PMO orders huge cuts in social sector spending for 2015-16

Employment guarantee, rural road and sanitation schemes among those likely to be affected

By Jitendra
Published: Friday 05 December 2014

Photo: Neha Sakhuja

The upcoming budget will see social sectors face huge cuts in funds. Ministries concerned with infrastructure works, on the other hand, will be given with more funds. These include ministries of shipping, road and transport, telecom and power.

The Prime Minister’s Office (PMO) has directed the Union Ministry of Finance to include these budget adjustments in the Union budget for 2015-16.

The finance ministry attributes these fund cuts to the increasing current account deficit (CAD). But in comparison to last year, CAD is much lower this year. The CAD in the first quarter of 2013-14 was $21.8 billion. It was lower at $7.8 billion in the same quarter this year. The Reserve Bank of India also said this week that the CAD is in a “reasonably comfortable” zone.  

“Prices of petrol and diesel are the lowest in six years. The government has been enjoying a huge revenue cushion but it is not helping the social sectors,” says a ministry official.

According to sources in the finance ministry, the Union Ministry of Rural Development (MoRD) is expected to face a massive Rs 15,000-crore-fund cut in the budget next year despite the encouraging performance of its rural development schemes.

Sources told Down To Earth, “The finance ministry has asked the secretary of MoRD to decide how these cuts will be distributed across different schemes like the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA), Indira Awas Yojana and Pradhan Mantri Gram Sadak Yojana (PMGSY). Infrastructure-related ministries will receive more funds. Even their unspent funds will not be deducted but further added to next year’s budget.”

Several media reports have highlighted how flagship schemes like MGNREGA are facing a fund crunch. Schemes like PMGSY are also facing fund crises. Chief ministers of 11 states have written to the prime minister, protesting the allocation of less funds.

Swachh Bharat Mission in peril?

The Union Ministry of Drinking Water and Sanitation (MoDWS) is expected to face a budget cut of Rs 5,000 crore. While ministry officials admit that they will face fund cuts, they refused to confirm the amount.

“This cut has put a question mark on the prime minister’s pet programme Swachh Bharat Mission which aims to make India open defecation-free,” says a senior ministry official.

The Union Ministry of Health and Family Welfare is expected to face a budget cut of Rs 7,000 crore and the Union Ministry of Panchayati Raj a cut of Rs 3,000 crore.

Expected budget cuts across ministries
Rural development Rs 15,000 crore from last year’s budget
Health and family welfare Rs 7,000 crore from current budget
Panchayati raj Rs 3,000 crore
Drinking water and sanitation Rs 5,000 crore

Performance of major social sector schemes: a sample survey report

Implementation of Mahatma Gandhi National Rural Employment Guarantee Act, 2005: Standing Committee on Rural Development (2012-13)

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