from the government’s own goals."

DK Joshi, chief economist at Crisil added that expenditure on power projects, ports, irrigation and railways have grown below the CAGR of nominal GDP. Therefore, he said that there is a need for increased thrust in these areas. and need for government to involve the private sector more actively in power and ports, by removing policy bottlenecks.

However, India has a long way to go when compared to the other nations across the world. According to Crisil Research, there is a long distance for government to cover to reach its own stated targets for education expenditure at 6% of GDP and health at 2% of GDP. It said that India needs to protect and prioritise spending in these areas, since currently we rank lowest among BRICS countries in health, education, and physical infrastructure.

"Clearly, if the government has to build on the momentum of the increased spending in education, health, and physical infrastructure, the considerable savings that will accrue from curtailing subsidies in fuel, fertilisers, and food can be re-allocated to these areas," added Kudva.

The 2012-13 Budget had proposed that Rs 61, 427 crore would be spent on education, up from Rs 52,057 crore in 2011–12.