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Social Sector Budget: Allocations increased but rural development left out

Topics Budget 2020

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The Union Budget 2020-21 has increased expenditure allocations for almost all social sector ministries, compared to the budgeted as well as the revised estimates for 2019-20. However, there is a key exception.

The Department of Rural Development, under which comes some of the biggest flagship schemes of the Narendra Modi government, saw its 2020-21 net allocation cut by more than Rs 2,500 crore compared to the revised estimates of 2019-20. The FY21 budgeted allocation for Rural Development is Rs 1.20 trillion. For FY20, the revised estimate was Rs 1.23 trillion and the budgeted estimate was Rs 1.18 trillion.

The Department of Rural Development handles schemes like National Rural Employment Guarantee Act (NREGA) programme, Pradhan Mantri Gram Sadak Yojana, National Rural Livelihood Mission, Shyama Prasad Mukherjee Rurban Mission and the rural component of Pradhan Mantri Awas Yojana.

At a time when experts, economists and even industry bodies have been calling for the government to put more disposable income in the hands of the rural poor, the allocation of marquee scheme NREGA was cut drastically, by around Rs 9,500 crore. The allocation for the coming year is at Rs 61,500 crore, compared with FY20 revised estimates of Rs 71,002 crore, which was an increase from the budgeted estimates of Rs 60,000 crore.

“NREGA is a demand-based scheme so if the demand arises it needs to be provided. This year there was an increase in demand from certain pockets of the country. Partly, it is also related to the circumstances as this year was there was in several states, a year of exceptional weather,” Expenditure Secretary TV Somanathan had told Business Standard in a post-budget interview.

“What we have provided is what we see as the requirement in a steady state. But if this some un-natural events occur in the coming year, then in the revised estimates, we will provide for the difference, for NREGA,” Somanthan said, meaning that higher amounts for NREGA could be provided in the supplementary demand for grants next year.

In the other schemes of Rural Development, the increase in allocation has been marginal. For Pradhan Mantri Gram Sadak Yojana, the revised estimates for FY20 were lower than budgeted estimates. The BE for FY21 is just Rs 500 crore more than the BE for FY20.

In other social sector ministries, the allocations are on expected lines. While they have risen year-on-year, there could be some cuts if the economic growth and fiscal situation is anything like this year.

For example, the total allocations for welfare of children, across ministries and department, are budgeted at Rs 96,042 crore. This compares with the BE of Rs 91,644 crore for FY20. However, that allocation was slashed at the RE stage to Rs 87,642 crore.

Similar cuts happened in a number of administrative and social sector line items to ensure that the fiscal slippage in FY20 did not go beyond 0.5 per cent of GDP. The total expenditure for 2019-20 was revised downwards by nearly Rs 90,000 crore, which is quite miniscule compared to the size of the budget.

But revenue expenditure, under which the allocations for most of the budget schemes are counted, was slashed by nearly Rs 1 trillion, as capital expenditure saw an increase of Rs 10,000 crore.

In fact, across departments, the revised estimates of 2019-20 were lower than budgeted estimates. These included AYUSH, Water Resources, River Development and Ganga Rejuvenation, Drinking Water and Sanitation, Empowerment of of Persons With Disabilities, and Women and Child Development,

There were positive developments in other schemes. The gender budget, for example, will see an allocation of Rs 1.43 trillion in 2020-21, almost similar to the 2019-20 revised estimates and higher than 2019-20 budgeted estimate of Rs 1.37 trillion. Similar increases compared to both BE and RE of 2019-20 were seen in Health and Family Welfare and Social Justice and Empowerment for 2020-21.

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