Fiscal consolidation hits 26 of 37 welfare schemes in FY24

The central government has significantly reduced allocations to 26 out of the 37 major welfare schemes that cover ‘core’ and ‘core of the core’ programmes that address health, education, rural development, and marginalised communities. This move is part of the government’s focused efforts on aggressive fiscal consolidation in FY24.

The Interim Budget, presented by Finance Minister Nirmala Sitharaman, indicates a 6 per cent decrease in the total revised estimates (RE) for these 37 schemes, amounting to ~4.41 trillion in FY24 compared to the budget estimate (BE) of ~4.69 trillion. However, there is a 14 per cent increase in allocations for these schemes in FY25, reaching ~5.03 trillion over the RE of FY24.

Among the prominent schemes affected, the PM Awas Yojana, a ‘core’ scheme facilitating affordable housing for low and moderate-income households, saw funding slashed to ~54,103 crore in RE FY24 from ~79,590 crore in BE FY24. However, the budgeted amount for the upcoming fiscal year has been increased to ~80,671 crore, reflecting the government’s focus on building an additional 20 million new houses under the PM Awas Yojana (Gramin) in the next five years.

“Despite the challenges due to Covid, implementation of PM Awas Yojana (Gramin) continued and we are close to achieving the target of three crore (30 million) houses,” Sitharaman said in her Budget speech.

“Two crore (20 million) more houses will be taken up in the next five years to meet the requirement arising from [the] increase in the number of families,” she said.

Another major scheme, the PM Ayushman Bharat Health Infrastructure Mission (PM-ABHIM), designed to address critical gaps in public health infrastructure, particularly in critical care facilities and primary care, had its funding halved to ~2,100 crore in RE FY24 from ~4200 crore in BE FY24. However, it has been allocated ~4,108 crore in FY25.

The Swachh Bharat Mission (SBM), a flagship scheme promoting sanitation and cleanliness, experienced a 49 per cent reduction in funding to ~2,550 crore in RE FY24 from ~5,000 crore in BE FY24. Meanwhile, it has been allotted ~5,000 crore in FY25.

Similarly, the funding for the schemes that promote welfare among the marginalised section of the society including scheduled castes (SCS), scheduled tribes (STS), vulnerable groups and minorities was also slashed.

Schemes for the welfare of marginalised sections, including scheduled castes (SCS), scheduled tribes (STS), vulnerable groups, and minorities, witnessed funding cuts. The scheme for SCS saw a decline of 27.9 per cent to ~6,780 crore in RE FY24 from ~9,409 crore in BE FY24, while the STS scheme declined by 23.5 per cent to ~3,286 crore in RE FY24 from ~4,295 crore in BE FY24.

However, these schemes received a boost in BE FY25, with increased allocations to ~9,560 crore and ~4,241 crore, respectively. Education-related schemes like PM SHRI (Schools for Rising India), focusing on setting up over 14,500 schools across the country in line with the vision of the new education policy (NEP), also saw a funding cut to ~2,800 crore in RE FY24 from ~4,000 crore in BE FY24.

These cuts in funding for major welfare schemes coincide with the finance minister revising the fiscal deficit estimate for FY24 to 5.8 per cent of GDP, down from the 5.9 per cent initially budgeted, and setting an ambitious target of 5.1 per cent for the upcoming fiscal year.