Examine the pattern and trend of public expenditure on social services in the post-reforms period in India. To what extent this…

Post-1991 economic reforms initially witnessed fiscal compression in social sector spending, followed by a sustained recovery post-2004 and sharp increases post-NFSA (2013) and the pandemic, reaching about 8% of GDP and 26.2% of total government expenditure (₹25.7 lakh crore, FY25 BE, Economic Survey 2024-25).

Pattern of Expenditure:

• Sectoral Disparities: Education expenditure has stagnated around 2.9% of GDP (against the 6% NEP target), while government health spending remains modest at about 1.8–1.9% (against the 2.5% NHP target).
• Expansion of Social Safety Nets: Schemes like MGNREGA (now succeeded by the VB-G RAM G Act, 2025), PM-KISAN, Samagra Shiksha, and Ayushman Bharat have driven outlays.
• Structural Composition: Spending is overwhelmingly revenue-heavy (salaries, subsidies) with limited capital formation. States bear over 60% of this burden, often constrained by FRBM targets despite Finance Commission devolutions.

Nexus with Inclusive Growth: Increased outlays accelerated poverty reduction (Tendulkar and MPI metrics) and improved HDI indicators; the government's share of total health spending rose from 29% to 48% between FY15 and FY22. However, as NITI Aayog’s SDG Index highlights, stubborn inter-state disparities, high out-of-pocket health expenses, and child malnutrition persist.

Finding: Expenditure has broadened basic social safety nets, but translating it into genuine inclusive growth necessitates shifting focus from input-based allocations to outcome-oriented capital investments in human capacity.