You are here: Home » Budget » Reactions » Economy
Business Standard

Budget Impact: Major fillip for skill development and social protection schemes

Financial inclusion and vocational education get a boost, says a PwC analysis

Business Standard 

India is ranked at 135 out of 187 countries on the Human Development Index in 2013 and the improvement in ranking has just been one place from 2008. While the overall focus in this is mainly on spurring growth and infrastructure development, approach to foster an inclusive growth is amply visible in this .


Read our full coverage on Union Budget

Click here for charts & tables.


While there has been some logical consolidation of schemes and programs like RSBY coming under the Health Ministry and Skills Ministry attempting to bring all skill related schemes under its ambit, the is silent on theme of convergence initiated in the last budget. A number of commendable steps have been initiated in the area of skill development, financial inclusion and social protection including pension and accident coverage for the unorganised sector.

"Budget 2015-16 marks the dawn of 'Co-operative federalism' and empowerment of the States." In light of recommendations of the 14th Finance Commission to increase share of Central taxes from 32% to 42%to the States, the Finance Minister has done well by still maintaining the Plan Outlay for the Social Sector programs at the level of revised estimates for FY 2014-15.

The allocations and resource sharing arrangement with states would change for 24 central schemes; mostly in the social sector. The implementation of schemes would depend upon priorities accorded by the State Governments. We need to wait and watch to see the impact on existing flagship schemes in education, health, nutrition, livelihood and water and sanitation which figure in this list.

sad Policy announcement/direction
sad Fund Allocation
sad Overall

Despite the additional allocation of finances to states, schemes of national importance like MGNREGS continue to be supported fully by the Centre. Allocation to livelihoods schemes have gone up marginally.

smiley Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS)
With a focus on improving the quality and effectiveness of activities under MGNREGS, budget 2015-16 has the highest ever allocation for the scheme.

However, the focus on creating tangible and meaningful infrastructure is not translating into improvement in performance. The proportion of completed work has come down from 29% in 2013-14 to 13% in 2014-15.

The person days of work and utilisation % has also not seen any improvement in last 3 years. While the scheme lays down special emphasis on backward districts, state specific fund allocation is not addressing the needs of the poorest of poor (Bihar, Maharashtra and Uttar Pradesh have 46% of rural poor, but accounted for only 20% of total released funds).

wink National Rural Livelihoods Mission (NRLM)
The utilisation under NRLM has been low over the past 2 years (62% in 2013-14 and 51% in 2014-15). The budget allocation has been reduced for 2015-16 and this scheme falls under the list where a change in sharing pattern is proposed. NRLM has a significant external aid component which also has gone down by 38%. New initiatives like "Start-up Village Entrepreneurship Program" proposed in last budget is yet to be implemented.

smiley Policy announcement/direction
sad Fund Allocation
sad Overall

The Budget has a prominent thrust on facilitating 'access' and 'inclusion' in education as is evident from the proposed up-gradation of secondary schools and junior/middle schools and setting up of a student financial aid authority but is silent on quality aspects of education and facilitating PPPs in school education.

sad Elementary education
There is a 22% reduction in allocation for Sarva Shiksha Abhiyan (SSA) over last year. The trend of lower allocation is in line with the near universal enrollment achieved at primary level. However, the increased focus on enhancing quality of education to address the poor learning levels of students is not evident from the allocations.

smiley Secondary and higher education
The Rashtriya Madhyamik Shiksha Abhiyan (RMSA) flagship programme for secondary education has 29% lower allocation as compared to previous year. This could be justified in the context of the changed funding pattern and also by the fact that only 67% of the funds were utilized last year. The proposed addition/upgradation of secondary schools and junior/middle, to the senior secondary level is a welcome move for increasing access to secondary education considering the 100% enrollment at primary level.

The significant decrease of 48% in allocation for the Rashtriya Uchcha Shiksha Abhiyan (RUSA) is expected to be offset by the greater share from the State Government. The affordability of education is expected to get a major boost from proposed IT based Student Financial Aid Authority to monitor the financing for higher education through the Pradhan Mantri Vidya Lakshmi Karyakram.

Allocation for technical education has been reduced marginally by 2%. However, the Budget provides for a stimulus to technical education with the allocation for new IITs, NITs, IIMs, AIIMS like institutes, and other Centers of Excellence and national institutes in alignment with the Government's resolve to set up at least one major Central Institute in each State.

Vocational education and skill development
smiley Policy announcement/direction
smiley Fund allocation
smiley Overall

The vocational education and skill development has got a major fillip from the new 'Ministry of Skill Development and Entrepreneurship' and 'Make in India' initiative. The convergence amongst various ministries/departments (about 20 of them on an average at State level) pursuing the skill development schemes is still not realised. The proposed National Skill Mission is a welcome measure in this direction which would consolidate initiatives under various ministries and 31 Sector Skill Councils represented by industry players.

A number of initiatives like Deen Dayal Upadhyaya Grameen Koushalya Yojana, Nai Manzil, Skill India, NSDCs STAR2 and the Credit Guarantee Fund are expected to enhance access, equality, quality, innovation and institutional credit in the skill development area.

sad Policy announcement/direction
wink Fund Allocation
sad Overall

The continued focus on gender mainstreaming through Ministries like Road Transport and Highways and Home Affairs is visible through allocations on safe public transport systems in the Budget. The gender budget, despite having 84% utilisation last year has reduced allocation. At a policy level, commitment to girls' education through 'Beti bachao, beti padhao' and 'Sukanya Samriddhi account' is a welcome measure.

Though the overall allocation to women specific programs has reduced significantly, the Nirbhaya Fund, which will establish One Stop Crisis Centres and CCTVs in public areas, has been retained at INR 1,000 crores.

Public Health
sad Policy announcement/direction
sad Fund Allocation
sad Overall

The overall budget allocation for health for this year is INR 33,282 crores which is 1.87% of the overall budget. In order to promote health care and bring more people under the insurance cover, the limit of deduction under Income Tax has been increased. RSBY, a health insurance scheme has been brought under the Ministry of Health and Family Welfare.

There is a renewed focus on Indian Systems of Medicine with the department of AYUSH becoming a separate ministry last year. Thrust has been provided to medical education and research with an increased allocation of INR 1,756 crores. All the six AIIMS in the first phase of PMSSY have become functional and 6 more AIIMS/AIIMS like institution is proposed to bring about an improvement in accessibility to tertiary care services and increase the doctor to patient ratio.

The budget is silent on "Health for All" and two key initiatives of Free Drug Service and Free Diagnosis Service announced in the last budget.

sad National Health Mission (NHM)
The budgetary allocation for NHM has been reduced by 17% as compared to last year in light of the modified funding pattern. The urban component under National Urban Health Mission is in nascent stage and allocation to NUHM may suffer as the priorities of the state governments may not be aligned to the central government.

wink Nutrition
wink Policy announcement/direction
wink Fund Allocation
wink Overall

Nutrition has been a major focus area and the Government has invested significant funds towards reducing malnutrition in the previous years. This years' budget however sees a significant 53% reduction in the allocations as compared to last year.

sad Water and Sanitation
sad Policy announcement/direction
wink Fund Allocation
sad Overall

The budgetary allocation to Ministry of Drinking Water and Sanitation has been reduced drastically to INR 6,244 crores from INR 15,627 crores with a drastic reduction in the allocation to National Rural Drinking Water Programme from INR 11,000 crores to INR 2,611 crores.

Allocation for the Swachh Bharat Abhiyan is at INR 3,625 crores which is marginally lower than last year. There is an increased focus on the sanitation sector with more than 50% of the overall Ministry budget. The government has kept an enabling provision of levying a Swachh cess on service tax, if the need arises.

The thrust on achieving a Swachh Bharat by 2019 would require strengthening of human resources and the institutional framework which would be one of the priorities for both Centre and States.

Ashok Varma
Partner- Government Reforms and Infrastructure Development,
PwC India

Team members: Veeresh, Sana, Simi, Pooja, Rittika and Govind

Dear Reader,

Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.
We, however, have a request.

As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.

Support quality journalism and subscribe to Business Standard.

Digital Editor

First Published: Mon, March 02 2015. 00:35 IST