Economic Survey 2024-25: Progress in Social Services

The Economic Survey for 2024-25, presented in Parliament by Union Minister for Finance and Corporate Affairs, Smt. Nirmala Sitharaman, highlights the Indian government’s commitment to empowering its citizens. The survey emphasizes significant advancements in education, healthcare, skill development, and social infrastructure. These initiatives aim to uplift the quality of life for all citizens, particularly those from marginalized communities. The findings reflect a robust increase in social service expenditure, indicating a focused effort to enhance the welfare of the population.

Rising Trends in Social Service Expenditure

The Economic Survey reveals a notable increase in the government’s social services expenditure (SSE). This expenditure has risen from 23.3% in FY21 to 26.2% in FY25, representing a compound annual growth rate (CAGR) of 15%. The total outlay for social services by both the Central and State governments has grown significantly, from โ‚น14.8 lakh crore in FY21 to an expected โ‚น25.7 lakh crore in FY25. This increase underscores the government’s commitment to enhancing social welfare.

In the education sector, the expenditure has seen a CAGR of 12%, climbing from โ‚น5.8 lakh crore in FY21 to โ‚น9.2 lakh crore in FY25. This growth reflects the government’s focus on improving educational infrastructure and access. Similarly, the health sector has experienced a remarkable CAGR of 18%, with spending increasing from โ‚น3.2 lakh crore in FY21 to โ‚น6.1 lakh crore in FY25. The survey notes that the share of government health expenditure has risen from 29% to 48% between FY15 and FY22, indicating a shift towards greater public investment in health services. These trends highlight the government’s dedication to building a more equitable society through enhanced social services.

Impact of Government Schemes on Consumption Expenditure

The Economic Survey also emphasizes the positive impact of government welfare schemes on consumption and income generation, particularly for low-income households. Programs such as free or subsidized food grains, subsidized cooking fuel, and Direct Benefit Transfers have significantly improved household incomes. These fiscal transfers provide essential resources to financially vulnerable sections of society, thereby enhancing their standard of living.

The survey indicates that social sector initiatives have played a crucial role in reducing inequality and boosting consumption spending. The Gini coefficient, which measures inequality in consumption expenditure, has shown a decline in recent years. In rural areas, it dropped from 0.266 in 2022-23 to 0.237 in 2023-24, while in urban areas, it fell from 0.314 to 0.284 during the same period. This decline suggests that government efforts are effectively narrowing the gap between different income groups.

Furthermore, the Household Consumption Expenditure Survey (HCES) for 2023-24 reveals that the urban-rural gap in consumption expenditure is closing. The largest growth in average Monthly Per Capita Expenditure (MPCE) occurred among the bottom 5-10% of the population in both rural and urban areas. The gap in average MPCE between urban and rural households has decreased from 84% in 2011-12 to 70% in 2023-24. This trend indicates sustained momentum in consumption growth, particularly in rural regions.

Fiscal Policies Reshaping Income Distribution

The Economic Survey highlights how various fiscal policies are reshaping income distribution in India. Food subsidies represent the largest fiscal outlay among the government’s social schemes. In 2022-23, the Union government allocated 6.5% of its budget to the Pradhan Mantri Garib Kalyan Anna Yojana (PMGKAY), which provides free and subsidized food rations to the needy.

The concentration of benefits among lower consumption groups indicates that policies like the Public Distribution System (PDS) and PMGKAY are effectively supporting low-income households. In 2022-23, the value of food subsidies accounted for 7% of household consumption among the bottom 20% in rural areas, compared to only 2% for the top 20%. A similar pattern is observed in urban areas, demonstrating the progressive nature of these policies.

Moreover, the survey reveals that 84% of the population had access to a ration card in 2022-23. This includes 59% of households reporting that they hold a Below Poverty Line (BPL), Antyodaya Anna Yojana (AAY), or Priority Household (PHH) card. Such widespread access to essential resources is crucial for improving the living standards of the most vulnerable segments of society.

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