Economy
Budget prioritizes women-centric welfare, some other areas left wanting
Summary
- Major scheme outlays show increased social welfare programme allocations, particularly in education and health. PM-Kisan and MNREGA have not changed allocations for fiscal year 2025 compared to the current fiscal year
In her Budget speech, finance minister Nirmala Sitharaman reiterated the government's four focus areas: women, youth, poor, and farmers. While the interim budget scored a win for women, the youth and farmers could be left wanting for more.
Major social welfare schemes have received increased funding, especially the gender budget that saw a near 20% rise in its outlay to ₹3.1 trillion from ₹2.6 trillion in the revised estimates of last fiscal.
“The Interim Budget has relied on capex-led socio-economic growth template while ensuring fiscal prudence. The government has effectively leveraged the direct benefit transfer to deliver multiple social benefit schemes focussing on GYAM (gareeb, yuva, annadata and mahila)," said Pankaj Pandey, head of retail research at ICICI Direct.
However, agriculture and allied sectors lost focus with outlay rising a mere 4.5% to ₹1.5 trillion. Still, rural development saw a boost of 11.2% in 2024-25 from the revised estimates of the current fiscal year.
Meanwhile, outlay for the crucial rural jobs scheme, the Mahatma Gandhi National Rural Employment Guarantee Scheme, also remains unchanged at ₹86,000 crore compared to the revised estimates for 2023-24. This was despite the fact that demand for jobs under the scheme remains elevated.
“Revex (revenue expenditure) is budgeted to decline for the second consecutive year, driven by some savings from subsidies as well as muted increases/no changes in allocation to flagship schemes such as PM Kisan and MGNREGS," said economists at Barclays.
The government has also consistently overspent beyond initial estimates for the scheme, shows Budget data. The actual spending on the rural employment scheme grew 43% more than the budgeted allocation in 2023-24. It was 24% more than the budgeted allocation in 2022-23.
Additionally, the government's gas subsidy allocation, aimed at benefiting rural women, remains high in the run-up to the general elections, reaching an estimated ₹11,925 crore for the fiscal year 2024-25. This marks a nearly two-fold increase compared to the allocation of ₹6,817 crore made two years ago.
While this is a modest drop of 2.6% from the revised allocations for 2023-24, a slew of announcements made by the government through the current fiscal year to support cooking gas subsidies have kept the flame on this key provision burning.
Last year saw two back-to-back hikes in cooking gas subsidy totalling to ₹500 for beneficiaries under the government’s flagship scheme Pradhan Mantri Ujjwala Yojana, allowing them to purchase cylinders at lower prices. The moves came even as inflation has remained above the Reserve Bank of India’s medium-term target of 4% for much of last year.
“With food and LPG subsidy spending plans for the next fiscal year already announced, the total subsidy bill is only slightly lower in 2024-25," said economists at Barclays.
