In the post-reforms period in India (beginning in 1991), the pattern and trend of public expenditure on social services have undergone significant transformations. These changes were driven by economic liberalization, fiscal adjustments, and a growing emphasis on achieving inclusive growth. Below is a detailed examination of the trends and their alignment with inclusive growth goals:

1. Trends in Public Expenditure on Social Services (Post-1991)

• Initial Period of Reforms (1990s): After economic reforms in 1991, the Indian government initially focused on reducing fiscal deficits and promoting private sector-led growth. During the early phase, there was a relative stagnation in social sector spending, as fiscal discipline became a priority. Social services such as health, education, and poverty alleviation programs saw less investment relative to other sectors like infrastructure and industry.

• Impact: This led to rising inequality and concerns about the neglect of social equity, particularly for vulnerable populations, in the early phase of reforms.

• 2000s Onward: Expansion of Social Spending:

• Increased Allocations: From the early 2000s, there was a noticeable shift toward increasing public expenditure on social services. Flagship programs like the Sarva Shiksha Abhiyan (SSA) (universal primary education), National Rural Health Mission (NRHM), and Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) were launched, reflecting a shift toward addressing disparities in education, health, and employment.

• Focus on Rural Development: Public expenditure increasingly focused on rural development, poverty alleviation, and improving access to essential services like health, education, and sanitation. This period marked a substantial rise in social spending as a percentage of GDP.

• 12th Five-Year Plan (2012-2017):

• The government’s approach during this period explicitly linked social sector spending to the objective of inclusive growth. The plan set ambitious targets for improving health, education, and employment outcomes through enhanced government spending. Investments in social infrastructure, social security, and skill development were prioritized.

• Shift Toward Direct Benefit Transfers (DBTs): From 2013 onward, the adoption of digital platforms for welfare schemes through Aadhaar-linked DBT aimed to streamline public expenditure on subsidies and social services, reduce leakages, and ensure that benefits reached the intended beneficiaries.

• Recent Developments (2017-2023):

• Ayushman Bharat (2018): This is the world’s largest government-funded healthcare initiative, which seeks to expand healthcare access to over 500 million people. It marked a new phase in social sector spending, focusing on universal health coverage.

• Education and Skill Development: Programs like Skill India and Digital India focused on empowering the youth and enhancing their employability, contributing to both social and economic development.

2. Share of Social Services in GDP and Total Public Expenditure

• Health and Education Spending: Public expenditure on health as a percentage of GDP remained low during the early post-reform years, hovering around 1% but gradually increased in the 2000s and beyond. Education expenditure similarly rose, but often below international standards.
• Trend in Public Expenditure: Between 1991 and 2020, the share of expenditure on social services (which includes health, education, rural development, and welfare schemes) in the total expenditure of both the central and state governments saw a gradual rise. By the 2020s, it constituted over 7% of GDP, reflecting a growing recognition of the importance of social services.

3. Public Expenditure and Inclusive Growth

The shift in the pattern of public expenditure on social services in the post-reforms era was increasingly aligned with the goal of inclusive growth, although challenges remained:

• Pro-Poor Programs: Several targeted programs such as MGNREGA, Pradhan Mantri Awas Yojana (PMAY), and National Social Assistance Programme (NSAP) were designed to provide a social safety net to the poor and marginalized sections. These efforts contributed to poverty reduction and enhanced livelihoods for rural and urban poor populations.

• Health and Education: Expansion in education and health spending contributed to improvements in literacy rates and life expectancy. However, challenges persisted in terms of quality, access, and efficiency. Public healthcare spending still lagged behind the targets set for achieving universal health coverage.

• Reduction in Inequality: Social service spending aimed at marginalized groups, including Scheduled Castes, Scheduled Tribes, and women, was intended to reduce socio-economic inequality. However, regional disparities and unequal distribution of benefits remained a concern.

• Direct Impact on Inclusive Growth:

• Economic Participation: Increased public spending on health and education improved human capital development, making it easier for disadvantaged sections of society to participate in economic growth.

• Infrastructure and Employment: Schemes like MGNREGA provided employment opportunities, especially in rural areas, ensuring a direct link between government expenditure and income redistribution.

• Social Security: Public expenditure on pension schemes, insurance for the poor, and welfare programs enhanced social protection, contributing to poverty alleviation and ensuring that economic growth was more equitable.

4. Challenges to Achieving Inclusive Growth

• Underfunding of Key Sectors: Despite the upward trend, expenditure on social services like health and education often remained below desired levels, especially compared to developed nations. This underfunding limited the scope of inclusive growth.
• Quality vs. Quantity: While there was increased spending, quality issues in education, healthcare, and public services persisted. Outcomes did not always match the level of financial input, especially in rural and underserved regions.
• Leakages and Corruption: Although DBT helped in curbing leakages, systemic inefficiencies and corruption in the implementation of welfare programs hindered the full realization of the benefits.

Conclusion:

The pattern of public expenditure on social services in the post-reforms period in India reflects a gradual shift toward achieving the objective of inclusive growth. The government’s increasing focus on education, health, and poverty alleviation, especially from the early 2000s onward, underscores a commitment to ensuring that the benefits of economic growth reach all sections of society. However, while there has been notable progress, challenges related to the quality of services, regional disparities, and funding levels indicate that there is still work to be done to fully align public expenditure with the inclusive growth objective.

Public Expenditure on Social Services in Post-Reform India: A Look at Pattern, Trend, and Inclusivity

The economic reforms initiated in India in 1991 ushered in a period of significant change, impacting the role of the state and its expenditure patterns. Examining public expenditure on social services in this post-reform era reveals a complex picture, with both positive and negative trends impacting inclusivity.

Pattern and Trend:

• Increased Overall Expenditure: Post-reform, India witnessed a substantial rise in total public expenditure. However, the allocation to social services has remained stagnant or even declined in relative terms.
• Varying Trends across Sectors:
• Education: While total expenditure on education has risen, its share in GDP has remained stagnant, highlighting a need for greater investment.
• Health: The expenditure on health has been relatively low, with significant variations across states.
• Social Security: While there have been efforts to strengthen social security schemes, coverage remains limited, especially for the most vulnerable groups.
• Focus on Specific Programs: Post-reform, there has been an increasing focus on targeted programs like the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) and the Public Distribution System (PDS), aimed at alleviating poverty and providing food security.

Inclusivity:

• Mixed Results: While increased expenditure on social services has contributed to improved health and education indicators, the gains have been uneven, with significant disparities across regions, socioeconomic groups, and gender.
• Challenges in Reaching the Marginalized: The design and implementation of social programs often face challenges in reaching the most vulnerable sections of society, particularly those living in remote areas and belonging to marginalized communities.
• Limited Targeting and Leakages: Issues with targeting and leakages in existing programs hinder their effectiveness in achieving inclusive growth.
• Prioritization of Economic Growth: The emphasis on economic growth has often overshadowed the need for robust social protection mechanisms, leading to a trade-off between efficiency and inclusivity.

Factors Influencing Inclusivity:

• Fiscal constraints: Limited fiscal space and increasing pressure on public resources have hampered the expansion of social services.
• Governance Challenges: Weak governance and bureaucratic inefficiencies hinder effective implementation of social programs and lead to leakages.
• Lack of Data and Monitoring: Data collection and monitoring systems are inadequate, making it difficult to track the impact of programs and identify areas requiring intervention.

Conclusion:

The post-reform period in India has witnessed a mixed bag in terms of public expenditure on social services and its impact on inclusive growth. While overall expenditure has risen, it has not kept pace with the need for increased investment in crucial sectors like education and health. Addressing the issue of inequality requires more targeted interventions, improved governance, and a greater focus on reaching the most vulnerable populations. To achieve truly inclusive growth, India needs to prioritize social welfare alongside economic development and ensure equitable distribution of benefits.

In the post-reforms period, which began in the early 1990s, India has witnessed significant changes in its public expenditure patterns on social services. The objective of this analysis is to examine the trend and pattern of public expenditure on social services in India and assess its consonance with achieving inclusive growth.

Trend and Pattern of Public Expenditure on Social Services:

1. Increase in social sector expenditure: There has been a steady increase in public expenditure on social services as a percentage of GDP. According to the Ministry of Finance, the social sector expenditure (including education, health, and family welfare) increased from 1.4% of GDP in 1990-91 to 6.2% in 2019-20.
2. Shift towards education and healthcare: There has been a significant shift in the composition of social sector expenditure, with a greater emphasis on education and healthcare. In 2019-20, education accounted for 34.4% of social sector expenditure, followed by healthcare (26.4%), and family welfare (14.5%).
3. Pro-poor focus: The government has introduced various programs and schemes targeting vulnerable sections of society, such as the National Rural Health Mission (NRHM), Sarva Shiksha Abhiyan (SSA), and the National Old Age Pension Scheme (NOAPS).
4. Decentralization: There has been a growing trend towards decentralization, with a greater emphasis on transferring funds and decision-making powers to local governments and panchayats.

Consonance with Achieving Inclusive Growth:

While there have been positive trends in public expenditure on social services, the impact on inclusive growth has been mixed:

1. Education: The increase in public expenditure on education has led to improvements in access to education, particularly at the primary and elementary levels. However, concerns remain about the quality of education, and significant disparities persist between urban and rural areas, as well as between different socio-economic groups.
2. Healthcare: Public expenditure on healthcare has led to improvements in health outcomes, such as a decline in infant mortality rates and an increase in life expectancy. However, India still lags behind in terms of healthcare infrastructure, particularly in rural areas, and there are concerns about the quality of healthcare services.
3. Poverty reduction: While poverty reduction programs have been implemented, poverty rates remain high, particularly in rural areas. The Gini coefficient, which measures income inequality, has also increased, suggesting that the benefits of economic growth have not been evenly distributed.
4. Inequities and Exclusion: Despite the pro-poor focus, there are still significant inequities and exclusions in the delivery of social services. For example, Scheduled Castes and Scheduled Tribes continue to face discrimination and exclusion in accessing education and healthcare services.
5. Quality of Services: The quality of social services, particularly in rural areas, remains a concern. There are issues related to infrastructure, human resources, and accountability, which impact the effectiveness of public expenditure on social services.

Challenges and Recommendations:

1. Increase in budgetary allocation: There is a need to increase budgetary allocation for social services to address the significant gaps in healthcare, education, and other social sectors.
2. Improving quality of services: The government should focus on improving the quality of social services, particularly in rural areas, by addressing issues related to infrastructure, human resources, and accountability.
3. Addressing inequities and exclusions: The government should take steps to address inequities and exclusions in the delivery of social services, particularly for marginalized groups such as Scheduled Castes and Scheduled Tribes.
4. Strengthening governance and accountability: There is a need to strengthen governance and accountability mechanisms to ensure that public expenditure on social services is effective and efficient.

In conclusion, while there have been positive trends in public expenditure on social services in India, the impact on inclusive growth has been mixed. To achieve inclusive growth, it is essential to address the challenges and recommendations outlined above, particularly in terms of increasing budgetary allocation, improving the quality of services, addressing inequities and exclusions, and strengthening governance and accountability.