Not enough fiscal room to increase public spend on social sector

ON HEALTH, THE ECONOMIC SURVEY SAID GROWING COST OF HEALTHCARE IS BURDENING THE PUBLIC

NEW DELHI: Higher public investment in the social sector, including education and health, is critical for India, but being a developing economy “there is not enough fiscal space” to increase government spending, the Economic Survey 2017-18 said on Monday.

“Investment in human capital is a pre-requisite for a healthy and productive population for nation building. Being a developing economy, there is not enough fiscal space to increase expenditure on critical social infrastructure like education and health in India,” the survey said.

“Public investment in social infrastructure such as education and health is critical in the development of an economy. However, the expenditure on social services by centre and states as a proportion of GDP (gross domestic product) has remained in the range of 6% in 2012-13 to 2014-15. There has been a marginal decline to 5.8% in 2015-16 that has moved up to 6.6% in 2017-18 (budget estimate),” the Survey said.

Of the 6.6% of GDP spent on the social sector, 2.7% went to education in 2017-18, down from 3.1% in 2013-14, the Survey said. This is not even half of what the education sector has been demanding for years. For more than 30 years, there has been a demand to spend 6% of GDP on education alone.

Similarly, 1.4% goes to health in 2017-18—up from 1.2% in 2013-14. This, too, is less than what the sector has been demanding.

The rest of the social sector had a share of 2.2% of GDP in 2017-18. “Given the limited resources”, the government has consistently prioritised strengthening the educational and health profile of the population, the survey said. As India is poised to grow as a leading knowledge economy, education, skill development and health will remain priorities for the government.