There are a number of indications to show that the recovery in the economy is uneven and on shaky grounds. Unemployment rates, especially among the educated youth, remain at record-high levels. Real wages in the informal sector have been declining, there exists a high level of unutilised capacity in the industrial sector, and the share of private consumption expenditure in the GDP is at a low. All these indicate that distress continues among the poorer sections and those in the informal sector. Budget 2023, which will be announced in a couple of weeks, could address this by including expansionary measures towards enhancing welfare provisions that could not only provide a cushion for the poor but also contribute to improving the overall situation of depressed demand.
However, the government has already announced that one of the most significant measures introduced as a part of Covid relief will not be continued anymore. The additional free foodgrains which were given under the Pradhan Mantri Garib Kalyan Anna Yojana (PMGKAY) over the last two years have been discontinued from January 2023 onwards. PMGKAY has been playing an important role in mitigating hunger and providing an indirect form of income support in these times of difficulty.
While the usual entitlement under the National Food Security Act (NFSA) of 5 kgs of cereals per person every month would continue for the eligible beneficiaries (about 80 crore persons) and will now be given for free (with a change in nomenclature to PMGKAY), this drop in prices does not compensate for the reduction in quantity, as people were already paying very low prices—₹3 per kg for rice and ₹2 per kg for wheat, with some states giving an additional subsidy and distributing it at an even cheaper price. At the same time, it is seen that other forms of support that the government has been providing have also stagnated or reduced in the recent past.
Many have been arguing for some form of direct cash transfer to be given to address the current situation. While there was a one-time transfer for three months to all the women account holders under the PM Jan Dhan Yojana (PMJDY) in 2020, there has been no new or additional cash transfer that has been introduced. In this context, it becomes important to bring attention to maternity entitlements under the NFSA as well as social security pensions for the aged, single women and disabled under the National Social Assistance Programme (NSAP). Both of these are very critical initiatives that reach some of the neediest and vulnerable sections of the society.
Although the NFSA provides an entitlement of at least ₹6000 to all pregnant women, the Pradhan Mantri Matru Vandana Yojana (PMMVY) scheme that was introduced in 2017 covers only the first child with an entitlement of ₹5000. While last year there was a modification to this scheme to also include the second child in case it is a girl, the coverage under the scheme continues to be quite low. A recent response to a question in the Lok Sabha states that there have been about 3.12 crore beneficiaries enrolled under this scheme since its inception up to November 2022, an average of around 60 lakh per year in contrast to about 2.5 crore births that take place each year.
A letter by a group of over 50 economists to the finance minister in December 2022, asking for enhanced allocations for social security pensions and maternity entitlements, estimates that an allocation of at least ₹8000 crore would be required for the full-fledged implementation of the maternity entitlements as per the NFSA norms, whereas so far it has never gone above ₹2,500 crore. In fact, if the amount of ₹6000 (as set in the NFSA which was passed almost ten years back) is adjusted for inflation, even higher allocations would be required. Similarly, in the case of old age pensions, the Central government’s contribution has remained at ₹200 per month since 2006! The economists’ letter also recommends that this must be immediately increased to at least ₹500, requiring an additional ₹9000 crore for old age and widow pensions.
In other welfare measures as well, the trend over the last few years has not been very positive. The allocations for Anganwadi services and mid-day meals have been declining in real terms from 2015 onwards. It is estimated that in real terms, the budgets for these two schemes in 2022 was 25 per cent to 30 per cent lower compared to 2015. Even during Covid, there was no substantial increase in the budgetary allocations for these schemes. In MGNREGA too, there is evidence of high unmet demand as well as delays in wage payments. Wage rates under the employment guarantee schemes are below the minimum wage as well as the market wages. Wages for Anganwadi workers and ASHAs have also not been increased in a long time. Health and education budgets also remain woefully inadequate. With the single move of withdrawing the additional food grains under PMGKAY, the government is saving ₹1.8 lakh crore on the food subsidy. What remains to be seen is how much of this would be utilised for welfare spending.
All components of the social sector have been crying for attention and funds, and in the current economic scenario, ignoring these areas could be very costly. India has been notorious for its low expenditure on health, education and social spending. There is no better time than now to correct this. Spending on the social sector needs to be seen not as ‘freebies’, but rather meeting the basic responsibilities of a welfare state. And in fact, this is also critical for economic revival. One hopes that Budget 2023 would send out such a message.
Dipa Sinha
Teaches Economics at Dr B R Ambedkar University, Delhi