Social priorities in the Union Budget 2024-25: A snapshot

This essay is part of the series "Budget 2024-25"

Building upon an estimated 8.2 percent real growth in FY 2024, an overall 20 percent rise in real GDP since FY 2020, and an optimistic outlook for FY 2025, the Economic Survey 2023-24 released on 22 July 2024 outlined a comprehensive, broad-based and inclusive medium-term growth strategy for a developed India by 2047 using a six-pronged approach. To capitalise on the foundational supply-side structural reforms of past years and consolidate the prospects highlighted within this medium-term growth outlook, India will have to give way to a bottom-up approach that addresses the glaring gaps in its factor markets and restokes the consumption-driven growth phenomenon within the economy. 

In this context, the article looks closely into the social sector priorities put forth in the Union Budget 2024-25, which assume a critical role in addressing workforce participation and employability gaps, facilitating productive employment generation and protecting livelihoods and increasing income levels and the socioeconomic welfare of all, with particular emphasis on the ‘poor, women, youth and farmers’. Moreover, social welfare remains the fulcrum of a modern welfare state in which economic emancipation and social security are inextricably intertwined. 

Budget 2024-25: Targeted gains for India’s social sector

Consecutive Union Budgets presented in the last few years have witnessed a sustained emphasis on public infrastructure investment, the digitalisation of public service delivery, and targeted relief and structural reforms under the Atmanirbhar Bharat Abhiyan, coupled with effective management of inflationary pressures and fiscal balances to ensure India’s economy recovers and expands steadily out of the global economic downturns. This year, however, the Union Budget 2024-25 takes on a more holistic approach, prioritising nine key strategies expected to set the stage for India’s long-term development goals.

The education sector remains a priority with significant funding among all other social sectors, although slightly lower compared to the revised estimates for FY 2024.

In particular reference to the social sector expenditure, the expenditure outlay presented along with Budget 2024-25 highlights several key trends (see Table 1 for actual estimates (AE), budget estimates (BE) and revised estimates (RE) for FY 2023, FY 2024 and FY 2025). The education sector remains a priority with significant funding among all other social sectors, although slightly lower compared to the revised estimates for FY 2024. The Ministry of Skill Development and Entrepreneurship has seen a substantial increase this year with an estimated expenditure outlay of INR 4520 crores – a 28.5 percent increase from 2023-24 BE and a significant 38.6 percent increase over the 2023-24 RE, indicating a focus on enhancing workforce capabilities and preparing it for the expected job market transformations. Health sector funding has consistently increased in absolute terms, reflecting continued emphasis on healthcare improvements. However, the significant gap in the 2023-24 BE and the 2023-24 RE of health expenditure driven by a shortfall in capital expenditure in the previous fiscal raises concern regarding the realisation of the goal of making healthcare accessible and affordable for all. In terms of programmes or schemes to be initiated for social justice and empowerment, as well as tribal affairs, respective ministries/departments have received higher allocations, underscoring a commitment to supporting the most vulnerable and marginalised communities.

Table 1: Expenditure Outlay for the Social Sector (in Rs. Crores)

Source: Compiled from Expenditure Profile, Union Budget 2024-2025

To encourage approximately 4.1 crore youth across India and capitalise on their demographic dividend, INR 1.48 lakh crore has been provided for their education, skilling, and employment to initiate a package of five schemes and initiatives. To ensure inclusive human resource development that supports a sustained medium-term growth vision, the following will be introduced to help 1,00,000 and 25,000 students every year, respectively—financial support for loans up to INR 10 lakhs for higher education in domestic institutions, with e-vouchers for annual interest subvention of 3 percent of the loan amount and a revised Model Skill Loan Scheme to facilitate loans up to INR 7.5 lakh with a guarantee from government-promoted funds. 

To encourage approximately 4.1 crore youth across India and capitalise on their demographic dividend, INR 1.48 lakh crore has been provided for their education, skilling, and employment to initiate a package of five schemes and initiatives.

The Centre’s major health scheme, Ayushman Bharat Pradhan Mantri Jan Arogya Yojana (AB PM-JAY), has an allocation of INR 7,300 crore, increasing it from the previous allocation of INR 6800 crore. Emphasising the need for more medical research, the budget allocation for the Indian Council of Medical Research (ICMR) has been raised from INR 2295.12 crore to INR 2,732.13 crore. However, though the 75th Round of the National Sample Survey revealed a significant gap in out-of-pocket treatment costs between the private and public sectors, no notable push for a more robust public health assistance architecture was announced in the budget. 

To ensure ample opportunities for an educated, skilled and healthy workforce and encourage employment formalisation, Budget 2024 has commendably pledged to support Employees' Provident Fund Organisation (EPFO) enrolments for new entrants in the workforce through Employment-linked Incentives (ELIs) with a one-month wage payout for all formal sectors in three instalments, up to INR 15,000 per month, with an eligibility limit of a salary of INR 1 lakh per month. This scheme will likely benefit 210 lakh young employees. Also, the limit on MUDRA loans will be doubled to INR 20 lakh for those who have availed and repaid loans previously taken under the Tarun (Youth) category in a bid to encourage youth endeavours in small businesses.

While the modest increase in the allocations to women and child development appears discouraging, the 38.6 percent year-on-year increase in gender budget spread across 43 ministries/departments reaffirms India’s commitment to adopting a gender-transformative approach that transcends women’s empowerment to leverage their productive potential across all walks of life. Much-needed steps like rolling out women-specific skilling programmes and promoting market access to women-led Self Help Group (SHG) enterprises have been announced. The Budget has focused on initiatives to encourage greater participation of women in the workforce by provisioning for the establishment of working women’s hostels and creche facilities to address the critical care infrastructure requirements in partnership with industry players. 

Room for balance in social spending

India's social sector expenditure has evolved significantly over time to focus on more empowering models of social security that emphasise long-term sustainability, efficiency, and inclusivity. Through digital empowerment, outcome-oriented budgeting, targeted interventions, and increased private sector participation, the government has aimed to create an ecosystem that not only provides immediate relief but also empowers citizens to improve their socio-economic status over time. This comprehensive approach is crucial for achieving the goal of a developed India by 2047. The focus on empowering models of social security year-on-year, however, should not contradict the extent of expenditures that were previously undertaken and must align with the current global standards. It should, in fact, complement and enhance traditional welfare expenditures by ensuring that funds are used more efficiently and effectively. 

India's social sector expenditure has evolved significantly over time to focus on more empowering models of social security that emphasise long-term sustainability, efficiency, and inclusivity.

Despite absolute and relative increases, funding for education has remained stagnant at around 2.7-2.9 percent of GDP, which is below the global benchmark of 4-6 percent set by UNESCO. Similarly, while health expenditures have grown up to 1.9 percent of the GDP, they still fall short of the 2.5 percent of GDP target set by the National Health Policy 2017. There is a need for sustained and increased investment in healthcare infrastructure, particularly in rural and underserved areas. Moreover, the significant variations in budget and revised estimates for FY 2024 across some of these social sectors, including skill development, social justice and empowerment, and tribal affairs (see Table 1), point out that despite the emphasis on process reforms and accountability, there are still inefficiencies in the implementation of various social sector programmes. Therefore, ensuring that the allocated funds are utilised effectively and reach the intended beneficiaries has remained a challenge. 

Improving governance structures to enhance efficiency, transparency, and accountability in the implementation of social sector programmes is critical. Building robust institutions that can effectively manage and deliver services leveraging India’s foundational DPI architecture presents significant opportunities. Moreover, to support India’s outcome-oriented budgeting approach, while initiatives like the Data Governance Quality Index (DGQI) are steps in the right direction, there is still a need for better data collection, management, and utilisation to inform policy decisions and track progress. The COVID-19 pandemic period has revealed the socio-economic vulnerability of India’s internal migrant workers employed in the unorganised sector. As laid out in the Budget, the government's plan to continue building houses and dormitories for the poor under the PM AWAS Yojna is imperative to provide these economically weaker sections with decent homes. Targeted and well-planned policy design and budget allocation for strengthening the social security of migrant workers employed in the urban centres across the country is much-needed to improve India’s labour market architecture further. 

The current budgetary allocations and the overall design of social sector expenditures, coupled with the prospective strategies, align well with India's medium-term growth vision. While the Union Budget 2024-2025 hits specific targets with commendable increases in certain areas like workforce transformation and women-led development, it confronts a few misses in achieving a balanced approach that caters to all.

Debosmita Sarkar is a Junior Fellow at the Centre for New Economic Diplomacy at the Observer Research Foundation.

Ambar Kumar Ghosh is an Associate Fellow at the Observer Research Foundation. 

• Indian Economy
• India
• Ayushman Bharat Pradhan Mantri Jan Arogya Yojana (AB PM-JAY)
• Economic Survey 2023-2024
• India Budget 2024-2025
• Narendra Modi
• Nirmala Sitharaman
• Union Budget 2024-2025

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