India is committed to achieving Sustainable Development Goals (SDGs) by 2030, for which social sector development is important. As a large part of the India’s population depends on public provisioning for essential services such as health care, education, nutrition and others, adequate public spending on social sectors and efficiency in the delivery systems is critical says the panellist in a consultation on ‘Resource Adequacy for Social Sector: Impact of Union Budget 2020-21 on Odisha’ held today at CYSD.
Given the current state of economy, with a slump in rural demand, unmet demand for teachers, paramedical staff and caregivers, quality education and health for all, rural employment, an expansionary budget with a focus on social sector front starting with allocating additional resources for health, education, nutrition, employment guarantee could have made an economic sense. An analysis of Odisha Budget and Accountability Centre of CYSD reveals that the allocation for key human development concerns, as explained above this year failed to deliver the country’s poor and marginalised.
The 15th Finance Commission recommendations has suggested the devolution from centre to states at 41 percent for the year 2020-21, one point decrease from 42% suggested by the 14th FC. Based on this, the overall devolution to the states has been fixed at Rs 784181 Cr in 2020-21. In the inter se distribution (distribution among states), Odisha’s share has been fixed at 4.629 %, which is a little lower than the 14th FC recommendation of 4.642 %. With the new formula, the loss of revenue for Odisha is Rs 102 cr. The grants-in-aid recommended for local self-governments (both rural and urban) and post devolution revenue deficit grants are in line with the previous Finance Commission’s recommendations.
It is good to notice that there is an overall increase in the devolution to rural urban local bodies from Rs 75,918 Cr. in 2019-20 BE to Rs 99925 Cr in 2020-21 BE. For Odisha, the FC-XV allocated Rs 2258 crore for Rural Local Bodies and Rs. 1087 crore for the urban local bodies during 2020-21, which was Rs 1806.28 crore for Rural and Rs 348.68 crore for urban in 2019-20. The grants-in-aid recommended for local self-governments (both rural and urban) is made in the ratio of 67.5:32.5, against the 14th FC recommendation of 70:30. This means the urban local bodies are given more importance in the Union Budget 2020-21. Odisha do not have Million-Plus cities, however it has 1087 Non-Million cities. Therefore, the state will loss grant in this regards not meeting the Million-Plus cities criteria.
Reflecting the situation of rural India, Mahatma Gandhi National Employment Guarantee Act (MGNREGA), and Skill Development are the two important life lines to promote employment, thereby increasing more demand and shaping the rural economy. The allocation in the budget for MGNREGA has been reduced by Rs 10000 Cr, less than the budget Rs 71002 Crore in 2019-20 RE. Similarly, the budget for Jobs and Skill Development remained flat with an allocation of Rs 3000 Cr.
Although India is one of the world’s fastest-growing large economies with increase in Foreign Exchange Reserves and high growth in the previous years unlike the year 2019-20, lag behind in the Human Development context. Prioritising and fast-tracking actions for the last mile are crucial if the goal of “no one is left behind” is to be realised. Yet, there exist significant disparities in the achievement of some of the vital human development components such as IMR – 41, MMR – 130, Under 5 mortality rate – 50, Children Anaemic 38.5 percent, women Anaemic 58.5 percent which are far behind when compared to the global average. On the other hand, health and education didn’t see any significant increases in allocation in the budget 2020-21. The increase in allocation for health and education remained at Rs 5000 cr and Rs 6000 cr, which are again flat, considering the present inflation rate (around 5%).
Even the schemes like National Programme of Mid Day Meal (MDM) and ICDS have almost stagnated allocation in the budget 2020-21. Allocation for MDM in budget 2020-21 is Rs 11000 cr, same as in 2019-20 BE and for ICDS, the allocation has increased by Rs 1000 Cr as compared to the allocation in 2019-20 BE. If we assume the number of children covered under these schemes remain same in the next year, the real price rise may put problem to serve food and nutrition to the children in the country. It is a worrying direction in the current context where the key social sectors have remained under funded. This is reflected not just in the low allocation but also policy pronouncements such as introducing public-private partnership model for district hospitals, which is a key pillar of primary health care services to the rural people.
The current centre – state relationship is based primarily on two aspects – cooperative federalism and competitive federalism. While resources from Centre to State in meeting the key human development components are necessary, it is equally important for the state to increase capacity on better utilisation of funds through increased absorption capacity and better convergence. In many of the schemes, the actual realisation of budgets in Odisha is low. This could be the reason of either low fund flow or low capacity for utilisation. In Odisha, the vacancy in key positions particularly at the block and below is a concern in this regard. In some schemes like MGNREGA, ICDS, MDM, the realisation is better at the national level as compared to Odisha. Noted economists, academia and society leaders were present in this consultation.