Examine the pattern and trend of public expenditure on social services in the post-reforms period in India. To what extent has this been in consonance with achieving the objective of inclusive growth?

Indian constitution envisions a welfare state under Article 38 of the constitution which is reflected inpublic expenditure on social services.In the post-reforms period the public expenditure on social services increased from 5.49% of GDP in 1990-91 to 8.3% in 2021-22.

## Patterns and trends of public expenditure on social services:

##

• From 1990s to Early 2000s:Marked slowdown in public spending –

• Education – 3% of GDP.


• Public healthcare –  1% of GDP.

• From 2000s to Early 2009:Marked by re-prioritization of social spending Eg- Sarva Shiksha Abhiyan (SSA) for education, National Health Mission (NHM), and MGNREGA.


• 2010 onwards: Shift towards Rights based approach E.g., Right To Education, Right To Food, etc.

## Consonance with achieving the objective of inclusive growth:

• Rapid growth and poverty reduction:A total of 415 million people moved out of poverty in India within just 15 years from 2005 to 2021. (UN)


• Financial inclusion:Under PMJDY more than 53.13 crore bank accounts have been opened proving instrumental in Direct Benefit Transfer to the beneficiaries.


• Education Accessibility:E.g. Gross Enrolment Ratio for girls at the secondary level rose from 77.45% in 2014-15 to 81.32% in 2019-20.


• Improved Health Indicators:Health expenditure increases at cagr of 15.8%. (1.9% OF GDP IN FY24) – Life expectancy increased from 58 years in 1991 to 70 years in 2022.

## However, Challenges remain in realizing the full extent:

• High Levels of Poverty– NITI Aayog’s 2021 report estimated that around 25% of the population still lives in multidimensional poverty


• Employment Generation and Jobless Growth– According to PLFS 2019-20, India’s unemployment rate was 4.8% and youth unemployment (15-29 years) was 22.9%.


• Underinvestment in Social Infrastructure:According to a report by Dasra, social sector spending was ₹23 trillion ($280 billion) in FY23. It is less than NITI Aayog recommendation of 13% of GDP.


• Regional Disparities in Development:As per ‘Relative Economic Performance of Indian States: 1960-61 to 2023-24’by Economic Advisory Council to the Prime Minister (EAC-PM), 5 Southern states have emerged asmajor contributors to India’s GDP,accounting for30%by March 2024. On the other hand,Uttar Pradesh contributes only 9.5% of GDPandBihar just 4.3%.


• Social Exclusion and Inequality Based on Caste, Gender etc:According to NITI Aayog’s 2021 Multidimensional Poverty Index, SCs and STs suffer more from multidimensional poverty and Female labor force participation in India is only 23.3% (PLFS 2019-20)

## World Economic Forum has suggested 3 practical ways for countries to boost inclusive growth:

• Investmentin their citizens’ capabilities. e.g.Bolsa Familia– Brazil, provides financial aid to brazilian families ensuring children education, vaccination etc.


• Labour Law Reforms– ensuring social security cover


• Investment in labor intensive economic sectorsincluding sustainable water, energy, digital, and transport infrastructure, rural economy, education and training.

ImplementingSocial Security Code 2020can help achieve goal of instituting a credible social protection framework, consistent with India’s level of development.

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