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Intra-State Disparity in Government Expenditure: An Analysis

This paper analyses the intra-state disparities in government expenditure in six states, Bihar, Uttar Pradesh, Jharkhand, Chhattisgarh, Madhya Pradesh and West Bengal, based on the actual treasury data on government expenditure made in the social sectors of education, health and supply of drinking water, captured from the databases of the accountants general of these states. The disparities that it finds within most of these states are shocking, to say the least.

INTER AND INTRA STATE DISPARITIES

Intra-State Disparity in Government Expenditure: An Analysis

Govind Bhattacharya

This paper analyses the intra-state disparities in government expenditure in six states, Bihar, Uttar Pradesh, Jharkhand, Chhattisgarh, Madhya Pradesh and West Bengal, based on the actual treasury data on government expenditure made in the social sectors of education, health and supply of drinking water, captured from the databases of the accountants general of these states. The disparities that it finds within most of these states are shocking, to say the least.

The author gratefully acknowledges the data support provided by the accountants general (A&E) of Bihar, Uttar Pradesh, Madhya Pradesh, Chhattisgarh, Jharkhand and West Bengal as well as their deputies. He also wishes to thank Rakhee Bhattacharya of the Maulana Abul Kalam Azad Institute of Asian Studies, Kolkata, and Shashank Bhide of the National Council of Applied Economic Research, New Delhi, for their insightful comments and suggestions for the improvement of the paper.

Govind Bhattacharya (govind100@hotmail.com) belongs to the Indian Audit and Accounts Service (1986).

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A
combination of historical, social, political and economic factors has consigned Bihar to the periphery of India’s economic growth. In addition to having a very low per capita income, Bihar today finds itself at the bottom of all the major states in India in respect of almost all socio-economic parameters. It is also one of the most ruralised states in India, with about 90% of its population living in more than 39,000 villages, where poverty and deprivation have assumed endemic proportions over the past several decades. It is only now that an earnest attempt is being made to change this scenario. Until 1993-94, the poverty ratio in Bihar, both urban as well as rural, was the highest among all the major states of India. Even in 1999-2000, with about 44% of the rural population below the poverty line, Bihar was the second poorest state in India, next only to Orissa. P overty, especially rural poverty, remains the primary concern of the government’s development policy in the State. As of 2000, undivided Bihar accounted for one-sixth of all the poor in India, and onefifth of all the poor living in rural areas (Table 1, p 232). Worse, over the past two decades, Bihar’s share of national poverty has continued to increase; in 1999-2000, there were more poor p eople in Bihar than in 1987-88, despite a decrease in the poverty ratio. Politicians and administrators had failed miserably to a ddress this problem.

Further, within the state, though the levels of poverty are high in all the regions, there are wide variations in the levels of poverty – the urban poor seemed to be concentrated in north rather than in south Bihar in 1999-2000, while rural poverty seemed to be concentrated in south rather than north Bihar (Table 2, p 232).

Core versus Periphery?

Any decline, like improvement, takes place over a period of time, and to be visible in an overt fashion, there has to be an a ccumulation of many factors, all impeding development and growth, working together over a relatively long period of time. Some of these are legacy problems inherited from the past, some arise due to lack of vision and some arise from administrative failures and bottle necks. The situation of Bihar may be contextualised in terms of core-periphery mapping, conceptualised by Myrdal2 most appropriately in the politico-economic perspective of regional development and disparity to distinguish between advanced and backward regions, where the core develops at the cost of the periphery that is left impoverished. There is a concentration of growth and resources in the leading urbanised, industrialised regions or the “core” that becomes the resource

INTER AND INTRA-STATE DISPARITIES

frontier, while there is an a bsence of resources and growth in other states as well and the present paper is an attempt to analyse the backward regions or the “periphery”. The core thus devel-government expenditure in more exhaustive detail across several ops by drawing resources from the peripheral zones, leaving states with a similar socio-economic milieu Chhattisgarh, the latter without the means or resources to progress. Over a Jharkhand, Madhya Pradesh (MP), Uttar Pradesh (UP) and West period of time, this process widens the development gap Bengal. But before attempting such an analysis, let us look at the b etween the most and the socio-economic scenario in

Table 1: Comparative Levels of Poverty in Bihar and India (Number and percentage of

least prosperous regions these states, and compare

people below poverty line)

and, in the absence of eco-Year Persons Below Poverty Line (in lakh) Bihar's Share of Poor their situations in terms of

Bihar* India in India (%)

nomic and infrastructural some accepted parameters

Rural Urban All Rural Urban All Rural Urban All

linkages, triggers a mech- of social and economic

1983 417.7 44.35 462.05 2,519.57 709.4 3,228.97 16.58 6.25 14.31

anism by which new d evelopment (Table 3).

(64.37) (47.33) (62.22) (45.65) (40.79) (44.48)

r esources are always di- We note the following

1987-88 370.23 50.7 420.93 2,318.79 751.69 3,070.49 15.97 6.74 13.71

rected towards the core from Table 3:

(53.63) (48.73) (52.12) (39.09) (38.20) (38.86)

that attracts people from t Per capita income in all

1993-94 450.86 42.49 493.35 2,440.31 763.37 3,203.68 18.48 5.57 15.40

the periphery, leaving the the states except West

(58.21) (34.50) (54.96) (37.27) (32.36) (35.97)

periphery even more dis-1999-2000 376.51 49.13 425.64 1,932.43 670.07 2602.5 19.48 7.33 16.36Bengal is far less than the

advantaged and impecu- (44.30) (32.91) (42.60) (27.09) (23.62) (26.10) national average; in Bihar

* Erstwhile Bihar; Figures in parentheses are percentages of people below poverty line. Figures for people

nious, till the time that the it is abysmally low.

below the poverty line in 2004-05 are given in Table 3.

disparity level becomes Source: National Human Development Report, 2001, Tables 2.19 through 2.21, Planning Commission, t Except in West Bengal, Government of India (http://planningcommission.nic.in/reports/genrep/nhdrep/nhdtstatapx.pdf)

socially unsustainable. We believe that not only in Bihar, but in all the states that we have studied, and by implication also in the states outside the scope of our study, the situation is fast approaching that stage and would assume serious proportions if not addressed at this point of time.

Table 2: Intra-State Disparity – Bihar: Headcount Index Estimates at the Regional Level 1

Rural Urban 1993-94 1999-2000 1993-94 1999-2000

North Bihar 49.3 38.0 30.6 35.3
South Bihar 44.4 44.1 20.8 23.3
Chhotanagpur Plateau (current Jharkhand) 52.6 45.0 24.6 19.7

Source: Deaton, 2003, cited in “Bihar, Towards a Development Strategy”, A World Bank Report, 2006, 13.

In the case of Bihar, Patna still remains the only visible urban centre in the state. The development and changes that have taken place in Bihar are visible only in a few districts like Patna and the

the percentage of people living below the poverty line in all the other states is far higher than the national average. t The infant mortality in West Bengal, and also in Jharkhand, is far less than the national average; while in Bihar and Chhattisgarh, it is comparable to the national average, in UP and MP, it is substantially higher than the national average. t Life expectancy at birth showed some variation across the states and is more or less comparable to the national average in all the states except MP. t Except in Bihar, UP and Jharkhand, the literacy rates, both male and female, are comparable to the national average. In B ihar, UP and Jharkhand, both male and female literacy rates are much below the national average. t Bihar not only has the lowest per capita income among all the states, but also the highest poverty ratio (41.4% as compared to

beneficiaries are only a handful, but the rest of Bihar continues to languish in acute poverty and severe backwardness. Very few districts have received benefits from the development initiatives launched by successive govern-

Table 3: Some Selected Socio-economic Indicators: A Comparison

State 2001 Census Literacy Rate 2001 Census Infant Life Per Capita % of Popula- Lorentz Ratio
Mortality Expectancy State tion Below 2004-05
at Birth Income (Rs) Poverty Line
Population (‘000) Sex Ratio Male Female 2006 2001-05 2004-05 (P) 2004-05 Rural Urban
Bihar 82,999 921 59.7 33.1 60 61.4 5,772 41.4 0.208 0.339
UP 1,66,198 898 68.8 42.2 71 59.8 11,477 32.8 0.287 0.370
MP 60,348 920 76.1 50.3 74 57.7 14,069 38.3 0.269 0.397
ments, and this has enormously Chhattisgarh 20,834 989 77.4 51.9 61 NA 15,073 40.9 0.305 0.439
widened the disparity across the Jharkhand 26,946 940 67.3 38.9 49 NA 13,013 40.3 0.231 0.354
districts in the state. The disparity West Bengal 80,176 934 77.0 59.6 38 64.6 22,497 24.7 0.273 0.376
that we see within the states is All-India 10,28,737 933 75.9 54.1 58 62.7 22,946 27.5 0.297 0.373

Source: Economic Survey 2007-08, Government of India.

self-augmenting, resources tend to get allocated to the few districts that form the core, while the oth-the national average of 27.5%). Among these states, only West ers are left largely to fend for themselves and continue to be ne-Bengal has a poverty ratio below the national average. glected and ignored. t In the last column, the Lorentz Ratio that reflects the level of

inequality shows that rural inequality is lower than urban in-Disparity – An Inherent Weakness? equality in all these states as well as at the national level. With The Economic Survey of Bihar for 2007-08 for the first time increasing income in urban India, the consumption pattern pointed out that the government expenditure in respect of health r eflects a higher level of inequality across all the states. In and education was overwhelmingly concentrated in Patna dis-C hhattisgarh, the inequality levels are higher than the national trict. We had suspected that this would be the case with most average for rural as well as for urban areas.

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INTER AND INTRA-STATE DISPARITIES

We shall later try to examine if there is any correlation bet-t As regards the monthly per capita government expenditure on ween these observations and the results of our subsequent analy-education and health, we note that the all states’ averages have sis on the levels of disparity in government expenditure on social grown by nearly six times between 2004-05 and 2007-08, but the sectors. The purpose of this paper is to find out if government per capita monthly expenditure of the states on health remained expenditure on the social sectors has been equitable across all more or less the same, while that for education shows an increase

of around 50% between these two

Table 4: Monthly Per Capita Expenditure on Health and Education (Rs: 2004-05)

State Household Expenditure Per Capita Monthly Per Capita Monthly years. Per capita expenditure in
Education Rural Urban Medical Rural Urban Rural Total Urban Govt Expenditure on Education3 Health 2004-05 2004-05 Govt Expenditure onEducation4 Health 2007-08 2007-08 Bihar remained the lowest among these states. The interstate varia-
Bihar 7.25 45.16 13.89 26.12 417.11 696.27 30.10 6.00 49.20 8.96 tions in per capita government
UP 18.91 62.68 48.31 54.31 532.63 857.05 34.87 10.66 47.56 10.35 expenditure also remained more
MP 10.28 62.90 28.29 44.71 439.06 903.68 33.53 11.70 44.46 12.15 or less the same in the states over

Chhattisgarh 5.95 81.05 31.62 63.61 425.10 989.97 45.09 11.97 63.27 12.92 the years, indicating that priori-

Jharkhand 6.54 62.23 16.56 49.29 425.30 985.43 41.61 12.61 60.43 9.85 ties remained more or less the

West Bengal 18.12 73.52 38.13 71.20 562.11 1,123.61 54.72 12.43 65.18 14.88 same for these state governments All-India 14.90 52.69 36.96 54.59 558.78 1,052.36 10.77 3.40 68.415 19.09 as far as social sector expenditure Source: For Household Expenditure: NSS 61st Round: Levels and patterns of consumer expenditure 2004-05 Report No 508(61/1.0/1) Government of India 2006 and the per capita monthly government expenditure is estimated from the data of Finance Accounts of the

was concerned.

respective states on the basis of their projected population for the respective years as per the Census report 2001.

t In rural areas, the share of edu

the districts within a state and whether there is any significant intra-state disparity in government expenditure on a social sector, and if so, to estimate the level of such disparity. For the purpose of our analysis, we have taken three major heads, education, health and sanitation, and the same six states, Bihar, UP, MP, Chhattisgarh, Jharkhand and West Bengal.

Expenditure on Education and Health

As a first step in our analysis, we compare the per capita household expenditure on health and education with the per capita government expenditure on these two sectors. Table 4 shows the monthly per capita expenditure on health and education in 2004-05 based on the National Sample Survey (NSS) 61st round survey data as well as the per capita government expenditure on these sectors, while Table 5 shows their respective share in the total per capita expenditure, both for households as well as government. From Tables 4 and 5, we note that: t Bihar, Jharkhand and Chhattisgarh had the lowest per capita monthly expenditure on both education and health in the rural sector, followed by MP; their combined expenditure on health and education was less than 9% of the total per capita monthly expenditure, the national average for rural areas being 9.28%. In Bihar, the combined expenditure on health and education was the least among the states (5% only). t The per capita monthly household expenditure in Bihar on these two sectors, both in rural as well as urban areas, as well as the per capita monthly government expenditure, was the lowest among the states and much below the national average. The per capita household expenditure on education and health in rural areas of UP and West Bengal was higher than the national average. t The pattern in rural areas in respect of these two sectors was not reflected in the urban areas. In urban areas, the per capita household expenditure in all the states except Bihar was much higher than the national average; in Chhattisgarh and West B engal, it was substantially higher than the national average, for education as well as for medical expenditure. The per capita household medical expenditure in other states was lower than the national average.

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cation in the total household expenditure was almost insignificant in all the states, while in urban areas, it varied between 6% and 8%. Expenditure on health shows no significant variations between rural and urban areas and was between 3% and 9% in all these states. The relatively higher expenditure on health was probably due to the absence of adequate government facilities for health in rural areas. The share of government expenditure on education in 2004-05 was, however, much higher, while that on health was more or less the same as in the case of household expenditure. There is no significant variation in the per capita expenditure on education and health between 2004-05 and 2007-08 in these states.

Table 5: Percentage Shares of Expenditure (2004-05)

Household Expenditure % Share of Education % Share of Health in
in Total Govt Total Govt
Education Health Expenditure6 Expenditure
State Rural Urban Rural Urban 2004-05 2007-08 2004-05 2007-08
Bihar 1.74 6.49 3.33 3.75 21.59 21.90 4.30 4.00
UP 3.55 7.31 9.07 6.34 16.54 19.42 5.05 4.39
MP 2.34 6.96 6.44 4.95 14.29 14.41 4.99 3.78
Chhattisgarh 1.40 8.19 7.44 6.43 16.75 14.72 4.45 2.68
Jharkhand 1.54 6.32 3.89 5.00 20.20 17.68 6.12 2.88
West Bengal 3.22 6.54 6.78 6.34 19.45 17.34 4.42 3.97
All-India 2.67 5.01 6.61 5.19

Source: Calculated from Table 4.

Macro-Level Perspective

The above analysis suggests that these states (with the exception perhaps of West Bengal), which share a common socio-political and economic background, suffer from various disabilities like poverty that show wide intra-state variations, low female literacy, high infant mortality, and high income inequality in urban areas. Chhattisgarh, however, seems to have made considerable progress in improving its human development indicators during the short span of its existence. Education and healthcare still remain low-priority areas, especially in the rural areas of all these states, and households spend an insignificant share of their total income on these sectors. The household income is mostly spent on the most basic necessities of food and shelter. The per capita government expenditure on these sectors also remains more or

INTER AND INTRA-STATE DISPARITIES

less the same in these states, though the governments seem to spend a larger share of their total expenditure on these sectors.

In these poor states, government expenditure on social sectors, especially on education and health, remains the primary

Table 6a: Maximum and Minimum Per Capita Expenditure within States: Primary Education

State Maximum Per Capita Mimimum Per Capita District with State Average (Rs) Expenditure (Rs) Expenditure (Rs) Mimimum Capita (Capital District) Expenditure

Bihar 3,867.18 66.68 Kaimur (Bhabua) 399.72

Jharkhand 2,022.54 257.90 Bokaro 561.76

MP 2,703.97 140.84 Sheopur 359.90

Chhattisgarh 519.18 198.75 Korba 427.16

UP 2,354.43 14.96 Kaushambi 341.22

West Bengal 769.80 75.21 Darjeeling 323.17

Table 6b: Maximum and Minimum Per Capita Expenditure within States: Secondary Education

State Maximum Per Capita Mimimum Per Capita District with State Average (Rs) Expenditure (Rs) Expenditure (Rs) Mimimum Capita (Capital District) Expenditure

Bihar 625.94 30.34 Araria 91.79

Jharkhand 397.59 40.35 Bokaro 97.94

MP 429.32 49.47 Guna (including 118.45 Ashok Nagar)

Chhattisgarh 267.32 54.58 Korba 141.92

UP 338.41 41.87 Shrawasti 168.94

West Bengal 538.47 204.43 Darjeeling 356.33

Table 6c: Maximum and Minimum Per Capita Expenditure within States: Higher Education

State Maximum Per Capita Mimimum Per Capita District with State Average (Rs) Expenditure (Rs) Expenditure (Rs) Mimimum Capita (Capital District) Expenditure

Bihar 1,532.61 0.00 Sheohar, Lakhiserai, 88.25 Kaimur (Bhabua), Arwal, Gaya

Jharkhand 617.77 0.00 Chatra 65.43

MP 551.20 10.77 Sheopur 55.03

Chhattisgarh 151.77 19.21 Dantewada 59.02

UP 346.06 0.83 Shrawasti 40.61

West Bengal 687.15 9.87 Uttar Dinajpur 90.23

Table 6d: Maximum and Minimum Per Capita Expenditure within States: Medical and Public Health

State Maximum Per Capita Mimimum Per Capita District with State Average (Rs) Expenditure (Rs) Expenditure (Rs) Mimimum Capita (Capital District) Expenditure

Bihar 927.23 14.16 Supaul 107.54

Jharkhand 474.78 50.85 Giridih 118.18

MP 1,190.90 58.50 Harda 145.84

Chhattisgarh 797.34 16.32 Jashpur 155.03

UP 2,059.59 31.85 Auraiya 124.21

West Bengal 1,013.09 77.98 Uttar Dinajpur 178.58

Table 6e: Maximum and Minimum Per Capita Expenditure within States: Water Supply and Sanitation

State Maximum Per Capita Mimimum Per Capita District with State Average (Rs) Expenditure (Rs) Expenditure (Rs) Mimimum Capita (Capital District) Expenditure

Bihar 170.86 0.00 Arwal 31.06

Jharkhand 61.87 7.95 Pakaur 23.94

MP 266.71 4.37 Sheopur 19.76

Chhattisgarh 356.86 65.30 Kawardha 139.30

UP 714.73 4.72 Pilibhit 28.58

West Bengal 301.29 3.37 Haora 27.05

determinant of the standard of living of the people and has the potential of lifting them out of poverty. The expenditure on education empowers people with skills, knowledge and abilities and is obviously an investment in the human capital of a state. If properly utilised, it has the potential of lifting millions out of poverty. The expenditure on education and health by the government creates an enabling environment that can uplift a state by releasing the creative energy of its people. We shall therefore attempt an analysis of the patterns and trends of government expenditure on these two very important sectors, moving from the state to the district level and examine whether such expenditure is actually contributing towards reduction of intra-state disparity or, on the contrary, increasing it.

Methodology for Micro-Level Analysis

For the micro-level analysis attempted in this paper, we have selected three major heads of accounts, education, medical and water supply and sanitation. Under the major head of account education, three sub-major heads pertaining to primary, secondary and higher education were selected, leaving out technical education and educational administration, since these, by their very nature, would be concentrated in the capital or a few districts and would not be relevant for the purpose of measuring disparity. For medical, the entire expenditure booked under the major head medical was noted. We have also selected water supply and sanitation as a major head and selected the sub-major head water supply under it. For each of the selected major/submajor heads, the total expenditure booked was noted from the computerised records kept by the accountants general of the respective states from the original records, that is, challans/vouchers paid at the treasuries. From the expenditure recorded at the various treasuries, the total expenditure under a major/sub-major head of account within a district for the year 2007-08 was calculated for each of the six states selected for our study. The per c apita expenditure under the respective heads were calculated

Table 7: Expenditure on Headquarters and Capital Outlay, Bihar (2007-08)

Head of Accounts Education8 Revenue Expenditure (Rs Crore) Per Capita Expenditure Revenue (Rs)
Primary Headquarters 1.44 0.16
Others 3,696.40 399.18
Secondary Headquarters 17.65 1.91
Others 841.28 90.85
Higher Headquarters 0.83 0.09
Others 813.10 87.81
Medical9 Headquarters 29.92 3.23
Others 968.69 104.61

by dividing the estimated population of the district for 2007 from the census data of 2001, assuming existing growth rates for the districts mentioned therein. The districts were then sorted in descending order of the per capita expenditure under each major/ sub-major heads. The average expenditure of each state was calculated by dividing the total expenditure in the state under a head by the projected population of the state.

From the average per capita expenditure, the standard deviation, coefficient of variance and disparity ratio7 were calculated for each state for each head of account. All these are standard i nequality measures and results from them closely correlate,

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INTER AND INTRA-STATE DISPARITIES

v alidating the methodology. The disparity ratios are then plotted in the graphs for each head of account.

The districts were then grouped under five classes according to the per capita expenditure made under each head, the classes being defined at intervals of 20% of the maximum per capita expenditure among all the districts. For example, for Bihar, u nder the head “primary education”, the maximum per capita expenditure was recorded for Patna district (Rs 3,867). The classes and the number of districts were thus defined as:

Classes Class Frequency
Intervals (Rs) (No of Districts
within the Class)
1 Top 20% (80% to 100% of maximum per capita
expenditure) 3,094-3,867 1
2 60% to 80% of maximum per capita expenditure 2,320-3,094 0
3 40% to 60% of maximum per capita expenditure 1,547-2,320 0
4 20% to 40% of maximum per capita expenditure 773-1,547 0
5 Bottom 20% (0% to 20% of maximum per capita
expenditure 0-773 37
Total number of districts 38

Table 10: Disparity in Government Expenditure: Secondary Education (2007-08)

Thus in Bihar, there was only one district in which the per capita expenditure was between Rs 3,094 and Rs 3,867, the remaining 37 districts had an annual per capita expenditure below Rs 773. Obviously, the expenditure was concentrated in only one

Table 8: Disparity in Government Expenditure: Primary Education (2007-08)

Bihar Jharkhand MP Chhattisgarh UP West Bengal

Average per capita expenditure (Rs) 399.72 561.76 359.90 427.16 341.22 323.17

Standard deviation 605.54 393.97 376.72 87.58 112.45 143.23

Coefficient of variance 151.49 70.13 104.67 20.50 32.96 44.32

Disparity ratio (%) 950.80 314.13 719.67 75.02 685.62 214.93

of the 38 districts, the rest being in the bottom 20% category in terms of government expenditure, indicating the existence of high disparity, earlier suggested by the coefficient of variance of earlier exercise on disparity ratios. The analysis and the results are summarised in Tables 8 through 17 and the associated charts (p 237) for the five heads of accounts and the six states as mentioned earlier.

Findings and Conclusions

The summarised results of analysis are shown in Tables 6a to 6e (p 234) for all the states for different heads of expenditure. t Primary education showed very high disparity in Bihar, UP and MP; the disparity was moderate in Jharkhand and West Bengal and minimum in Chhattisgarh where as many as nine out of 16 districts were in the top 20 expenditure class. Bihar had the highest disparity ratio of 951% followed by MP (720%) and UP (645%), compared to Chhattisgarh (75%), West Bengal (215%) and Jharkhand (314%).

Bihar Jharkhand MP Chhattisgarh UP West Bengal

Average per capita expenditure (Rs) 91.79 97.94 118.45 141.92 168.94 356.33

Standard Deviation 95.55 83.64 70.30 51.14 68.03 80.27

Coefficient of Variance 104.09 85.40 59.35 36.04 40.27 22.53

Disparity Ratio (%) 648.84 364.75 320.67 149.89 175.53 90.94

t Secondary education showed a similarly high level of disparity, with Bihar being at the top with a disparity ratio of 645%, followed by Jharkhand and MP; the disparity was less pronounced in UP, Chhattisgarh and West Bengal. t Higher education showed much higher disparities, with Bihar again leading the table with a very high disparity ratio of 1737%; all the other states except Chhattisgarh showed very high disparity in expenditure. Except in Chhattisgarh, the capital district received almost all the funds allocated under higher education. t In medical expenditure, UP showed the highest disparity with a disparity ratio of 1632%, followed by Bihar (849%), MP (777%) and West Bengal (524%). Even Chhattisgarh showed very high

Table 9: Number of Districts According to Per Capita Government Expenditure on Primary Education (2007-08)

disparity (504%) in medical expenditure; State Number of Districts Lying within the Per Capita Expenditure Range Total Expenditure Characteristics of the State (Rs) only Jharkhand seems to have less disparity 0-20% of 20-40% of 40-60% of 60-80% of 80-100% of Number Maximum Minimum Average

(359%) in this sector.

Maximum Maximum Maximum Maximum Maximum of Per Capita Per Capita Per Capita Expenditure Expenditure Expenditure Expenditure Expenditure Districts Expenditure Expenditure Expenditure t Water supply showed the highest disparfor a District for a District for a District

ity in UP (2484%), MP (1327%) and West Ben-

Bihar 37 0 0 0 1 38 3,867.18 66.68 399.72

gal (1101%). Bihar showed relatively less dis-

Jharkhand 10 7 0 0 1 18 2,022.54 257.90 561.76

parity (546%) in water supply, while Chhat-

MP 42 0 0 0 1 43 2,730.97 140.84 359.90

tisgarh (209%) and Jharkhand (225%) had

Chhattisgarh 0 1 2 4 9 16 519.18 198.75 427.16

the least disparity.

UP 63 6 0 0 1 70 2,354.43 14.96 341.22

t It is interesting to note the minimum

West Bengal 2 8 7 0 1 18 769.80 75.21 323.17

amounts spent by the state governments in 151% and disparity ratio of 951%. This exer-

Table 11: Number of Districts According to Per Capita Government Expenditure on Secondary Education (2007-08)

cise was carried out for each state and the

State Number of Districts Lying within the Per Capita Expenditure Range Total Expenditure Characteristics of the State (Rs)

results were plotted in graphs, where the

0-20% of 20-40% of 40-60% of 60-80% of 80-100% of Number Maximum Minimum Average three intermediate classes between the top Maximum Maximum Maximum Maximum Maximum of Per Capita Per Capita Per Capita Expenditure Expenditure Expenditure Expenditure Expenditure Districts Expenditure Expenditure Expenditure

20% and bottom 20% were combined. The

for a District for a District for a District

results were so evident that no further statis-

Bihar 37 0 0 0 1 38 625.94 30.34 91.79 tical measures were considered necessary to Jharkhand 13 1 1 0 1 18 397.59 40.35 97.94

drive home the point that in almost all the MP 21 16 5 0 1 43 429.32 49.47 118.45

states there existed an alarming proportion Chhattisgarh 0 6 8 1 1 16 267.32 54.58 141.92

of disparity in government expenditure. This UP 1 26 23 14 6 70 338.41 41.67 168.94 West Bengal 0 1 6 9 2 18 528.47 204.43 356.33

exercise also reflected the results from our

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Table 12: Disparity in Government Expenditure: Higher Education (2007-08)c entral-sponsored social sector schemes such as the Sarva

Bihar Jharkhand MP Chhattisgarh UP West Bengal

Shiksha Abhiyan (SSA) and National Rural Health Mission

Average per capita

(NRHM) in the various districts, which might have the effect of

expenditure (Rs) 88.25 65.43 55.03 59.02 40.61 90.23

reducing the level of disparity under the relevant heads.

Standard Deviation 251.77 145.18 81.19 36.79 45.95 160.67

However, most of the funds spent under such central-sponsored

Coefficient of Variance 285.30 221.89 147.55 62.34 113.15 178.07 Disparity Ratio (%) 1,736.69 944.16 982.15 224.62 850.17 750.60 schemes are not routed through the state budget, but directly transferred to the executing agencies identified for such different districts per capita; for example, in

Table 13: Number of Districts According to Per Capita Government Expenditure on Higher Education (2007-08)

primary education, UP spent only Rs 15 per State Number of Districts Lying within the Per Capita Expenditure Range Total Expenditure Characteristics of the State (Rs) 0-20% of 20-40% of 40-60% of 60-80% of 80-100% of Number Maximum Minimum Average

year per person in Kaushambi district; in sec-

Maximum Maximum Maximum Maximum Maximum of Per Capita Per Capita Per Capitaondary education, Bihar spent Rs 30 per year Expenditure Expenditure Expenditure Expenditure Expenditure Districts Expenditure Expenditure Expenditure for a District for a District for a District

per person in Araria district; in higher educa-

Bihar 37 0 0 0 1 38 1,532.61 0 88.25

tion, Bihar spent less than even Re 1 per year

Jharkhand 17 0 0 0 1 18 617.77 0 65.43

per person in as many as 21 of its 38 districts,

MP 41 1 0 0 1 43 551.20 10.77 55.03

Jharkhand in three out of its 18 districts and

Chhattisgarh 6 7 1 1 1 16 151.77 19.21 59.02

UP in one district (Shrawasti); in medical,

UP 64 4 1 0 1 70 346.06 0.83 40.61

Bihar spent Rs 14 per year per person in Su-

West Bengal 16 0 1 0 1 18 687.15 9.87 90.23

paul district, closely followed by Rs 16 for Table 14: Disparity in Government Expenditure: Medical (2007-08)schemes. So these data could not be captured from the expendi Bihar Jharkhand MP Chhattisgarh UP West Bengal ture booked under the state treasuries. The states are yet to de-Average per capita velop any comprehensive database of the expenditure made on expenditure (Rs) 107.54 118.18 145.84 155.03 124.21 178.58

the central-sponsored schemes. Such expenditure, however,

Standard Deviation 145.60 96.32 171.34 189.25 273.21 211.77

may not radically alter the disparity patterns within the state as

Coefficient of Variance 135.39 81.50 117.49 122.07 219.96 118.59

it is spent in all the districts throughout the state, though in

Disparity Ratio (%) 849.03 358.70 776.50 503.77 1,632.50 523.64

varying degrees. Chhattisgarh in Jashpur district; and in wa-Table 15: Number of Districts According to Per Capita Government Expenditure on Medical (2007-08)

ter supply, only Chhattisgarh recorded a min-State Number of Districts Lying within the Per Capita Expenditure Range Total Expenditure Characteristics of the State (Rs) 0-20% of 20-40% of 40-60% of 60-80% of 80-100% of Number Maximum Minimum Average

imum expenditure of Rs 65 per capita among

Maximum Maximum Maximum Maximum Maximum of Per Capita Per Capita Per Capitaits districts; all the other states recorded less Expenditure Expenditure Expenditure Expenditure Expenditure Districts Expenditure Expenditure Expenditure for a District for a District for a District

than Rs 10 per year per person for providing

Bihar 37 0 0 0 1 38 927.23 14.16 107.54

drinking water in more than one of their

Jharkhand 13 4 0 0 1 18 474.78 50.85 118.18

districts.

MP 41 1 0 0 1 43 1,190.90 58.50 145.84

t Overall Chhattisgarh seems to be the only

Chhattisgarh 15 0 0 0 1 16 797.34 16.32 155.03

state that has spent its resources in the social

UP 68 0 1 0 1 70 2,059.59 31.85 124.21

sectors in the most equitable manner, fol-

West Bengal 16 1 0 0 1 18 1,013.09 77.98 178.58

lowed by West Bengal. Bihar, UP and MP are Table 16: Disparity in Government Expenditure: Drinking Water Supply (2007-08)t Further, the expenditure on departmental headquarters Bihar Jharkhand MP Chhattisgarh UP West Bengal ( secretariat and the directorates), which are mostly located in the Average per capita capital districts, has also not been allocated among the disexpenditure (Rs) 31.06 23.94 19.76 139.30 28.58 27.05

tricts. But as the data in Table 7 (p 234) show, this has hardly

Standard Deviation 35.30 14.08 39.62 68.49 84.28 69.30

any i mpact on the levels of disparity between the capital dis-

Coefficient of Variance 113.67 58.80 200.46 49.17 294.88 256.17

trict and the others. The expenditure on headquarters for

Disparity Ratio (%) 545.80 225.20 1,327.36 209.30 2,484.32 1,101.29

p rimary, secondary and higher education and health services the most inequitable states as far as expenditure on the social in Bihar in 2007-08 distributed among the state population sectors is concerned. would amount to only Re 0.16, Rs 1.91, Re 0.09 and Rs 3.23, t The implications of this inequity in terms

Table 17: Number of Districts According to Per Capita Government Expenditure on Drinking Water Supply (2007-08)

of its potential for social and political unrest,

State Number of Districts Lying within the Per Capita Expenditure Range Total Expenditure Characteristics of the State (Rs)

and increasing impoverishment and aliena

0-20% of 20-40% of 40-60% of 60-80% of 80-100% of Number Maximum Minimum Average tion of the rural sector are grave. The 13th Maximum Maximum Maximum Maximum Maximum of Per Capita Per Capita Per Capita Expenditure Expenditure Expenditure Expenditure Expenditure Districts Expenditure Expenditure Expenditure

Finance Commission needs to give due con

for a District for a District for a District

sideration and weight to this aspect while Bihar 4 20 11 2 1 38 170.86 1.35 31.06
recommending transfers to the states. Jharkhand 5 8 3 1 1 18 61.87 7.95 23.94
MP 42 0 0 0 1 43 266.71 4.37 19.76
Limitations and Other Observations Chattisgarh 0 13 2 0 1 16 356.86 65.30 139.30
t The analysis in this section has not consi- UP 69 0 0 0 1 70 714.73 4.72 28.58
dered the expenditure incurred under West Bengal 16 0 0 1 1 18 301.29 3.37 27.05
236 june 27, 2009 vol xliv nos 26 & 27 Economic & Political Weekly
EPW

INTER AND INTRA-STATE DISPARITIES

Chart 1: No of Districts Lying within Different Expenditure Ranges Per Capita Expenditure on Primary Education (2007-08) 80 70 60 50 40 30 20 10 0

Intermediate range Bottom 20% Top 20%

Bihar Jharkhand MP Chhattisgarh UP West Bengal

Chart 2: No of Districts Lying within Different Expenditure Ranges Per Capita Expenditure on Secondary Education (2007-08) 80 70 60 50 40 30 20 10 0 Bihar Jharkhand MP Chhattisgarh UP West Bengal

Bottom 20% Intermediate range Top 20%

Chart 3: No of Districts Lying within Different Expenditure Ranges Per Capita Expenditure on Higher Education (2007-08) 80 70 60 50 40 30 20 10 0 Bihar Jharkhand MP Chhattisgarh UP West Bengal

Bottom 20% Intermediate range Top 20%

Chart 4: No of Districts Lying within Different Expenditure Ranges Per Capita Medical Expenditure (2007-08) 80 70 60 50 40 30 20 10 0 Bihar Jharkhand MP Chhattisgarh UP West Bengal

Bottom 20% Intermediate range Top 20%

r espectively, which will not materially alter the intra-state d isparity p atterns in the state. t The analysis is based on revenue expenditure only; capital outlay has not been considered because it is not significant compared to the revenue expenditure and also because capital outlay is not made in every district every year in respect of each of

Economic & Political Weekly

EPW
june 27, 2009 vol xliv nos 26 & 27

Chart 5: No of Districts Lying within Different Expenditure Ranges Per Capita Expenditure on Water Supply (2007-08) 80 70 60 50 40 30 20 10 0

Bottom 20% Intermediate range Top 20%

Bihar Jharkhand MP Chhattisgarh UP West Bengal

the heads and a time series analysis is better suited to analyse the patterns of expenditure. Thus during 2007-08, no capital outlay was made in respect of primary and higher education; capital outlay in respect of secondary education was Rs 11.49 crore, which in per capita terms amounted to Rs 1.24 only, and is unlikely to alter intra-state disparity patterns in any significant manner. Similarly in health, the actual capital outlays made during the period from 2004-05 to 2007-08 were Rs 22 crore, Rs 138 crore, Rs 168 crore, and Rs 245 crore, respectively; it was reduced to Rs 130 crore in 2008-09 (BE). In 2007-08, the figure was abnormally high and this was because of Rs 120 crore spent for the construction of health sub-centres and additional primary health centres under the NRHM, a one-time plan expenditure. Without this, the per capita medical expenditure would be only Rs 13.49, which is not likely to make any major impact on the level of disparity between the capital district with a per capita medical expenditure of Rs 927.23 and the other districts, the state average per capita medical expenditure being Rs 107.54.

Notes

1 No reliable data on regional poverty estimates are available after 2000.

2 G Myrdal, Economic Theory and Underdeveloped Regions (London: Duckworth), 1957.

3 Per capita expenditure on health and education has been calculated from Finance Accounts for 2004-05, on the basis of the projected population for the respective states for 2004-05.

4 Per capita expenditure on health and education has been calculated from Finance Accounts for 2007-08, on the basis of the projected population for the respective states for 2007-08, except for UP, for which the data pertains to the Finance Accounts 2006-07.

5 All-India figures have been calculated by dividing the expenditure (BE) of all states for 2006-07 by the projected population of 1.112 billion for the country for 2006. The figures are only indicative.

6 Percentage shares have been calculated on the basis of RE for 2007-08 for all states except UP and Jharkhand; as explained earlier, for UP the data for 2006-07 actuals were the latest available both for total expenditure as well as for sectoral expenditure. For Jharkhand, 2007-08 BE was used for total expenditure. Except for UP, while calculating the percentage share, the sectoral data (expenditure on medical and education for 2007-08) captured from the primary records were, however, based on the actual expenditure. Ratios worked out here are only indicative and even though these may undergo minor changes when reworked on the basis of actual expenditure figures, it would not affect the overall patterns and trends and our observations would still remain the same.

7 Disparity ratio (%)=[(Maximum per capita expenditure in a district-minimum per capita expenditure in a district)/Average per capita expenditure in a state]*100.

8 Adult education, technical education, language and other education have not been considered in the analysis.

9 Pubic health and family welfare have been excluded from the above analysis.

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