When the Narendra Modi-led National Democratic Alliance (NDA) government rode to power with a thumping majority in 2014, the expectation was that Modi—who had promised the electorate “minimum government, maximum governance" in his campaign —would force a cutback in flagship welfare schemes initiated during the tenure of the United Progressive Alliance (UPA) government, and shake up budgetary allocations.

Yet, the actual record of the second NDA government has been quite similar to that of the UPA, and quite unlike that of NDA-I, a Mint analysis of budget figures show. Consider the spending on two key rural ministries for instance: agriculture and rural development. Their combined share in overall central spending averaged 4.5% in NDA-I, 6% in UPA-I, and 6.7% in UPA-II. In the first two years of the current NDA government, the spend on those rural-centric ministries was relatively lower. But since then, this share has seen a sharp increase, taking the average spend beyond the UPA-II period.

Even when one considers the aggregate rural spending on major schemes (including rural spending by other ministries such as that of the power ministry on rural electrification), the average spend in recent years does not appear too different from the UPA-era average, as an analysis by Mint’s partner, HowIndiaLives showed.

When it comes to spending on social infrastructure, which economists consider necessary to drive human capital formation and long-run growth, the NDA-II’s record has been a tad poorer compared to its immediate predecessor. The average spending on health and education (and on allied ministries such as drinking water and sanitation, which have a direct bearing on health outcomes) under NDA-II at 7.6% is considerably lower than UPA-II (8.3%), and is roughly the same as it was under UPA-I (7.4%).

But even on this count, NDA-II’s record is closer to the UPA tenure than it is to NDA-I, which saw a paltry 4.5% spend on social infrastructure.

The analysis considers spending shares (as a share of overall spending) rather than spending growth as these shares helps us understand how each sector has been accorded importance relative to all others. Spending growth fluctuates year to year depending on nominal growth expectations and overall macro-economic environment.

Even when we consider the divide between capital and revenue expenditure, NDA-II’s record appears much more similar to that of UPA tenure than to the first NDA government headed by the late Atal Bihari Vajpayee.

Under Vajpayee, the average share of capital expenditure in overall spending was as high as 18%, which fell to 15% during UPA-I, and further to 12% during UPA-II.

Under NDA-II, this ratio has risen marginally to 13%, which is still lower than what it was under UPA-I. Apart from the oil bonanza, it is the cuts in capex spending that seems to have sustained the fiscal consolidation under NDA-II. On the fiscal consolidation front, its track record is much better than that of UPA.

While the NDA-II claims credit for having transferred more to states by implementing the recommendations of the 14th finance commission (FFC), the fact remains that its record here too is not that different from previous governments.

The states’ share in the gross tax revenue of the centre did shoot up in 2015-16, compared with the year-earlier period. But as a 2016 NIPFP working paper by NIPFP researchers Mita Choudhury, Ranjan Kumar Mohanty and Jay Dev Dubey pointed out, the year before FFC recommendations were implemented was an unusually low year for central transfers to states.

Aggregate transfer to states as a percentage of gross tax revenues of the centre increased from 55% to 57% between 2014-15 and 2015-16. This share was, however, more than 60% in earlier years, as the accompanying chart shows.

The latest data for 2018-19 (revised estimates), shows that the share is back to the 55% level, last seen during 2014-15.

Overall, the Modi government’s record has not been very different from that of its predecessor, and starkly different from that of the Vajpayee government. Even if its rhetoric may suggest otherwise, the data shows that the Modi government has largely followed the UPA template in its allocations.


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