Union Budget 2019: Children welfare, social sector suffer as new revenue sharing pattern puts additional burden on states

The UN Committee on the Rights of the Child (CRC) General Comment No 19 on public budgeting for the realisation of children’s rights is the first UN document providing detailed guidance to states on their legal obligation to invest in children. Since its adoption in 1989, the Convention on the Rights of the Child has been ratified by all member countries of the world except one. Yet governments still need to do more to realise children’s rights. India, with more than 39 percent population of children, has prioritised health, education, nutrition through centrally sponsored schemes and flagship programmes over the last decade and significant progress has been recorded during the Millennium Development Goals period. [caption id=“attachment_4234713” align=“alignleft” width=“380”] Children watching on a mobile phone in rural areas of India. Reuters[/caption] Now, the Sustainable Development Goals have set ambitious targets on health, nutrition, education and gender equality. The realisation of these goals is possible with careful planning and adequate resources. While India is a rapidly growing economy, its share for children in the total budget did not grow substantially. Status of child right indicators The UNICEF State of the World’s Children Report (2016) indicates that of the 74 million children between 3-6 years in India, around 20 million do not attend pre-school. Pre-school education helps in maintaining better retention and learning levels at primary level as well as the transition to secondary level. The annual report of the Ministry of Human Resource Development (MHRD), 2014-15 shows 60.6 lakh (60,64,229) children are still out of school, of which 28.9 lakh (47.7 percent) are girls. Out of the total 60,64,229 out of school children, 16.61 percent belong to Scheduled Tribes (ST) community and 25.67 percent are Muslims. The U-DISE data estimates enrolment rate for all children from six-10 years at 99.3 percent. The percentage of girls’ enrolment at the primary and upper primary level is 48.2 percent and 48.6 percent, respectively. The Scheduled Caste (SC) enrolment is at 19.8 percent and ST enrolment is at 10.4 percent. The enrolment of children from OBC category is 45.1 percent and 45.2 percent for the primary and upper primary levels, respectively. As per National Family Health Survey-4, the under-5 mortality rate in India is 50 per 1,000 live births whereas infant mortality rate is 41 per 1,000 live births. A total of 38.4 percent of children under five years are stunted. Crime against children has also been on an increase. As per the last National Crime Records Bureau (NCRB) report (2016), over 100,000 cases of crime against children were reported, documenting an increase of 14 percent since 2015. Some of the major crimes committed were kidnapping and abduction (52.3per cent) and cases under the Protection of Children from Sexual Offences(POCSO) Act, 2012 (34.4per cent), including child rape. Besides, India is home for the largest number of children, particularly girls, who get married before the legal age. There are 78.5 lakh girls (2.3 percent of all women or girls who were ever married or were married in 2011) who were married while they were not even 10 years old. Has the state’s autonomy on spending enhanced with the 14th Finance Commission? The 14th Finance Commission (FFC) recommended a hike in the devolution of central revenues to the states from 32 percent to 42 percent. The inclusion of forest area in the devolution formula also helped states with hilly terrains, particularly the special category states. This resulted in higher devolution of revenue to states. But on the other hand, the discontinuation of planning system (replacing Planning commission with NITI Aayog) resulted in withdrawal of certain central assistance to state plan schemes like Backward Regions Grant Fund (BRGF), Normal Central Assistance for State Plans, Special Plan Assistance and Additional Central Assistance for LWE Districts, National e-governance Action Plan, Rajiv Gandhi Panchayat Sashaktikaran Abhiyan, and Scheme for Empowerment Adolescent Girls (SABLA). Restructuring of centrally sponsored schemes (CSS) and its implication: Withdrawal of certain central assistance to states (as explained earlier) has resulted in a loss of Rs 37,685 crore (at the level of 2013-14) for general category states and Rs 35,460 crore for special category states. Increase in the states’ share from 25 percent to 40 percent for core CSS has left general category states with a burden of Rs 38,442 crore in 2015-16 and Rs 41,806 crore in 2016-17. The average burden on the general category states due to these two changes is to the tune of 0.69 percent of GSDP. Net impact of these changes on general category States: The gains in increased devolution is therefore negated or marginalised by the additional burden on the states due to changes in the sharing pattern and withdrawal of certain central assistance. The net gains and burden for general category states is given in graph below for 2016-17. The gain in the tax devolution for the general category states is around 0.7 percent of GSDP and the additional burden is also around 0.7 percent of GSDP. The losers in the autonomy are Chhattisgarh, Gujarat, Haryana, Jharkhand, Karnataka, Madhya Pradesh, Odisha and Tamil Nadu. Even in other states, the gain in autonomy is marginal. [caption id=“attachment_6001401” align=“alignnone” width=“825”] Net gains and burden in GSDP for general category states after the devolution of central revenues by 14th Finance Commission[/caption] Changing priorities in social sectors The changes in the structure of federal transfers have also not influenced the priorities of the states in favour of social services. The share of expenditure on social services in the total expenditure has declined from 37.76 percent in 2013-14 to 37.16 percent in 2016-17. Much of the expenditure on children is in social sectors particularly in education (elementary and secondary education), primary health care and social welfare (nutrition). By considering these expenditures, the total expenditure on children has declined from 22 percent of total expenditure in 2013-14 to 20.84 percent in general category states in 2016-17, while it fell from 22.46 percent in 2013-14 to 21.16 percent in 2016-17 in the case of special category states. In most of the states, the fall in the share of expenditure on children is higher than the fall in the share of expenditure on social sector. This means that states prioritise other economic services over social services by drastically reducing child budget. Take away The loss in share of grants due to the withdrawal of certain central assistance to CSS affected the special category states and low-income states as BRGF was one of the major CSS among them. Higher transfers through devolution and therefore more autonomy to states is an illusion and is vindicated by the fact that the states share towards CSS expenditures increased from 25 percent to 40 percent and the states had to continue their committed expenditures under CSS which have been withdrawn. The net gain in untied transfers and autonomy to the states gets narrowed down due to the additional burden on States. Though there is an increase in total transfers and total expenditures of the states, there is a declining priority towards social sectors and child budgeting. The decline in the share of child budget is higher than the share of social services in total expenditures. Amarnath Kalle works for the National Institute of Public Finance and Policy while Alka Singh works for the Save the Children India