Government expenditure on social services drops to 8.3% of GDP in 2022-23: Economic Survey

Further development of social sector hold the key to achieving the goal of more equitable economic growth in the country, the survey suggested.

The central and State governments incurred an expenditure of ₹21.3 lakh crore on social services sectors — 8.3% of Gross Domestic Product (GDP) — during the financial year 2022-23, according to the annual Economy Survey, tabled by Finance Minister Nirmala Sitharaman in Parliament on the first day of the Budget Session on January 31. 

In 2021-22, the combined expenditure on social services increased to 8.6% of the GDP from 8.3% in 2020-21. The spending was later reduced to 8.2%.

“The social services expenditure witnessed an increase of 8.4% in FY21 over FY20 and another 31.4% increase in FY22 over FY21, being the pandemic years, which required enhanced outlay, especially in health and education sectors. While the social sector expenditure outlay of the Centre and State governments was 9.15 lakh crore in 2015-16, it has increased steadily to stand at 21.3 lakh crore in FY23 (budget estimate, or BE),” the survey says. 

As per the survey, the government allocated 2.9% of the total GDP for education, 2.1% for health and 3.2% for others in 2022-23. Other social sectors taken into account in the survey include water supply and sanitation, housing, urban development, welfare of SCs, STs and OBCs, labour and labour welfare, social security and welfare, nutrition, and relief on account of natural calamities.

The survey shows that the share of expenditure on health in the total expenditure on social services increased from 21% in FY19 to 26% in FY23. The budgeted expenditure of Central and State governments on the sector reached 2.1% of GDP in FY23 — a decline of 0.1% in FY22.

“The 15th Finance Commission, in its report, had recommended that public health expenditure of Union and States together should be increased in a progressive manner to reach 2.5% of GDP by 2025. In keeping with this objective, Central and State Governments’ budgeted expenditure on the health sector reached 2.1% of GDP in FY23 (BE) and 2.2% in FY22 (revised estimate, or RE), against 1.6 per cent in FY21,” the survey says.

It adds that the government’s share in the total health expenditure increased from 28.6% in FY 2014 to 40.6% in 2019 with a significant decline in out-of-pocket expenditure. The social security expenditure on health, which includes health insurance programme, government-financed health insurance schemes and medical reimbursements made to government employees, increased from 6% in FY14 to 9.6% in FY19.