Efficient fund utilisation is crucial, and the government must judiciously identify the beneficiaries, ensuring the removal of fictitious claimants The Union government implements numerous welfare programmes to achieve various socioeconomic goals and national priorities. This is primarily done through central schemes (CS) fully funded and executed by the government and through centrally sponsored schemes (CSS) funded both by the Centre and states in varying proportions, such as 90:10, 60:40, and so on. These schemes are implemented by the states. The total expenditure of the Centre in FY 2022–23 on these schemes was Rs 1,620,000 crore (Rs 1,208,000 crore on 740 CSs; Rs 412,000 crore on 50 CSSs), constituting 41% of the total budget spending of Rs 3,940,000 crore. Efficient fund...
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Category: Welfare schemes
Balancing welfare and fiscal responsibility
The Centre should go for a complete overhaul of its food subsidy programme. It should exclude from the beneficiaries’ list those who are better off Seen in the backdrop of 250 million persons coming out of poverty during the last nine-and-a-half years of incumbent government (as per a recent report released by Niti Aayog), Prime Minister Narendra Modi has faced flak from the opposition parties for his decision to continue with supply of free ration under the Pradhan Mantri Garib Kalyan Anna Yojana (PMGKAY) scheme for five years (it was announced by Modi during a poll rally in Chhattisgarh late last year). They question the logic of supplying free food even to those who have crossed the poverty line. Modi...
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Differentiating welfare schemes from freebies
As election pledges of freebies escalate, Modi Government issues a warning to States at the third National Conference of Chief Secretaries In the third National Conference of Chief Secretaries held in Delhi on 28th and 29th December 2023 under the chairmanship of Prime Minister Shri Narendra Modi, the central government cautioned the states against giving freebies, and goaded them to increase capital expenditure by rationalizing welfare schemes with emphasis on eliminating inefficient subsidies. The Centre’s concern over freebies – an acronym for “something given free of charge” – has heightened because of a volley of these promised by almost all political parties in five state elections held in November 2023. It apprehends that the freebies would drain state coffers, lead...
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New mechanism to ensure utilisation of funds
The new mechanism would regulate the release of funds to the states and track their use, thereby preventing idling The Union government executes a plethora of welfare programs aimed at providing basic and necessary amenities and upliftment of the most disadvantaged members of society. It does so mainly through “Central Schemes” (CS) which are fully funded and implemented by it. A total of 740 CS schemes are currently under implementation. During FY2022-23, the CS spending was Rs 1208,000 crore In addition, there are “Centrally Sponsored Schemes” (CSS) designed to supplement the efforts of the states in achieving various socioeconomic goals and implementing national priorities. These are funded by the central government and the states in varying proportions viz. 90:10, 60:40,...
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Do not tinker with national pension scheme
The increase in life expectancy and rise in the cost of living further reinforces the need for assured monthly income for a decent life in old age Stung by the Opposition States, including Rajasthan, Chhattisgarh, Jharkhand, Himachal Pradesh and Punjab reverting to the old pension system (OPS) and these parties promising the same in the impending state elections as also in Lok Sabha elections next year, the Union government is considering to amend the national pension scheme (NPS) to ensure that its benefits to the employees covered under it are more or less at par with the OPS. This will be at the cost of sacrificing fiscal prudence. The pension provides a person with a monthly income when he is...
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Rethinking Universal Basic Income and subsidies
There is a compelling case for disbanding all existing forms of support and replace them by what may be termed as ‘Unconditional Basic Income’ or the UBI system. During an interaction organised by the Confederation of Indian Industry (CII) last month, Chief Economic Advisor V Anantha Nageswaran dismissed the idea of Universal Basic Income (UBI) in India. He expressed concerns that UBI might create create ground for “perverse incentives,” discouraging people from actively seeking income-generating opportunities. As a result, he believes that UBI should not be priority in the near future. Drawing comparisons with developed countries, the current CEA highlights that these nations have limited room for increasing economic growth and creating income generating opportunities. Consequently, their governments have established social...
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The scourge of freebies is taking a heavy toll
Freebies are denuding the budgets of many states. This practice must go before states’ coffers run dry Delivering his Independence Day address, Delhi Chief Minister Arvind Kejriwal promised 200 units of electricity a month for ‘free’ to the entire 1.4 billion people of India saying this will cost Rs 150,000 crore per annum. He went on to add ‘When Modi – government can waive Rs 150,000 crore worth of loans given to four top industrialists of the country, why can’t it provide free electricity to the people which would cost it the same amount? In Delhi, Kejriwal is already giving free electricity to all households (HHs) consuming 200 units a month and a flat subsidy of Rs 800 to HHs...
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Time for ‘universal basic income’ is now
There is a compelling case for disbanding all forms of support and replacing them by ‘universal basic income’ (UBI) so that people can live with dignity At an interaction organized by the Confederation of Indian Industry (CII) on July 7, 2023, Chief Economic Advisor (CEA) V Anantha Nageswaran ruled out Universal Basic Income (UBI) for India saying this may create ground for “perverse incentives” and dissuade people from seeking income-generating opportunities. So, “UBI is not something that should be on the agenda in the near term”. In contrast, in the Economic Survey (2016-17) presented on January 31, 2017, the then CEA Arvind Subramanian had advocated UBI to substitute a plethora of extant subsidies. He couched the idea in Mahatma Gandhi’s...
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Bringing back OPS may be catastrophic
The new pension scheme or NPS has addressed the inequity issue by providing a platform to the private sector Even as the finances of states were beginning to look better as reflected in decline in the ratio of state government debt to GDP from 31.2 per cent during 2021-22 to 29.5 per cent during 2022-23—as per the budgetary estimate (BE) —the political brass in different states have made populist announcements which don’t augur well for the future. One of these relates to the revival of the old pension scheme (OPS). Making a statement in the Lok Sabha, the Minister of State for Finance Bhagwat Kishanrao Karad said, “The state governments of Rajasthan, Chhattisgarh, and Jharkhand have informed the Central government...
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Poll freebies: Road to economic disaster
Assured of financial help to meet most of their basic needs ‘perpetually’, the freebies cult is changing the mindset of people and making them complacent A few days back, Prime Minister Narendra Modi asked senior bureaucrats to point out deficiencies in government policies. In response, some officials have zeroed in on ‘the freebies promised by winning party in state elections’. In the past, freebie – an acronym for “something given free of charge” – found a place in a corner of the manifesto of parties. In recent years, this has occupied the centre-stage and holds the key to winning elections. For instance, in February 2020, the Aam Aadmi Party (AAP) led by Arvind Kejriwal mesmerised Delhi voters by promising freebies....
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