State welfare spending purses get fatter in pre-election year
₹24 trillion. While the increase may not seem too high, especially in a pre-election year, it comes on the back of a 28% increase in 2022-23, when states had found themselves flush with funds following a recovery in economic activity after covid-19 lockdowns eased. However, the 9.2% overall increase in social sector spending conceals wide variations across states.
Fourteen states have budgeted for greater increases, led by Jharkhand, Tamil Nadu, Andhra Pradesh and Telangana in the 19-22% range. Elsewhere, prominent states below the all-India average include Punjab, West Bengal, Rajasthan, Gujarat and Maharashtra. Further down that spectrum, six states have budgeted a decline in social sector expenditure, including Bihar and Assam.
Social sector expenditure here includes education, health, rural development, development schemes targeting specific social groups (such as scheduled castes and tribes), and urban development. Across states, for 2023-24, education, sports, and art and culture account for around 31% of total social service expenditure. Heath, social security and welfare, and rural development, account for another 10-11% each, and urban development for 7.2%.
States have budgeted an overall 8.2% increase in their “own tax revenues" in 2023-24, up from 7% a year earlier. RBI says strong growth in the state component of the goods and services tax (state GST) has been “instrumental" in reducing the overall funding dependence of states on the Union government. Yet, 42% of state revenues are still from the Centre, either in the form of taxes raised by the Centre but shared with states under constitutional rules, or central grants to states for specific uses or schemes.
Read more on livemint.com
