INDIA’S GROWTH DILEMMA: SKYSCRAPERS OR SOCIAL EQUITY?

THE CONTEXT: India faces a critical challenge balancing infrastructure development with social sector investments. The 2023-24 Union Budget allocated Rs 10 lakh crore for capital expenditure, primarily for infrastructure, while healthcare and education received Rs 89,155 crore and Rs 1.12 lakh crore, respectively, highlighting a stark disparity in priorities.

INFRASTRUCTURE FOCUS:

• • National Infrastructure Pipeline (NIP): The NIP aims to mobilize ₹111 lakh crore between 2020 and 2025, covering key sectors such as transportation, energy, water, and sanitation. Approximately 24% of the NIP is allocated to energy, 19% to roads, 16% to urban infrastructure, and 13% to railways. This initiative aligns with India’s vision of becoming a $5 trillion economy by enhancing productivity and reducing bottlenecks in critical sectors.
  • Union Budget 2023-24: ₹10 lakh crore was allocated for capital expenditure in 2023-24, marking a 37.4% increase over the previous year. Including grants-in-aid for asset creation, the effective capital expenditure stood at ₹13.7 lakh crore, a 30.1% increase from RE 2022-23. ₹2.7 lakh crore allocated for road infrastructure and Railways are allocated ₹2.4 lakh crore, the highest ever for the sector.
  • PM Gati Shakti Master Plan: It aims to modernize logistics infrastructure and reduce logistics costs from the current 14% of GDP to a global benchmark of 8-10%. The core theme is Integrated planning across ministries for seamless multimodal connectivity and digitization of supply chains to improve efficiency and reduce transit times.
  • Strategic Importance of Infrastructure Development: It has a high multiplier effect on GDP growth and job creation. Studies suggest that every rupee spent on infrastructure yields an economic return of ₹2.5.
  • Global Competitiveness: Improved infrastructure enhances India’s ranking in global indices like the World Bank’s Logistics Performance Index (LPI). Due to focused investments, India’s LPI rank improved from 54th in 2014 to 38th in 2023.

SOCIAL SECTOR UNDERFUNDING:

• • Healthcare Allocation: Union Budget 2023-24: ₹89,155 crore to healthcare, constituting only 2.1% of GDP, far below the global average of 6%. OECD countries spend an average of 8.8% of GDP on healthcare, showcasing the disparity in India’s investments.

National Health Mission (NHM) funding was reduced by 21% in 2023-24 to ₹29,085 crore from ₹37,000 crore in 2022-23.

Low allocation for primary healthcare infrastructure under PM Ayushman Bharat Health Infrastructure Mission (₹4,200 crore in 2023-24).

₹6,500 crore allocated for upgrading district hospitals and medical colleges, a 13% reduction from the previous year.

• • Education Allocation:  ₹1.12 lakh crore allocated to education, representing only 3% of GDP, despite the National Education Policy (NEP) 2020 recommending an increase to 6% of GDP. Brazil spends approximately 5.5% of GDP on education, while OECD nations average between 4-6% of GDP.

Unified District Information System for Education (UDISE+) data shows a drop from 26.02 crore students in 2018-19 to 24.8 crore in 2023-24, reflecting systemic issues like poor school infrastructure and rising economic pressures on families.

ASER (2022) reports only 20% of Class V rural students can read a Class II text,highlighting the quality deficit in foundational education.

IMPLICATIONS OF UNDERFUNDING:

• • Human Development Index (HDI): India ranks 134 out of 191 countries (2023), underscoring gaps in health and education as key barriers to human development. Life expectancy at birth is low (70.19 years in 2023) compared to global averages (~73 years). Poor literacy rates and learning outcomes contribute to India’s low HDI ranking.
  • Education Sector: India spends approximately 4.1% to 4.6% of GDP on education, aligning with global benchmarks but falling short of the NEP 2020 target of 6% of GDP. A 6% drop from 26.02 crore students in 2018-19 to 24.8 crore in 2023-24, with states like Bihar witnessing sharp declines. ASER (2022) reported that only 20% of rural Class V students could read a Class II text, signaling foundational gaps.
  • Economic Impact: A study by the International Monetary Fund (IMF) indicates that increasing public health expenditure by just 1% of GDP could boost long-term GDP growth by up to 0.7%. Poor investment in education exacerbates skill deficits, limiting labor force participation rates (especially among women) and reducing productivity.
  • Poverty and Inequality: Despite progress, poverty and inequality remain significant barriers. Multidimensional poverty declined from 24.85% in 2015-16 to 14.96% in 2019-21, yet over 135 million people remain multidimensionally poor. The Gini coefficient rose from 0.371 in the 1950s to 0.410 in 2023, indicating widening disparities. States like Bihar and Uttar Pradesh account for a significant share of India’s poor population.
  • Social Inequality: Nearly 10% of India’s population lives below the international poverty line ($2.15/day). Wealth inequality remains among the highest globally, with inadequate social spending failing to bridge disparities.

THE WAY FORWARD:

• • Increase Budgetary Allocations with Targeted Outcomes: Move beyond mere percentage targets (e.g., 6% of GDP) and adopt outcome-based budgeting that ties spending to measurable health indicators like life expectancy, IMR, and MMR. Prioritize early childhood education investments, which have the highest return on investment (ROI) in human capital development.
  • Strengthen Primary Healthcare Systems with Community-Centric Models: Empower local governments and panchayats to manage primary healthcare centers (PHCs) with increased funding autonomy. Deploy AI-enabled mobile health units equipped with diagnostic tools to serve remote areas. These units can use predictive analytics to identify disease hotspots.
  • Transform Education with a Focus on Quality and Equity: Replace traditional teacher training programs with immersive experiential learning modules, leveraging virtual reality (VR) and gamification techniques. Develop region-specific curricula tailored to local socio-economic contexts and languages.
  • Leverage Technology as a Force Multiplier: Introduce blockchain technology for secure patient data management, ensuring privacy while enabling interoperability across healthcare providers. Launch a “Digital Literacy Corps” program where tech-savvy youth train rural students and teachers in using digital tools effectively.
  • Redefine Public-Private Partnerships (PPPs): Shift from traditional PPP models to “Social Impact Bonds” (SIBs), where private investors fund social programs and are repaid by the government based on achieved outcomes. Mandate that a portion of CSR spending by corporates be directed toward building rural schools, hospitals, or skill development centers.
  • Third-Party Audits: Engage independent agencies to audit the performance of flagship schemes like Ayushman Bharat or Samagra Shiksha Abhiyan. Publish findings publicly to ensure transparency and accountability.

THE CONCLUSION:

Social sector investments are moral imperatives and economic necessities for sustained growth. Integrate social goals into national development strategies, emphasizing that human capital is the foundation of economic competitiveness.

UPSC PAST YEAR QUESTION:

Q. Despite Consistent experience of High growth, India still goes with the lowest indicators of human development. Examine the issues that make balanced and inclusive development elusive. 2019

MAINS PRACTICE QUESTION:

Q. India’s development trajectory disproportionately emphasizes infrastructure spending over social sector investments. Critically analyze the implications of this imbalance on human development, poverty alleviation, and inclusive growth.

SOURCE:

https://www.deccanherald.com/opinion/indias-growth-dilemma-skyscrapers-or-social-equity-3350786