In February 2015, the government accepted the 14th Finance Commission’s recommendation to empower states with greater expenditure discretion.
The states’ share in Union taxes, therefore, increased from 32% to 42%. It prompted slashing of budget to social sector by half to $1.6 billion.
The process adopted by the government raised several concerns, including from within the government. Union Minister for Women and Child Development Maneka Gandhi, in October last year, criticised the government for the same, stating that this cut is hurting the fight against malnutrition.
In a report released on February 24, 2016, the Centre for Policy Research pointed out that as a percentage of total expenditure, social sector spending has decreased marginally in many states.
Though the report goes on to add that, the overall expenditure on social sectors has seen increases at the state level.
“There is a worry that these cuts might have hurt, especially in the transition year. And such thinks mostly take toll on the vulnerable sections of the society,” said Rajeev Gowda, an economist and Member of Parliament. “It is a policy decision, which shows government’s priorities. They think that if we cut what is going to poor and women nobody will care.”
Budget allocations
Gowda also said that the government’s increase in the grants to social sectors denotes that they felt there were lapses in the last year’s Budget allocations.
Govind Rao, Member of 14th Finance Commission, stated, “States didn’t get proper time to respond to the budget or the Finance commission recommendation. We would have to wait for the revised allocation for it.”