Modi 3.0 retains focus on social sector-higher allocations for education and health in Budget 2025-26

The education sector remains a priority for the government

Budget 2025-26 continued with the Modi government’s focus on increasing spends on education and health. Social sector -comprising of education, health, social justice and empowerment, women and child development saw higher allocations in Budget 2025-26.

The education sector remains a priority for the government -the sector garnered a lion’s share of total social sector spending at Rs 1.28 lakh cr (BE for FY 26) from  Rs 1.25 lakh crore ( Budget Estimate) in 2024-25 and revised estimates of Rs 1.14 lakh crore. Outlay for education has gone up consistently year on year, from Rs97,000 crore in 2022-23.

Allocation for rural development inched up Rs2.66 lakh cr for FY 26 from Rs 1.90lakh crore (revised estimates for FY 25). Budget estimates for FY 25 were at Rs 2.65 lakh crore.

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Allocation for health was up to Rs 98,311 crore from Rs 88,032 crore in revised estimates and Rs 89287 cr (BE) for FY 25. According to the Economic Survey general government’s social services expenditure (SSE) has shown a rising trend since FY17. The SSE as a percentage of total expenditure  has increased from 23.3 per cent in FY21 to 26.2 per cent in FY25 . The social services expenditure witnessed an increase of 21 per cent in FY24 (RE) over FY23 and another 10 per cent increase in FY25 (BE) over FY24 (RE). During the five years from FY21 (pandemic year) to FY25 (BE), the SSE grew at a CAGR of 15 per cent, noted the survey.

According to the data in the economic survey,  Social Sector  outlay of the centre and state governments was Rs 14.8 lakh crore in FY21, it has increased steadily to stand at ₹25.7 lakh crore in FY25 (BE).

Challenges 

While allocations have been steadily increasing in absolute terms , there are significant gaps between budget estimates and revised estimates, indicating the need for effective implementation and increasing absorption capacities. Moreover, while allocation for education has gone up, funding for education has remained stagnant at around 2.7-2.9 per cent of GDP, much lower than the global benchmark of 4-6% set by UNESCO. Regarding health as well, while health expenditures have grown upto 1.9% of GDP, it is still short of the of the 2.5% of GDP target set by the National Health Policy 2017.