Note4Students: 

Mains: Underfunding issues related to welfare schemes;

Mentor comments:  The government’s stubborn refusal to prioritize welfare is baffling, especially in a country where, according to its own data, around 34% of the population survives on less than ₹100 a day, and over 81 crore people depend on free foodgrains to make ends meet. The National Democratic Alliance (NDA) in its current term, NDA 3.0, seems to be perpetuating the trend set in its previous two terms by cutting back on welfare allocations, as evidenced by the analysis below based on Budget documents.

Let’s learn!

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Why in the News? 

On the welfare front, the government has once again failed to boost expenditure on crucial welfare schemes that support the country’s marginalized populations.

Underfunding issues related to welfare schemes:

• Declining Budget Allocations as per GDP%: Both MGNREGA and NFSA have seen continuous declines in their budget allocations as a share of GDP since 2014-15, with MGNREGA’s allocation dropping from 0.29% to 0.26% and NFSA’s from 0.72% to 0.63%.
  • The combined budget allocation for MGNREGA and NFSA has decreased by 25% since 2014-15, highlighting a long-term trend of underfunding these essential welfare schemes. 
• Stagnating Real Wages and Increased Demand: With stagnating rural real wages and increased demand for work under MGNREGA, the current budget does not account for the rising number of person-days generated, which increased by 5.74 crore in the first quarter of the financial year.  
• Neglect of Vulnerable Groups: The National Social Assistance Programme, which provides monetary support to vulnerable groups such as widows, the elderly, and disabled individuals, has not seen any increase in its allocation. Its budget remains stagnant at ₹200 per month for the elderly and ₹300 for widows, despite inflation and the rising cost of living.  
• Chronic Malnutrition Rates: Over 50% of children under the age of five in India suffer from chronic malnutrition, with anaemia rates in women and children significantly higher than the global average—20% and 15%, respectively.  

• Declining Budget Allocations: The budget allocation for the Saksham Anganwadi and Poshan 2.0 schemes has decreased by more than 50% since 2014-15, dropping from 0.13% of GDP to 0.06% of GDP. This reduction in funding undermines the effectiveness of these programs aimed at combating child malnutrition and hunger.
• Mid-Day Meal (MDM) Programme: The MDM programme, which provides meals to about 12 crore children, has also seen its funding halved since 2014-15 as a share of GDP. 
  • Despite its success in improving attendance and nutritional outcomes, the lack of adequate funding limits its potential to address hunger effectively.
• Education Funding Decline: The share of central expenditure on education (primary and secondary) has declined from 0.37% of GDP in 2014-15 to 0.22% today.  
• Health Budget Allocation: While the budget allocation for health has seen a slight increase from 0.25% to 0.28% of GDP since 2014-15, this increase is still inadequate given the high out-of-pocket health expenses that push millions into poverty each year.

What Government can do?

• Increase Budget Allocations to Meet Actual Needs: The government should significantly increase the budget allocations for welfare schemes such as MGNREGA and NFSA to ensure they meet the actual demand for employment and food security.
  • For instance, allocating at least ₹2 lakh crore for MGNREGA, which is approximately 1% of GDP, would help clear pending dues and provide adequate employment opportunities for rural households. This increase would not only address the immediate needs of the population but also stimulate rural economic growth by enhancing purchasing power and consumption.
• Implement Targeted Policy Reforms and Monitoring Mechanisms: The need to establish robust monitoring systems to track the effectiveness and utilization of funds allocated to welfare schemes is crucial.
  • The government should implement targeted policy reforms that focus on the specific needs of vulnerable groups, such as widows, the elderly, and disabled individuals, ensuring that their support systems are adequately funded and responsive to inflation and rising living costs.  

Conclusion: The government must increase budget allocations for welfare schemes and implement targeted reforms with effective monitoring to address underfunding, ensuring vulnerable groups receive necessary support amidst rising costs.