Budget Analysis | Higher spending in pandemic year, but only a few critical schemes gained

The Union government’s expenditure in the COVID-hit fiscal year 2020-21 would likely be 13 percent higher than budgeted due to increased spending on livelihood schemes, direct benefit cash transfers, free rations and fertiliser subsidies. However, spending on key programmes such as the ones meant for child health and welfare, education, sanitation and rural infrastructure suffered big cuts.

Overall, the Union government is set to spend Rs 34.50 lakh crore in the current fiscal against the budgeted Rs 30.42 lakh crore, finance minister Nirmala Sitharaman announced while presenting the budget proposals for the fiscal year 2021-22.

Tall Target

The spending on central sector projects and schemes was estimated to rise 56 percent, from Rs 8.32 lakh crore to Rs 12.64 lakh crore, and that on centrally sponsored schemes by 14 percent to Rs 3.88 lakh crore from the budget estimate of Rs 3.40 lakh crore, budget documents show. Actual spending might fall short of the revised estimates, as the government’s expenditure plans for the fourth quarter is ambitious.

Central sector projects and schemes are those that are fully funded by the Centre while centrally sponsored schemes are those where the Centre and states share the cost.

Among the key centrally sponsored schemes, the outlay for Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS) was enhanced by 81 percent, as migrant workers who had returned to villages demanded work. The 2020-21 budget had provided Rs 61,500 crore. That outlay was increased by Rs 40,000 crore in May 2020. Another Rs 10,000 crore has been provided in the revised estimates, as demand for such work continues to be strong.

The spending on the National Social Assistance Programme, a programme to provide pensions to the vulnerable sections such as the elderly, widows and those with disabilities, was up 363 percent. This jump can be attributed to direct benefit transfer into the Pradhan Mantri Jan Dhan Yojana (PMJDY) accounts of women. About Rs 30,957 crore was transferred into a more than 20 crore Jan Dhan accounts operated by women, with each account holder getting Rs 500 for three months as COVID relief.

The outlay for Pradhan Mantri Awas Yojna (PMAY), a programme to assist people in rural areas to build pucca homes, was up 47 percent to Rs 40,500 crore. The demand for assistance under the scheme has been rising, as households building homes for self-occupation under PMAY can claim wages for a specific number of days from MGNREGS.

The spending on these three programmes will be up 98 percent from the budgeted numbers, according to revised estimates of the budget.

The Gainers

Among the central sector projects, the three food subsidy schemes under the National Food Security Act saw the highest rise, as the government gave free or subsidised rations to millions of below the poverty line (BPL) cardholders and other vulnerable sections of the society. There was a 101 percent rise in spending on assistance to state agencies for intra-state movement of foodgrain and fair price shop (FPS) dealers margin, a 341 percent increase in food subsidy to Food Corporation of India (FCI) and 110 percent rise in food subsidy for decentralized procurement of foodgrains. The combined spending on the three scheme has been revised to Rs 4.30 lakh crore from Rs 1.19 lakh crore provided in the budget – an increase of 261 percent.

The estimated spending on highway building by the National Highway Authority of India (NHAI) was up 15 percent and on roads works by 7 percent. Highways and road-building involve large expenditure, collectively about Rs 1.01 lakh crore in the revised estimates against Rs 0.96 lakh crore in the budget estimates.

And The Losers

However, the spending on Pradhan Mantri Gram Sadak Yojna (PMGSY), a rural employment cum rural road-building scheme, was down 30 percent, as work was stalled during the lockdown.

Swachh Bharat Mission also faced spending cuts. The outlay for the scheme –urban and rural – was pruned by 43 percent.

Public spending on the national education mission was cut by 28 percent and the spending on integrated child development service (ICDS) by 30 percent. The ICDS is a welfare scheme for preschool children and their mothers, under which food, pre-school education, primary healthcare and immunisation is provided. The national education mission and ICDS are centrally sponsored schemes.

The spending on Pradhan Mantri Kisan Samman Nidhi (PM-Kisan), a central sector scheme under which Rs 6,000 is transferred to farmer families in three instalments, has been cut by about 13 percent.