Examine the pattern and trend of public expenditure on social services in the post-reforms period in India. To what extent this has been in consonance with achieving the objective of inclusive growth?
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How to write this answer
- Examine Probe the issue in depth: Causes, evidence and consequences.
- To what extent Answer with a measured extent, backed by evidence on both sides.
For Economy: Use current data and scheme names; a simple flowchart of cause and effect works well.
For this question: Describe the trend, then judge inclusiveness with gains and gaps; the FY22 to FY26 growth anchors it.
Examine the pattern and trend of public spending on social services since the 1991 reforms, and judge how far it has served the aim of inclusive growth.
Social services cover education, health, family welfare, water supply and sanitation, housing, urban development, the welfare of SCs, STs and OBCs, labour welfare, social security, nutrition and disaster relief. Most of this spending is done by the States.
Pattern and trend
- In the early 1990s fiscal correction squeezed social spending; from the mid-2000s rights-based programmes (education, rural employment, food security, health missions) raised it.
- Recent years: The general government's social services expenditure has risen since FY22, growing at a compound annual rate of 12 per cent from FY22 to FY26 (BE); education grew at 11 per cent and health at 8 per cent a year.
- Its share of total government expenditure fell to 23.3 per cent in FY21 and rose to 26.6 per cent in FY26 (BE).
- A shift in form: More direct benefit transfers, insurance-based health care and centrally sponsored schemes.
How far it has served inclusive growth
- Gains: Near-universal school enrolment, falling multidimensional poverty, and the Household Consumption Expenditure Survey 2023-24 showing the fastest growth in spending among the bottom 5 to 10 per cent.
- Gaps: Spending on health and education remains low by international standards, learning outcomes are weak, regional inequality is wide, and much spending goes to subsidies rather than human capital.
Way forward
- Raise health and education spending, untie funds for States, focus on outcomes (learning, nutrition) and strengthen local delivery.
Social spending has grown and broadened since the reforms, and poverty has fallen. Growth becomes truly inclusive only when that spending buys better schools, health and skills.
Sources: Economic Survey 2025-26, Chapter 13 (Ministry of Finance)