Budget 2015: Social spending is up despite fiscal constraints

NEW DELHI: The fiscal constraints and higher allocation to states notwithstanding, FM Arun Jaitley has enhanced spending on social sector schemes in keeping with the government's "Sabka Saath, Sabka Vikas (development of all)" motto. The minister has proposed to spend Rs 2.41 lakh crore in 2015-16, up from Rs 1.92 crore in the revised estimates for the current fiscal.

However, the government has pulled the plug on eight of the 66 centrally sponsored schemes (CSS), changed the pattern of sharing funds with the states in 24 schemes while it will continue to fully sponsor 31 schemes. The move supports Prime Minister Narendra Modi's view that one-size-fits-all approach does not work for all states.

Hence, the Centre has withdrawn its support to states in case of eight schemes, which will now be independently implemented by states using the higher funds allocated to them following the recommendations of the Fourteenth Finance Commission. The commission has recommended allocation of 42% of funds collected through central taxes to the states compared with 32% earlier.

"In spite of the consequential reduced fiscal space for the Centre, the government has decided to continue supporting important national priorities such as agriculture, education, health, MGNREGA and rural infrastructure including roads. Programmes targeted for the poor and the underprivileged will be continued by us," Jaitley said in his speech.

The government had originally identified over 30 CSS which ought to have been transferred to the states because expenditure on them has already been taken into account as state expenditure. "Higher resources and lower outgo on subsidies have given government the space to enhance capital expenditure on social sector schemes, give boost to public spending and lower the fiscal deficit," DK Joshi, principal economist of Crisil said, adding that it was a tight balancing act.