Social sector spending up 15% in four years: Economic Survey

The social services expenditure of the government has increased at a compound annual growth rate (CAGR) of 15 per cent from 2020-2021 to 2024-25. This was stated in the Economic Survey 2024-25 tabled by Finance Minister Nirmala Sitharaman on Friday in the Parliament.

“The social services expenditure of the government (combined for the Centre and states) has increased at a compound annual growth rate of 15 per cent from FY21 to FY25,” stated the survey.

According to the survey, “The Gini coefficient — a measure of inequality in consumption expenditure — has been declining in recent years (for rural areas, it declined to 0.237 in 2023-24 from 0.266 in 2022-23, and for urban areas, it fell to 0.284 in 2023-24 from 0.314 in 2022-23), aided by various fiscal policies of the government that are reshaping income distribution.”

Citing an example, the document read that achieving improved educational outcomes and healthcare access could be accomplished with innovative solutions such as integrating new teaching methods and preventive healthcare strategies. Peer learning, life skills, and social and emotional learning held great potential for fostering lifelong learning, it further read.

Additionally, prioritising mental health in the workplace not only matters for a harmonious society but can also enhance worker productivity. A strong focus on preventing non-communicable diseases combined with the use of technology can be economically effective, significantly reducing the cost burden on healthcare systems.

Highlighting an increase from 23.3 per cent in 2020-21 to 26.2 per cent in 2024-25 or a CAGR of 15 per cent, the survey noted a rising trend in the government’s social services expenditure (SSE), as a percentage of total expenditure (TE).

While the SSE outlay of the Centre and state governments was Rs 14.8 lakh crore in 2020-21, it has increased steadily to stand at Rs 25.7 lakh crore in 2024-25 (budgetary estimates).

On education, the survey stated that the expenditure in the sector had grown at a CAGR of 12 per cent from Rs 5.8 lakh crore in 2020-21 to Rs 9.2 lakh crore in 202425 (BE).

On the other hand, it pointed out at a growing trend in health sector expenditure at CAGR of 18 per cent, from Rs 3.2 lakh crore in 2020-21 to Rs 6.1 lakh crore in 2024-25 (BE).

In the total health expenditure of the country between 2014-15 and 2021-22, the share of government health expenditure has increased from 29.0 per cent to 48.0 per cent, the survey stated.

Evidence shows that government schemes have spurred consumption and income generating activity in low-income households. Various government welfare schemes such as free or subsidised food grains, subsidised cooking fuel, insurance cover, Direct Benefit Transfers under various schemes are lifting household incomes. These fiscal transfers help to provide additional resources to the financially deprived sections and, thus, favourably impact people's standard of living.

The survey noted that various fiscal policies of the government were reshaping income distribution. Food subsidies constitute the largest fiscal outlay in the government’s diverse set of social schemes. In 2022-23, Union Government spent 6.5 per cent of its budget on the PM Pradhan Mantri Garib Kalyan Anna Yojana (PMGKAY) to provide free and subsidised food rations.

The concentration of larger benefits among lower consumption groups suggests that the public distribution system and PMGKAY policies support the low income and protect other vulnerable households against income fluctuations and impoverishment. On an average in 2022-23, the value of the subsidy accounted for 7 per cent of household consumption among the rural bottom 20 per cent, but only for 2 per cent among the top 20 per cent. A similar progressive pattern is observed in urban areas.

The survey also provided insights into the allocation of these benefits across different segments of the population. In 2022-23, 84 per cent of the population had access to a ration card, including 59 per cent who reported holding a Below Poverty Line (BPL), Antyodaya Anna Yojana (AAY) or Priority Household (PHH) cards in their household.