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LATEST NEWS UPDATES | The downside of govt's social sector push -Nitin Sethi

The downside of govt's social sector push -Nitin Sethi

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published Published on Mar 25, 2016   modified Modified on Mar 25, 2016
-Business Standard

While allocations to several social sector schemes have been increased, concerns about the direction of the funds being ploughed remain

The health and education sectors have trudged along the last two years awaiting direction that would be set through new policies the National Democratic Alliance government promised. In the absence of these guiding documents, most observers have been left to read the intermittent policy decisions like tea-leaves to guess the government's intent.

The National Education Policy was to be finalised by end-2015. The Ministry of Human Resource Development mandated an extensive exercise of consultations across the country that some have criticised for the structure of the time-consuming engagements and their effective value. Besides hundreds of other meetings, the mandate was to incorporate views from 250,000 meetings at the panchayat level. The report submission got delayed.

In January 2016, the Minister of Human Resource Development, Smriti Irani, gave the committee till February to finish the report. Now, the report is expected in April at the earliest, say sources in the ministry. It would still be a draft.

The story of the National Health Policy looks less promising. The policy-making on this front ran into rough weather months ago and is yet to emerge from it. The Niti Aayog presented a contrasting private sector and insurance-dominant view compared to the steering committee tasked to draw up the policy. After the first draft with a detailed and phased time-line for rolling out the policy was formulated, the Niti Aayog objected, rubbishing the main tenets of the report and asked for an overhaul. The policy has been stuck ever since.

"One cannot see the light at the end of this tunnel yet. The government has not emerged from the fundamental debate ignited by Niti Aayog," says one of the steering committee members helping draft the report.

A different stand

Even as the government jostles with policy statements, it has displayed a difference of approach from the previous United Progressive Alliance regime. The first policy shift in the social sector in general, a tectonic one at that, occurred with the acceptance of the Fourteenth Finance Commission and the Union Budget for 2015-16. Allocations for many social sector schemes were pared down justified by the additional resources transferred to states from the tax pool.

The health ministry did not suffer a cut but like UPA, the NDA government went with the steady rate of annual increase in budgetary support of around 7 per cent from Rs 31,537 crore in 2014-15 to Rs 33,813 crore in 2015-16 - almost the same percentage of GDP as the previous year, pegged around 0.25 per cent. Within that the flagship National Rural Health Mission suffered a cut of 11 per cent, notes Accountability Initiative. Supporting nutrition programmes such as ICDS suffered cuts too.

In comparison, the budgetary allocations for education took a direct hit both as a percentage of GDP and as a percentage of total budgetary expenditure, analyses Centre for Budget and Governance Accountability. Department of school education and literacy suffered the cut in real terms - pared down from Rs 45,722 crore in 2014-15 to Rs 42,817 crore in 2015-16. The allocation for Sarva Siksha Abhiyan was slashed from Rs 24,380 crore in 2014-15 to Rs 22,015 crore in 2015-16, says Accountability Initiative.

For several centrally-sponsored schemes, the government eventually did revise the budget upwards. The trouble arose from the process set in motion as a consequence of adopting the Fourteenth Finance Commission - the revision in centre's share of contribution to centrally sponsored schemes. By the time the government had decided the new sharing ratios for the schemes in September-October 2015, delays of transfers to the service delivery points had been recorded across the country.

This has now been documented across centrally sponsored schemes including those in the health and education sectors - the release of funds in the first two or three quarters of the financial year got choked in several areas. Accountability Initiative records, "In FY 2015-16, by December, only 49 per cent of schools had got their annual school grants (compared with 73 per cent for all of FY 2014-15). In fact, 31 per cent of schools had not received any school grants till December."

Some preliminary non-government studies also have tried to assess how states absorbed and spent the unconditional transfer of revenue show. Results varied across states and specific social sector segments. Too many states had prepared their budgets before the changed fiscal structure of the 2015-16 budgets. The government is yet to make such a comprehensive assessment.

New focus

But by 2016-17, smarting under the suit-boot tag thrown at it by the Opposition, NDA was back trying to re-establish a pro-poor image and made much of its investments in to central government's farm and social sector. While budgetary support to several schemes has been restored or marginally increased in absolute terms, experts remain concerned about the overall direction and character of the funds being ploughed in.

The health ministry budget got ramped up by funds committed to insurance schemes and commitments to providing dialysis machines to districts through public-private partnership. Last year, the government had brought focus to the immunisation programme upfront. The flagship National Health Mission, in contrast, has got pared down this year.

In Education, the spotlight shifted to a Higher Education Financing Agency with a capital base of Rs 1,000 crore, while the Rashtriya Uchchatar Siksha Abhiyan suffered a cut of Rs 250 crore.

"While the health policy debate is stuck, the government has indicated its inclination for the insurance-based system. Yet we don't know if this is a piece-meal offer while the final vision is sketched out or not," says a member of the steering committee drawing up the health policy.

"On the one hand you have to think if insurance is the way out. On the other is the fact that, even if states are willing, the expertise is not accessible at that level to guide and direct funding priorities in complex concerns like health," explains a former health secretary.

Similarly on the education sector, Pratap Bhanu Mehta, president of the Centre for Policy Research, has spoken of the government's move towards dependence on private sector to provide higher education.

But a lack of clear enunciation of its intent beyond the budget has left many observers wondering if these are one-off reactions or part of a larger belief system NDA brings to the social sector.

"The budgetary shifts need to be part of a framework and direction that a clear policy can provide. These piece-meal annual special steps cannot add up to make a dent in areas where there is still a lot of work required to catch up even with other developing countries - education and health. Hopefully this year we should have these two policies in place," says a senior official in the government involved in development of one of the two policies.

If the government does get the policies on the two sectors in place by this year, it would have only around two and a half years to implement these - a tough ask even for a government with much greater political clarity on the social sector.

Business Standard, 24 March, 2016, http://www.business-standard.com/article/economy-policy/the-downside-of-govt-s-social-sector-push-116032400585_1.html


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