Will the FY26 Budget reverse the decline in social sector spending?

Union Budget allocations for social sectors declining rapidly, impacting schemes like MGNREGS and PM-POSHAN, raising concerns for future.

The share of the Union Budget allocated for the social sector has declined rapidly in recent years. Data show that the outlays to most schemes under the rural development, education, health, and social welfare heads have either declined or stagnated.

Table 1 shows the allocations for various social sectors as a share of the total Budget.

Expenditure on health as a share of the total Budget declined from 2.47%-2.22% in the FY18-22 period to 1.85%-1.75% in the FY23-25 period. The share of the total Budget allocated to the Ministry of Rural Development did not cross the 6%-mark in the last three years, which was the case for many years prior.

Similarly, allocations for higher education as a share of the total Budget declined from the 1.57%-1.37% range in FY17-20 to 1.27%-0.88% in FY21-25. Allocations for school education declined from the 2.18%-1.96% range to 1.61%-1.23% and allocations for social welfare schemes declined from the 1.89%-1.61% range to 1.17%-0.97% in the same period.

The reduced allocations can be better understood at the scheme level. Table 2 shows the allocations for various social sector schemes as a share of the total Budget.

Notably, allocations for schemes such as the Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS), introduced under the United Progressive Alliance government, have declined significantly over time.

The ₹86,000 crore (Budget Estimates) allocated for MGNREGS for 2024-25 formed only 1.78% of the total Budget, a 10-year low. Latest data show that the Rural Development Ministry was short of ₹4,315 crore, which resulted in a delay in the disbursement of wages to MGNREGS workers.