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The Social Sector Is Again the Target of Spending Cuts

Dipa Sinha

The Budget speech mentions six principles of ‘Viksit Bharat’: zero-poverty, quality education, comprehensive healthcare, meaningful employment, inclusion of women in economic activities, and farmers’ well being. This is followed by 10 broad areas that the proposed development measures span. However, Budget figures show that these measures are not sufficiently backed by allocations. This is disappointing given that there is widespread acceptance of not only the economic slowdown, but also the slump in consumption demand. Academics, industry, and civil society have all been recommending demand-side measures to increase the disposable incomes of the poor, lower classes, and the middle class.

Reduced allocations

While agriculture is identified as an engine of growth, there is hardly any increase in allocation for the Department of Agriculture and Farmers’ Welfare — from ₹1.22 lakh crore in 2024-25 (BE) to ₹1.27 lakh crore in 2025-26 (BE). In fact, the current year’s allocation is even less than the RE for 2024-25 (₹1.31 crore). The national mission on oilseeds does not find a mention in the Agriculture budget figures and a measly ₹1,000 crore has been allocated for the mission for pulses. The allocation for food subsidy is also more or less the same as last year (₹2 lakh crore) indicating that there is no hope of pulses and oils being included in the public distribution system. This could have offered stable and affordable prices for consumers, allowing them to spend their incomes on other items. Even the budget for MGNREGS remains stagnant at ₹86,000 crore despite demands from workers’ unions and also the corporate sector for an increase in wages under this scheme.

The Prime Minister’s Package for Employment and Skilling announced last year also does not seem to have really taken off. The allocation for the PM Internship Scheme in 2024-25 was ₹2,000 crore, but reduced to ₹380 crore (RE). However, this year’s allocation is significantly higher at ₹10,780 crore, which would be sufficient to cover about 18 lakh people. The number of registrations so far is only 1,25,000. The aim is to provide one crore internships in five years. Even if the targets are achieved, these internships only pay ₹5,000 per month and there is no guarantee of a job.

It is interesting that the first issue that gets mention in ‘investment’ is ‘investing in people’ and within this, the announcement that the cost norms for the Saksham Anganwadi and Poshan 2.0 ‘will be enhanced appropriately’. Yet, there is hardly any increase for the Saksham Anganwadi — from ₹21,200 crore 2024-25 (BE) to ₹21,960 crore 2025-26 (BE). The actual expenditure for 2023-24, two years ago, was already ₹21,810 crore. These cost norms have not been updated since 2018 and just indexing them to inflation would require higher budgets. If the honorariums of Anganwadi workers and helpers are also increased, as they should be, even higher allocations would be needed.

The ‘investing in the economy’ part focusses mostly on infrastructure projects with an emphasis on public-private partnership mode. This has been tried, but does not seem to have contributed to either recovery in demand or in employment generation.

Reviving demand

While there is excitement over the tax-related announcements for the middle class, it is important to remember that a very small proportion of Indians pay personal income tax and this initiative might be nowhere enough to revive rural and urban demand. Given stagnant rural wages over the last decade and the recent concerns related to urban consumption demand, along with the reverse structural change being observed in the labour market where employment in agriculture is rising, it is clear that much larger amounts of resources need to be pumped into rural areas and towards the lower income classes. There is no point bemoaning the fact that private investment is not forthcoming even though profits have been rising, as the Economic Survey does, while doing nothing to increase incomes of the masses and demand. Investment will only come when there are prospects of added revenue, which clearly the industry is not very buoyant about currently.

What one would therefore have expected from this Budget if it was to make a difference to growth and equity is big spending towards schemes such as MGNREGA along with newer schemes for small and labour-intensive projects, supported by enhanced spending on the social sector. However, budgets for most of these schemes and departments (education, health, social security pensions, mid-day meals) are either stagnant or have increased nominally. The overall Budget figures are also telling: while what the economic situation asks for is an expansionary Budget, we see projected fiscal deficit being lower at 4.4% for 2025-26 from 4.8% for 2024-25 even after taking into account the estimated revenue forgone of ₹1 lakh crore because of the income tax reforms. The total expenditure as a proportion of GDP has also gone down from 14.6% in 2024-25 to 14.2% in 2025-26 with the share of capital expenditure in total expenditure increasing from 27.9% to 30.6%. Obviously, spending has been cut. Once again the target of these cuts is the social sector.

(Dipa Sinha is an independent researcher and development economist. Courtesy: The Hindu.)

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In another article published in The Wire, titled Despite the ‘Investing in People’ Rhetoric, Budget 2025 Does Little for the Social Sector, Dipa Sinha writes (extract):

Spending on school education

The school education budget saw an increase from about Rs 73,000 crores in 2024-25 Budget Estimates (BE) to about Rs 78,600 crores in 2025-26. This increase of 7.6% barely keeps pace with inflation and does not provide much leeway to fill the massive gaps in human resources and infrastructure that the sector faces.

The finance minister’s speech also did not mention basic issues, such as making the requisite number of teachers or classrooms available, and was focussed only on digital interventions. While utilising the advantages offered by technology is critical and it is also important to address the digital divide right from childhood, it is well known that digitisation is not a substitute for all facilities that a school requires.

It is also worrying that year after year, even the allocated amounts for school education do not get spent. The revised budget for school education for 2024-25 for instance is around Rs 68,000 crores, about Rs 5,000 crores less than what was allocated initially.

One of the flagship programmes of the department of school education is PM POSHAN or the mid-day meal scheme. In its initial days, this scheme played a crucial role in increasing enrolment and attendance, especially of girls and children belonging to marginalised sections.

To this day, it contributes to addressing classroom hunger and providing at least one nutritious meal to children per day. It has been over 20 years since hot, cooked meals in schools were introduced nationally. It is now time for it to be reimagined in the current scenario.

With more children entering high schools, there is a demand for the mid-day meals to be extended at least up to class X (at present children up to class VIII are covered). This is also important in the context of increasing consumption of processed and packaged foods.

Many field reports show that most children in this age group come empty stomach to school and are often unable to carry lunch from home. They either remain hungry or eat whatever is available and affordable, usually a packet of namkeen or biscuits.

Furthermore, the meal itself needs to be upgraded to be made more nutritious and diverse. While many have discussed the addition of eggs, milk and fruits, the budget for PM-POSHAN does not allow for any of these improvements. The BE 2024-25 was Rs 12,467 crores, increased to Rs 12,500 crores this year. However, the Revised Estimates (RE) for 2024-25 are even lower at Rs 10,000 crores and it is essential to investigate the reason behind this decline.

Nutritional support through anganwadis

Although there is no mention of school meals, the budget speech did mention the nutritional support provided to pregnant women, lactating mothers, young children and adolescent girls in aspirational districts through anganwadis.

The finance minister has said that the cost norms would be enhanced appropriately. This is much needed as the current norms of Rs 8 per day for children and Rs 9.50 for adolescent girls and women were set seven years ago and have not been revised since. Not only do they need to be increased to account for inflation, but also to ensure that nutritional needs are met more effectively through inclusion of eggs and other animal proteins.

The budget for Saksham Anganwadi and POSHAN 2.0 saw hardly any increase despite this mention in the speech. The allocation for 2024-25 was Rs 21,200 crores, reduced to Rs 20,070 crores in the RE and increased to Rs 21,960 in 2025-26 BE. The anganwadi and mid-day meal budgets need to be increased not only to improve meal quality and expand coverage, but also to raise the wages of cooks, anganwadi workers, and helpers, which remain unacceptably low and have not been revised in a long time.

Spending on health

The budget for health too remains quite low. The finance minister’s speech mentioned increasing seats under medical education and day care centres for cancer patients, both worthy intentions. But the overall increase in the health budget is not enough to cover even the existing programmes, let alone new ones.

The allocation for the Department of Health and Family Welfare has increased by 9.5% from about Rs 88,000 crores BE in 2024-25 to Rs 96,000 crores allocated this year. Once again, the RE for 2024-25 was slightly lower (by about Rs 1,000 crores). It has been repeatedly stated that the Union government’s allocation for health needs to be doubled to meet the health spending targets.

The budget for the National Health Mission (NHM) which contributes towards strengthening the public health system, especially at the primary care levels, also didn’t see a substantial increase. The NHM budget has increased by barely 3.4% (therefore a decline in real terms) from an allocation of Rs 36,000 crores last year to Rs 37,223 crores this year.

On the other hand, the Pradhan Mantri Jan Arogya Yojana (PM-JAY), an insurance-based scheme, saw a substantial increase of almost 29% from Rs 7,300 crores to Rs 9,406 crores. While this was expected given the expansion of PMJAY to all elderly people, it still solidifies concerns that the insurance model, where there is a substantial transfer to the private sector, comes at the cost of reduced resources for strengthening the public health system. Other problems with this model of healthcare have been discussed extensively in a number of previous articles.

On the whole, this budget continues the longstanding trend of treating the social sector as a residual and not as one of the core sectors of the economy. The fact that basic education and health forms the basis for human capital – on which one can build skills, a core ingredient for growth – is not taken into account when allocations are made. Although the rhetoric of investing in people has been used, the allocations remain skewed towards large-scale infrastructure projects on one hand and fiscal consolidation on the other. All this, despite an overall slowdown in economic growth and consumption demand.

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Stagnant MGNREGS Allocation Part of Govt’s ‘Sabotage’ of Scheme:

NREGA Sangharsh Morcha

The Wire Staff

At Rs 86,000 crore, the Union government’s unchanged budgetary allocation to the Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS) is inadequate and part of its “systematic sabotage” of the scheme, an umbrella body of workers and activists has said.

In a statement issued on Sunday (February 2), the NREGA Sangharsh Morcha said that when inflation is accounted for, the scheme’s allocation in the 2025-26 budget is effectively lower by around Rs 4,000 crore compared to the 2024-25 budget.

While the allocation to the scheme in 2024-25 amounted to 0.26% of the GDP, the allocation in the budget presented on Saturday was equal to 0.24% of the GDP, its statement also said.

Under the MGNREG Act, rural households are guaranteed 100 days of employment a year at specially notified wages.

According to data current as of February 1, households under the scheme availed an average of a little less than 45 days of work this fiscal year, the Morcha said, adding that the figure for 2023-24 was around 52 days. This fiscal year will end on March 31.

The deficit for the scheme stands at Rs 9,860 crore and pending wages at Rs 6,949 crore as of February 1, it said, also writing that “an average of 20% of the [scheme’s] budget is used to clear past dues”.

“This inadequate budget will inevitably result in” delays in wage disbursement, worsening financial distress for rural workers; suppress demand for work under the scheme, in turn “denying people their right to employment”; and weaken rural infrastructure, the Morcha charged.

It also said the government’s “strategy of low initial allocation is a deliberate attempt to suppress MGNREGA work demand” and that when combined with the scheme’s “low wage rates”, participation is discouraged.

“This is not neglect; it is systematic sabotage of a critical lifeline for millions,” said the Morcha.

The parliamentary standing committee on rural development and panchayati raj in December said that inflation and the cost of living in both urban and rural areas had “risen manifold and is evident to all”.

“Even at this moment, going by the notified wage rates of MGNREGA, per day wage rate of around Rs 200 in many states defies any logic when the same state has much higher labour rates,” it added.

Wages for the MGNREGS are revised every year based on changes in the agricultural labour dimension of the consumer price index (CPI-AL).

Last February, the parliamentary standing committee on rural development and panchayati raj said that the practice of revising wages with 2010-11 CPI-AL values as the benchmark was “not coherent with the present inflation and cost of living”.

Citing the finds of an expert committee which recommended in 2019 that the need-based minimum wage in India be fixed at Rs 375 a day, the standing committee recommended that MGNREGA wages be ‘revised accordingly’.

As of the last revision in MGNREGA wage rates in March 2024, no administrative unit in India pays more than Rs 374 per day.

(Courtesy: The Wire, an Indian nonprofit news and opinion website. It was founded in 2015 by Siddharth Varadarajan, Sidharth Bhatia, and M. K. Venu.)

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Joint Statement by Central Trade Unions on the 2025-2026 Budget

The following statement was released to the press by the platform of Central Trade Unions and independent Sectoral Federations/Associations on Budget 2025-2026 presented by the finance minister Ms Nirmala Sitharaman.

Press Statement

• Pro-corporate Budget 2025-2026, shattering hopes of workers, farmers, unemployed youth, students and women
• No relief from price rise of essential commodities
• Job losses and jobless growth is the main direction.
• Trade Unions to organise Nationwide Protest on 5th February

The Budget 2025-2026 has once again treaded the path to the advantage of big business corporate houses, fails to address the unprecedented unemployment situation, aggravating agrarian crises, uncontrolled inflation resulting in rising prices of essential commodities, continuity of polices of privatisation and sale of Public Sector enterprises and Public services, less budget to education and health making it difficult to access by the poor, marginal, lower income groups as well as middle classes.

The announcement of 100 percent FDI in insurance sector would be damaging not only to our common people and the farmers but to the country’s economy as well. The policy of handing over public sector enterprises and public infrastructure to the corporates through the policy of National Monetisation Pipeline to continue aggressively.

The policies of the Union government have resulted in the increase of inequalities and this budget will ensure that trajectory to continue. Once again announcement is made of another set of schemes whereas the track record of this government has been to announce schemes and never inform the nation what happened to the implementation of the same. Mrs Sitharaman made a loud statement that ” A country is not just its soil; a country is its people”. Yes, Madam the country is its people among whom the vast majority are the wealth producing sections of our society- the workers and the farmers who are totally neglected in this budget.

This budget is another blow to informal economy workers, unemployed youth, poor and marginal farmers who are ignored. The budget does not do justice to the needs of our people for more needed allocation to education (it is only 2.6%), health (it is only 1.9%), drinking water, shelter to the poor, marginal and lower income group people. Some cosmetic announcements are mainly to garner votes only.

The raise in the tax relaxation to middle class is made but with the price rise of essential commodities, expensive healthcare and education, wage depression due to inflation, hence this is no big bonanza to middle class.

The fact revealed by Economic Survey that the monthly wage of self-employed and the salaried is gone down in 2023-2024 from 2017-2018. In case of self-employed men, the wage is lower by 9.1% and for females by 32% in this mentioned period. Similarly for salaried class reduction was for males 6.4% and for females 12.5%. During this very period the corporates increased their wealth by 22.3 % stealing the wages of working people is one of major factor in that. Employment expanded only by 1.5 % as per the same survey. The expenses on education and health have increased exorbitantly which is a burden on the poor sections of our people including the middle class. Hence this so-called jubilation of increase in the tax slab for the middle class is more of a propaganda specially to garner votes in the assembly elections in Delhi and the coming election in Bihar. To keep its ally in Bihar within NDA fold and the forthcoming election in the state, the schemes were announced but there is no guarantee that they would be realised as earlier track record of this government is miserable.

The government continues its failed schemes of ELI and production linked incentives which did not help generate better paid jobs but served the interest of corporates and continues in the new form of incentives in some other areas.

The Budget talks big about increased credit facility to MSMEs but does not give relief for them for the revival of those units which were pushed to die because of un planned demonetisation and GST polices.

Agrarian crises is not addressed rather the new scheme namely National Policy Framework on Agricultural Marketing announced a few days ago will further add to the miseries of farmers to push them out of farming. CTUs’ demand to increase funds to MGNREGA not only ignored, rather there is decrease in practical terms. The demand by Central Trade Unions to have Urban Employment Guarantee Scheme is also ignored. The cut in Railway budget indicates its negligence of safety norms rather to continue privatisation of this vital sector of our country.

The allocation of budget to ICDS, ASHA and Mid-day-Meal schemes is reduced in practical terms, it is not only blow to those engaged in these schemes but is the utter neglect of the families of marginal and lower income groups who receive these services

The FM said that the migration should be option and not necessity, but that requires direct investment into creation of jobs. On the contrary the finance minister has offered several incentives to the employers in various sectors claiming that this would generate jobs. It will remain a mirage as is the track record of this Government. The government is not willing to make recruitments in the already sanctioned posts in the central and state government departments and the PSUs while the ban on creation of jobs continues. The government is pushing for nuclear energy/atomic energy/nuclear reactors where as it is endangering the nation by fast-track privatization move of electricity generation and distribution in the country.

Trade Unions had demanded increase in corporate tax, introduction of wealth and gift tax to raise money but nothing of the sort done rather indirect taxes and Cess on common masses will add to their burden. We know that the government takes this route to meet the fiscal deficit.

In the name of “Ease of Doing Business” the government is pushing pro employer, anti-workers labour codes whereas the policies to give advantage to Monopoly corporates are reflected in this budget. The announcement by the finance minister about decriminalisation of provisions and exemption in violations is actually aimed to weaken the trade union movement who represent the voice and interest of 570 million (57 crores) of work force in the country. The government agenda to do away with inspection system continues with vengeance.

The platform of Central Trade Unions and Independent Sectoral Federations/Associations calls upon the common people to join the nationwide protest on 05th February 2025 against anti-worker, anti-farmer and anti-people budget 2025-2026.

INTUC, AITUC, HMS, CITU, AIUTUC, TUCC, SEWA, AICCTU, LPF, UTUC and independent Sectoral Federations/Associations.

(Courtesy: Mainstream Weekly, a current affairs weekly published from New Delhi, was founded in 1962 by the doyen of Indian journalism, Nikhil Chakravartty, who played an exceptional role in defence of press freedom through the columns of this journal. It is now an online weekly edited by Sumit Chakravartty along with Harsh Kapoor, the Executive Editor.)