India Spends Far Too Little on the Social Sector: A Reading List

On 20 December 2017, sixty development economists wrote to the Financial Minister, Arun Jaitley, to draw his attention to urgent priorities for the forthcoming budgetsocial security pensions and maternity entitlementsfor the forthcoming budget. They remarked that the central government's contribution has been "extraordinarily stingy". We produce a reading list of EPW articles which provide data and research insights into the state of social sector spending in India. 



Social Security Pensions 

The letter says:

The central government’s contribution to old-age pensions under the National Old Age Pension Scheme (NOAPS) scheme has remained at a measly Rs 200 per month since 2006. This is extraordinarily stingy. It is also a missed opportunity: NOAPS is a good scheme (with low leakages and administrative costs) that reaches some of the poorest members of society. The central government’s contribution should be immediately raised to Rs 500 (preferably more) at the very least. This requires an additional allocation of Rs 8,640 crores or so, based on the current NOAPS coverage (2.4 crore pensioners). Similarly, widow pensions should be raised from Rs 300 per month to Rs 500 at the very least. This would cost just another Rs 1,680 crores.


The above  article  compares and contrasts the design features of India’s two contributory pension schemes, NPS Lite and APY, to discuss their strengths and limitations in addressing the needs of low-income workers with the help of available data and studies. It also discusses how the current design of contributory social security schemes can be improved upon to meet the pension requirements of unorganised workers.



Another article written in 2015 by Sanyal, Singh and Bharati, argues that the prevailing Indian pension system is unable to fulfil its purpose, and that a non-contributory, basic pension can guarantee a regular income in old age to all residents of the country, regardless of level of earnings or occupation. It further explores the feasibility of introducing such a pension in India and argues for a properly crafted universal pension scheme (UPS), which will increase the coverage of pensions without placing stress.


Maternity Entitlements

Apart from discussing how the NOAPS requires an additional allocation of 8640 crores, the authors of the letter have also highlighted the need for maternity entitlements and the operationalisation of the new scheme for the same. The letter states: 

 Maternity entitlements: Maternity benefits of Rs 6,000 per child are a legal entitlement of all Indian women (except those already covered in the formal sector) under the National Food Security Act 2013. For more than three years, the central government did virtually nothing about this. On 31 December 2016, Prime Minister Narendra Modi finally announced that maternity benefits would be provided very soon. One year later, however, (1) the new scheme framed for this purpose (Pradhan Mantri Matru Vandana Yojana) is yet to be operationalised, (2) the provision made for it in the Union Budget 2017-18 (Rs 2,700 crores) is barely one third of what is required based on NFSA norms; and (3) in flagrant violation of the Act, PMMVY restricts the benefits to Rs 5,000 for just one child per woman. The Union Budget 2018-19 should provide for full-fledged implementation of maternity entitlements as per NFSA norms. This requires at least Rs 8,000 crores, based on a 60:40 ratio for centre:state contributions.


This article discusses  how in India, the laws pertaining to maternity entitlements reach a very limited number of women because most  women work outside the boundaries of the formal economy. 
Apart from the specific cases of pension and maternity entitlements brought up by the letter, social sector spending in thelas two budgets remained wanting on many fronts.
A series of articles examine these shortcomings:


Surprisingly, the 2017–18 Budget Speech overlooked discussing the financing of the “Right to Education” (RTE) and elementary education, despite widely shared concerns on low-learning levels and the need for further improvement. This article states that in 2017–18 (budget estimates (BE)), the Ministry of Human Resource Development (MHRD) has been allocated Rs 79,686 crore, 38% of which is allocated to the Department of School Education and Literacy, and 62% to the Department of Higher Education. Over time, the distribution of the MHRD’s budget shows clear signs of a reprioritisation towards higher education.


Seven articles from the Special Issue on the 2017-2018 Budget critically examined different dimensions of the Union Budget of the year and certain unrealistic assumptions that had been made. It contained the following articles:  

Once More on the ‘Humbug of Finance’ | Prabhat Patnaik
Erroneous Understanding of Macroeconomic Challenges | C P Chandrasekhar
Emerging Issues in Union–State Fiscal Relations | Pinaki Chakraborty
Business as Usual | M Govinda Rao
Not for Growth | J Dennis Rajakumar
What Does the Rural Economy Need? | Amit Basole

An Examination of Revenue Generation | Ajit Karnik, Mala Lalvani

Seven articles from the Budget 2016-2017 Special Issue analysed the implications of the budget of the year on public health, rural economy and centre-state financial relations. It comprised of the following articles:

Evolving Centre–State Financial Relations | Pinaki Chakraborty, Manish Gupta
Lacking in Substance | Ajit Karnik, Mala Lalvani
From LPG Connections to Use | Ashwini Dabadge, Ann Josey, Ashok Sreenivas
Rural Push in Budget 2016-17 | Himanshu
Beyond Fiscal Prudence and Consolidation | Pinaki Chakraborty, Lekha Chakraborty
Budget without Heft | Pulapre Balakrishnan
No Respite for Public Health | T Sundararaman, Indranil Mukhopadhyay, V R Muraleedharan



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