Social sector gets a Rs 6 lakh crore push in Budget 2026-27

Social sector gets a Rs 6 lakh cr rupee push in Budget 2026-27

• Rural, health, and education budgets saw modest increases for FY 2026-27
• VB-GRAM replaces MGNREGA, focusing on rural jobs linked to infrastructure
• Social security coverage doubled from 24.4% in 2021 to 48.8% in 2024

Did our AI summary help?

Finance Minister Nirmala Sitharaman’s ninth consecutive budget tinkered with the social sector spends which includes the ministry of rural development, health, education and social welfare and a slew of schemes.

Allocation for Rural development saw a modest increase from Rs 2.6 lakh crore to Rs 2.73 lakh crore in FY 2026-27 (Budget Estimates). Health  ministry’s allocation went up from Rs 98,311 crore (BE- 2025-26) to Rs 1.04 lakh crore for FY27. Revised estimates – the actual spending by the ministry was at Rs 94,625 crore.

The Education ministry also saw a marginal uptick in its allocation from Rs 1.28 lakh crore (FY 2025-26) to Rs 1.39 lakh crore ( Budget estimates in FY 2026-27).

“Our third kartavya, aligned with our vision of Sabka Sath, Sabka Vikas, is to ensure that every family, community, region and sector has access to resources, amenities and opportunities for meaningful participation,” the finance minister said.

Modi government’s social sector strategy over the last five years has seen a shift from a relief model to  a more tech-driven model focused on asset creation  and overall human development. Pandemic response budgets were largely focused on providing free food grains -  with the key focus being on survival. There were massive allocations  for PM Garib Kalyan Anna Yojana  and MGNREGA for generating rural employment. From 2023, there has been a shift in strategy towards assets creation – with emphasis on Jal Jeevan Mission  (piped water  to over 15 crore households by 2026); PM Awas Yojana (housing for all).

In 2026, the government replaced schemes like MGNREGA with VB-GRAM (Viksit Bharat Gramin)- which links rural employment to durable infrastructure like water  conservation and irrigation projects. VB-GRAM was allocated Rs 95,692 crore in FY27.

There has been also a shift  towards expanding state facilities for specialized  care , Budget 2025-26 mandated setting up Day Care Cancer Centres in all district hospitals , adding 75,000 medical seats over five years. Ayushman Bharat was expanded to include senior citizens and gig workers.   Budget 2026-27 emphasizes on building a strong ‘care ecosystem’ – covering geriatric and allied care services. Under which 1.5 lakh care givers will be trained.

Overall government expenditure on social services rose to 7.9  per  cent of GDP  in FY 2026. Critics say that housing and  water sanitation allocations have been steady, while  share of education and traditional  rural development (as a per cent of total expenditure) has stagnated  or declined from pandemic peaks. The ILO has reported that India’s  social security coverage has nearly doubled from 24.4% in 2021 to 48.8% in 2024

Social sector expenditure as a percentage of total union government spending reached an all time low of 17% in 2024-25 before a recovery to19% in 2025-26.