This presentation was delivered by S.K. Shanthi, Director, India Development at the "Five-Institute Union Budget Seminar 2018-19: Reforms and Development Perspectives", Leela Palace, Chanakyapuri, New Delhi, February 10, 2018. The seminar was organised by the National Institute of Public Finance and Policy in partnership with CPR, ICRIER, NCAER and IDF.

1. India Development Foundation
Budget 2018-19
February 10, 2018
Social Sector Focus
S.K. Shanthi

2. Major announcements for social sectors
Education Sector is the primary beneficiary
• Eklavya schools for tribal population
• 24 new district medical colleges
• Prime Minister Research fellowships for 1000 scholars
• Two more full-fledged schools of Planning and Architecture
• Revitalization of school infra with 1 lakh crore spend over 4 years (are smart
boards a smart idea?)
Health and Family Welfare got some benefit
• INR 600 crore corpus for TB patients
• A major insurance (Aayushman Yojana) scheme to cover 10 crore families –
allocation INR 1200 crs (??) – Sounds good, practical? Shouldn’t we now
regulate corporate hospital chains?
Others
• Housing for all
• INR 2.4 lakh crore for smart cities

3. Year Revenue Expenditure
INR Mn.
Capital Expenditure
INR Mn.
Total Expenditure
INR Mn.
Amount % Change Amount % Change Amount % Change
2017-2018RE 9,84.739 5.1 93,275 105.6 10,78,014 9.7
2018-2019BE 10,58,399 7.5 1,09,639 17.5 11,68,038 8.4
• The total social sector allocation by centre is 0.699% of GDP this year
compared to 0.72% last year
• All states budgeted 7.37% of GDP to this sector last year – 8.1% in total
• The total social sector allocation of the centre is 4.78% of the total
budgeted expenditure this year compared to 4.86% as per last year’s RE
• The budget for this sector is 8.4% larger than last year, roughly 3.5% larger
in real terms.
• This is far less than the growth rate projected for this year. If this trend
continues, as a percentage of the GD the allocation will continue to fall!
Brass Tracks

4. Sector Revenue Allocation Capital Allocation Total Allocation
Education, Sports, Art and Culture 22869.6 25040.1 47909.7
Medical and Public Health 17101.9 -5564.7 11537.2
Family Welfare 1407.1 87.5 1494.6
Water Supply and Sanitation -30345 0 -30345
Housing 16722.4 -1640.4 15082
Urban Development -4751.9 -4311.8 -9063.7
Welfare of SCs and STs and OBCs 2582 1130 3712
Labour and Labour Welfare 15027.2 0 15027.2
Social Security and Welfare 3568.3 -337.5 3230.8
Nutrition -11.6 0 -11.6
Expenditure on Natural Calamities 29282.5 0 29282.5
Budget 2018 – Additional Social Sector Allocations (INR Mn.)

5. Budget 2018 – Additional Social Sector Allocations (INR Cr.)
-4000
-3000
-2000
-1000
0
1000
2000
3000
4000
5000
6000
Addl. Revenue Allocation Addl. Capital Allocation Addl. Total

6. • What is the connection?
• How?
• Can allocations with large variations contribute to steady
build up of Social and Human capital?
• What is the evidence?
Social Sector Investments and the Economy

7. % Growth and Volatility In Revenue Expenditure: Sub-sectors …1
Year
Total Revenue
Expenditure
Education,
Sports, Art and
Culture
Medical and
Public Health
Family
Welfare
Water
Supply and
Sanitation
Housing
2014-15 -55.64 -55.26 -11.27 -89.83 -97.84 -94.07
2015-16 48.80 7.84 23.20 -23.46 981.47 38.62
2016-17 5.96 9.76 21.26 37.62 255.86 28.00
2017-18RE 5.08 18.07 8.88 -14.05 -65.28 106.06
2018-19BE 7.48 5.34 10.69 13.80 -87.07 55.65
Volatility (last 10 Years)
Average 5.96 5.38 11.19 -2.46 115.40 19.02
Std.Dev. 25.01 20.93 10.60 33.18 305.25 51.09
CoV 4.20 3.89 0.95 -13.50 2.65 2.69

8. % Growth and Volatility In Revenue Expenditure: Sub-sectors …1
Year
Total Revenue
Expenditure
Education,
Sports, Art and
Culture
Medical and
Public Health
Family
Welfare
Water
Supply and
Sanitation
Housing
2014-15 -55.64 -55.26 -11.27 -89.83 -97.84 -94.07
2015-16 48.80 7.84 23.20 -23.46 981.47 38.62
2016-17 5.96 9.76 21.26 37.62 255.86 28.00
2017-18RE 5.08 18.07 8.88 -14.05 -65.28 106.06
2018-19BE 7.48 5.34 10.50 13.80 -87.07 55.65
Volatility (last 10 Years)
Average 5.96 5.38 11.19 -2.46 115.40 19.02
Std.Dev. 25.01 20.93 10.60 33.18 305.25 51.09
CoV 4.20 3.89 0.95 -13.50 2.65 2.69
Volatility (last 4 Years)
Average 16.8 10.3 16.0 3.5 271.2 57.1
Std. Dev. 18.48 4.78 6.33 24.00 431.94 29.95
CoV 1.10 0.47 0.40 6.90 1.59 0.52

9. % Growth and Volatility In Revenue Expenditure: Sub-sectors …2
Year
Urban
Development
Welfare of SCs,
STs and OBCs
Labour and
Labour
Welfare
Social
Security and
Welfare
Nutrition
Expenditure
on Natural
Calamities
2014-15 -10.2 158.0 -18.4 10.9 -67.0 -26.1
2015-16 -15.0 115.8 68.7 -0.4 -50.5 158.5
2016-17 38.2 -24.1 10.7 -2.2 -34.4 20.1
2017-18RE 71.3 34.7 21.0 100.2 16.7 -34.1
2018-19BE -28.9 7.5 20.6 5.3 -7.7 36.5
Volatility (Last 10 years)
Average 11.10 58.40 20.54 22.75 -28.57 30.96
Std. Dev. 37.68 68.09 28.04 39.00 29.93 69.14
CoV 3.40 1.17 1.37 1.71 -1.05 2.23

10. % Growth and Volatility In Revenue Expenditure: Sub-sectors …2
Year
Urban
Development
Welfare of SCs,
STs and OBCs
Labour and
Labour
Welfare
Social
Security and
Welfare
Nutrition
Expenditure
on Natural
Calamities
2014-15 -10.2 158.0 -18.4 10.9 -67.0 -26.1
2015-16 -15.0 115.8 68.7 -0.4 -50.5 158.5
2016-17 38.2 -24.1 10.7 -2.2 -34.4 20.1
2017-18RE 71.3 34.7 21.0 100.2 16.7 -34.1
2018-19BE -28.9 7.5 20.6 5.3 -7.7 36.5
Volatility (Last 10 years)
Average 11.10 58.40 20.54 22.75 -28.57 30.96
Std. Dev. 37.68 68.09 28.04 39.00 29.93 69.14
CoV 3.40 1.17 1.37 1.71 -1.05 2.23
Volatility (Last 4 years)
Average 16.4 33.5 30.3 25.7 -19.0 45.2
Std. Dev. 40.42 51.89 22.56 43.10 25.66 70.41
CoV 2.46 1.55 0.75 1.68 -1.35 1.56

11. % Growth and Volatility in Capital Expenditure:
Sub-sectors
Year
Total
Social
Services
Education,
Sports, Art
and Culture
Medical and
Public Health
Housing
Urban
Development
Welfare of
SCs, STs and
OBCs
Social
Security
and
Welfare
2014-15 27.85 -5.10 -26.70 14.65 91.00 130.24 13.21
2015-16 10.90 58.17 9.21 -1.99 35.76 -41.43 46.39
2016-17 -16.08 -77.30 19.32 -1.15 -40.68 18.04 -1.51
2017-20RE 105.57 485.86 163.50 44.06 139.41 -3.50 13.98
2018-19BE 17.54 759.30 -17.27 -11.64 -12.57 22.18 -49.35
Volatility (Last 10 Years)
Average 16.37 134.29 23.59 2.23 25.05 18.46 12.94
Std. Dev. 33.29 256.26 52.31 24.35 55.70 43.43 50.08
CoV 2.03 1.91 2.22 10.93 2.22 2.35 3.87

12. % Growth and Volatility in Capital Expenditure:
Sub-sectors
Year
Total
Social
Services
Education,
Sports, Art
and Culture
Medical and
Public Health
Housing
Urban
Development
Welfare of
SCs, STs and
OBCs
Social
Security
and
Welfare
2014-15 27.85 -5.10 -26.70 14.65 91.00 130.24 13.21
2015-16 10.90 58.17 9.21 -1.99 35.76 -41.43 46.39
2016-17 -16.08 -77.30 19.32 -1.15 -40.68 18.04 -1.51
2017-20RE 105.57 485.86 163.50 44.06 139.41 -3.50 13.98
2018-19BE 17.54 759.30 -17.27 -11.64 -12.57 22.18 -49.35
Volatility (Last 10 Years)
Average 16.37 134.29 23.59 2.23 25.05 18.46 12.94
Std. Dev. 33.29 256.26 52.31 24.35 55.70 43.43 50.08
CoV 2.03 1.91 2.22 10.93 2.22 2.35 3.87
Volatility (Last 5 Years)
Average 29.2 244.2 29.6 8.8 42.6 25.1 4.5
Std. Dev. 40.9 323.7 69.0 19.5 65.9 57.2 31.2
CoV 1.4 1.3 2.3 2.2 1.5 2.3 6.9

13. Why Kerala?
• Ranks highest in HDI in India (2011-12)
• The state has allotted for social sectors with very far less volatility in
spending pattern
The case of Kerala

14. Impulse Response – SS Capital Expenditure on GSDP of
Kerala

15. Impulse Response – SS Revenue Expenditure on GSDP of
Kerala

16. • Are we compressing capital expenditure (12.3% of TE) too much in the
name of fiscal prudence?
• A slippage of 0.7% of GDP (as per 2017-18 RE) in the revenue deficit is
alarming
On Social Sector
• The action has definitely shifted to the states
• Centre’s social sector spend is down from 2.1 percent of GDP in 2010-11
to the current 0.7% - justified?
• The data from last four years shows an improvement in the strategic
focus and that is welcome
• Capital expenditures are impactful in contributing to long term growth
• The government should aggressively implement its ‘minimum
government, maximum governance’ promise to the people of India
Conclusions

17. THANK YOU