Q.1. Examine the pattern and trend of public expenditure on social services in the post-reforms period in India. To what extent this has been in consonance with achieving the objective of inclusive growth? [UPSC 2024 GS P-3]

The pattern and trend of public expenditure on social services in the post-reforms period (since 1991) in India can be analyzed in the context of the liberalization, privatization, and globalization (LPG) reforms that redefined the role of the state in the economy. The primary focus shifted from direct control to facilitating market-driven growth, yet the government recognized the need to ensure that this growth was inclusive, targeting the welfare of the broader population.

1. Trend of Public Expenditure on Social Services

Social services encompass education, health, sanitation, water supply, social security, and welfare programs. In the post-reform period, the trend in public expenditure on these services shows certain key characteristics:

a. Overall Increase in Social Sector Spending

• 1990s and Early 2000s: The initial years post-reforms saw relatively lower emphasis on public expenditure in social services as the government focused on stabilizing the economy, reducing fiscal deficits, and spurring market-driven growth. Public sector disinvestment and reduced spending were hallmarks of this phase.
• Mid-2000s onwards: There was a more explicit recognition of the need for inclusive growth, reflected in increased allocations to social services. Flagship programs like the Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS), Sarva Shiksha Abhiyan (SSA), National Health Mission (NHM), and National Food Security Act were introduced.

b. Health and Education

• Health: Expenditure on health remained relatively low during the initial reform years but picked up in the 2000s and 2010s. Programs like NHM and Ayushman Bharat aimed at universal healthcare access. However, India’s public health expenditure still lags behind global standards.
• Education: Education spending has seen consistent increases, particularly through programs like SSA, Mid-Day Meal Scheme, and Right to Education (RTE). The Gross Enrolment Ratio (GER) has improved significantly at the primary level.

c. Targeted Welfare Schemes

The rise of schemes targeted at specific vulnerable groups and sectors, like the Public Distribution System (PDS) for food security, subsidized housing, sanitation programs like Swachh Bharat Mission, and direct benefit transfers (DBT) aimed at ensuring welfare with minimized leakages, marked a trend toward ensuring inclusiveness.

2. Consonance with Inclusive Growth

Inclusive growth means ensuring that the benefits of economic growth reach all sections of society, particularly the disadvantaged. The extent to which public expenditure on social services has aligned with the objective of inclusive growth can be evaluated based on a few key parameters:

a. Poverty Reduction

• Public expenditure on rural development and employment programs (e.g., MGNREGS) has played a significant role in poverty alleviation. India witnessed a significant reduction in poverty rates between 2005 and 2015, indicating that some of the targeted welfare expenditures were effective in promoting inclusive growth.

b. Health and Education Disparities

• While public expenditure has improved access to health and education, disparities remain. There are regional, rural-urban, and socio-economic inequalities in access to quality services. The rural health infrastructure, for instance, remains underdeveloped despite higher allocations in recent years.
• While primary education has improved, higher education and quality outcomes have lagged, indicating the need for more targeted expenditure to ensure inclusiveness in human capital development.

c. Social Security

• Social security programs like pensions, insurance, and subsidies, particularly through schemes like the Pradhan Mantri Jan Dhan Yojana, Atal Pension Yojana, and the PDS, have expanded the safety net for marginalized groups. However, implementation challenges, such as leakages and under coverage, have sometimes hampered the realization of the full benefits of these expenditures.

d. Employment Generation

• Public expenditure on schemes like MGNREGS has directly contributed to rural employment generation. However, the challenge remains in creating sustainable livelihoods and addressing the quality of employment in urban areas, particularly for the informal sector.

e. Fiscal Constraints

• The push for inclusive growth through increased social sector spending has often been constrained by fiscal limitations, especially in the post-reform era of fiscal consolidation. As a result, the gap between the need for public expenditure in social services and actual allocations has persisted.

Conclusion

In the post-reforms period, public expenditure on social services in India has seen a gradual increase, especially in health, education, and social welfare. This spending has contributed to inclusive growth by reducing poverty, improving access to basic services, and providing social security to vulnerable populations. However, challenges like persistent regional disparities, quality of services, and fiscal constraints have limited the full realization of inclusive growth objectives. To fully achieve inclusive growth, India needs sustained and more efficient public expenditure, particularly in health, education, and employment, along with improvements in governance and service delivery.