Given the limited resources, the government has consistently prioritized strengthening the educational and health profile of the population, the Economic Survey says. Photo: Reuters
Given the limited resources, the government has consistently prioritized strengthening the educational and health profile of the population, the Economic Survey says. Photo: Reuters

Not enough fiscal space to increase public spending on social sector, says Economic Survey

Being a developing economy, there is not enough fiscal space to increase the expenditure on critical social infrastructure like education and health in India, the Economic Survey states

New Delhi: Higher public investment in the social sector, including education and health, is critical for India, but being a developing economy “there is not enough fiscal space" to increase the expenditure, the Economic Survey 2017-18 said on Monday.

“Investment in human capital is a pre-requisite for a healthy and productive population for nation building. Being a developing economy, there is not enough fiscal space to increase expenditure on critical social infrastructure like education and health in India," the survey said.

“Public investment in social infrastructure such as education and health is critical in the development of an economy. However, the expenditure on social services by the centre and states as a proportion of GDP (gross domestic product) has remained in the range of 6% in 2012-13 to 2014-15. There has been a marginal decline to 5.8% in 2015-16 that has moved up to 6.6% in 2017-18 (budget estimate)," the Economic Survey said.

Of the 6.6% of GDP on social sector, 2.7% goes to education in 2017-18, down from 3.1% in 2013-14, the Survey said. This is not even half of what the burgeoning education sector has been demanding for years. For more than 30 years, there has been a demand to spend 6% of GDP only on education.

Similarly, 1.4% goes to health in 2017-18 up from 1.2% in 2013-14. This, too, is less than what the sector is demanding for years. Rest of social sector has a pie of 2.2% of GDP in 2017-18. “Given the limited resources", the government has consistently prioritized strengthening the educational and health profile of the population, the survey said. As India is poised to grow as one of the leading knowledge economies, education, skill development and health will remain priorities for the government.

India has nearly 300 million students across 1.5 million schools, more than 51,000 colleges and 864 universities.

“India has made significant progress in quantitative indicators such as enrolment levels and physical infrastructure like construction of school buildings/classrooms, drinking water facilities, toilet, etc… In addition to quantitative indicators, the quality of education also needs to be monitored and assessed," it added.

As per the Survey, India, however, is incrementally increasing its social sector spending in terms of absolute numbers—Rs9.84 trillion in 2016-17 revised budget to Rs10.94 trillion in 2017-18 budget estimate.

To showcase how the education spending is improving access and reducing discrimination, the Economic Survey said India has been successful in achieving gender parity in the school sector and in higher education it is moving towards a better gender parity.

In 2016-17, for every 100 male students, there were 94 female students. This is an improvement from 2014-15, when there were 92 female students for every 100 male students. “The budget should not only focus on increasing the spend on education and skilling programmes but also allocate a substantial amount towards measuring the quality of vocational training programmes. Rather than just training and creating the volume, we should focus on the adoption of outcome-based training practices," said Neeti Sharma, a senior vice-president at Teamlease Services , a staffing and training firm.

Industry lobby Associated Chambers of Commerce of India, or Assocham, in an email note said its is not only expecting a higher education budget to correct under funding but also seeking GST relief for allied services of the higher education sector.

On health front, the Survey said growing expenditure on health is burdening the public in general. It said the National Health Policy has “recommended increasing state sector health spending to more than 8% the state government budget by 2020".

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