Budget not likely to cut social sector spending

Budget not likely to cut social sector spending

Job and housing programmes to retain funding despite pressure

Budget allocations on the Centre’s social sector flagship programmes such as the Mahatma Gandhi Rural Employment Guarantee Scheme (MNREGS) are not likely to be cut in the ensuing financial year 2012-13 despite pressure on the government to control spending.

Budgetary allocation for key rural development programmes largely remained unchanged in the last financial year, too, with a total allocation of Rs 74,143 crore, out of which the MNREGS got the bulk of Rs 40,000 crore.

“There will be no scaling down in the momentum of government’s productive social sector expenditure,” a senior government official told Deccan Herald. The official, however, stopped short of elaborating individual social sectors programmes as comments on budget related issues in the run-up to its presentation is traditionally not announced.

Besides, three more phases of polling in election-bound Uttar Pradesh are still due. Analysts are of the view that the government can do with a cut in the MNREGS allocation as it goes into fiscal consolidation mode next year.  The official, however, said the government has allowed the use of the use of Member of Parliament Local Area Development (MPLAD) Scheme funds to finance work taken up under the government’s social sector schemes.

The fund allocation under MPLAD was increased to Rs 5 crore from earlier Rs 2 crore last year. The MNREGS is among UPA’s signature social sector programmes, that promises at least 100 days of work every year to at least one member of each rural household.

The government is currently running over a dozen social sector schemes to help uplift conditions of rural and urban poor. Prominent among them are the Indira Awaas Yojana, aimed at providing affordable housing to people below poverty line, the National Rural Health Mission aimed at carrying out necessary architectural correction in the basic health care delivery system and the National Rural Drinking Water Programme.

The official said the demand from other ministries for enhanced budgetary support shot up in the run-up to the budget as the coming financial year (2012-13) also marks the beginning of the 12th Five-Year Plan (2012-17) and ministries want more allocation to give impetus in execution of their key programmes.

But, a larger than anticipated fiscal deficit this year and an overall slowing Indian economy has left government’s hands tied and made it necessary for it to take fiscal consolidation measures as it moves into the new financial year a month from now.

Asia’s third largest economy is expected to grow 7 per cent this year against 8.4 per cent last year and the fiscal deficit or the gap between government’s expenditure and its revenue is seen breaching the budgetary target by at least one percentage point.