The National Democratic Alliance (NDA) years are often, in mainstream media, lauded as years with a generous welfare agenda. But do budgetary allocations in the Union Budget corroborate this assessment?
We try to answer this by looking at the trend in welfare spending over the past 20 years. We compare expenditure on what we label “NDA schemes” with United Progressive Alliance (UPA) or “UPA schemes”.
Contrasting models?
For the UPA decade (2004-2014), we include five major programmes as “UPA schemes”. These are the National Rural Employment Guarantee Act (NREGA) 2005 and four schemes of the National Food Security Act (NFSA) 2013: the Public Distribution System (PDS), Mid-Day Meals (MDM), Integrated Child Development Services (ICDS) and maternity entitlements (provided through the Pradhan Mantri Matru Vandana Yojana (PMMVY) that operationalised very belatedly in 2017).
For the PDS, we use the food subsidy. Apportioning the food subsidy into a consumer-, producer- (i.e., the farmer’s share, who sells wheat and rice at minimum support prices) subsidy and administrative costs is not straightforward. However, halving the food subsidy (as an approximation of the consumer subsidy) does not make much of a difference.
During the NDA period (2014-2024), the Bharatiya Janata Party funded the Swachh Bharat Abhiyan (SBA) from 2014, Pradhan Mantri Awas Yojana-Urban (PMAY-U) from 2015 and PM-Awas (rural) the following year along with Pradhan Mantri Ujjwala Yojana. The PM-Kisan Samman Nidhi (PM-Kisan) and Ayushman Bharat were initiated in 2018, while the Jal Jeevan Mission (JJM) was in 2019. The total budget for Ayushman Bharat from 2019-24 was ₹32,000 crore, i.e., half the annual expenditure on PM-Awas, averaged over the same period. Including it does not change the broad results, which is why we exclude it.
For Ujjwala Yojana we use the LPG subsidy (as with the food subsidy), though only a small part of it is spent on Ujjwala Yojana. The chart includes five major “NDA schemes”: SBA, PM-Awas, LPG subsidy, PM-Kisan and the JJM.
Some have contrasted the UPA with the NDA, where private goods (toilets, LPG cylinder and water connections, housing) are provided by the government, and have labelled this “new welfarism”. However, several of these schemes existed in the UPA years, with different names (Swachh Bharat was Nirmal Bharat, PM-Awas was Indira Awaas, and so on) and lower budgets. After 2014, the UPA schemes continue with new names (e.g., MDM is Pradhan Mantri Poshan Shakti Nirman, or PM POSHAN, and the PDS is Pradhan Mantri Garib Kalyan Anna Yojana, or PMGKAY).
The NDA schemes follow a saturation approach that allows an element of ‘self-targeting’. Only those who do not have a toilet or ‘pucca’ room or LPG connection, are eligible. Once they receive it, others get a chance. In the case of the UPA’s benefits, entitled people get benefits enshrined in the laws on a yearly (100 days of work for rural families), monthly (PDS grains) or daily (meals in schools and at anganwadis) basis. Here too, there is some self-targeting — only those who cannot get work at higher wages than NREGA show up for it and children in government schools and angwandis tend to be from poorer families.
On how welfare spending has changed
Let us, nevertheless, keep the distinction for now. The chart shows expenditure in the Union Budget on “NDA schemes”, “UPA schemes” and the combined total. The level of welfare expenditure (top line) is low and stagnating, in spite of good GDP growth in this period. It exceeds 3% of GDP only once (in one of the two COVID-19 years). Whatever increase there is, was during the UPA years. After the Fourteenth Finance Commission devolved more funds to the States; the Centre’s share was reduced to 60% from 90% for some schemes. Adjusting for this, the point still stands.
In contrast to the NDA schemes, none of which are legal entitlements, the UPA benefits are enshrined in the law. So, it is not easy to defund them entirely. The NDA schemes, therefore, are much more like ‘freebies’ dependant on the whims of the government. Legal compulsions notwithstanding, the UPA schemes, especially those for children (school meals and the ICDS) suffered budgetary neglect under the NDA (middle line). Their share declined gradually from around 1.5% of GDP in 2014 to 1% of GDP in 2018-19. Then, the pandemic forced the government to ramp it up.
Increased funding to NDA schemes barely offsets the decline in spending on UPA schemes. It rose steadily (bottom line) in the past decade but remained below 1% of GDP. This explains their modest achievements: according to the National Family Health Survey, LPG usage increased from 43% in 2015-16 to 58% in 2019-21 (the most recent year for which the data is available). The proportion of households practising open defecation has halved (from 39% to 19%) and those residing in ‘pucca’ homes barely changed (from 56% to 60%).
It is precisely because the NDA lacked imagination that during COVID-19, it fell back on UPA initiatives, including NREGA which was mocked in 2015 by the Prime Minister as a symbol of the Congress’s failures.
The NDA’s fraught relationship with UPA schemes is evident in the case of the PDS/PMGKAY too. The NFSA 2013 mandated 50% coverage in urban areas and 75% in rural areas (i.e., 800 million in all), providing five kilograms a person a month at ₹2-₹3 a kg (for wheat and rice, respectively) for those covered by the PDS.
From April 2020 to December 2022, the government doubled people’s entitlements (from five kilograms each month to 10 kg, providing the extra five kilograms free) as COVID-19 relief. When the COVID-19 top up was discontinued in 2023, to blunt the blow, the original NFSA entitlement (five kilograms for ₹10-₹15) was made free. This repackaged PDS, that saved each person an additional ₹15 a month at most, was renamed PMGKAY.
Facts aside, the current expanded coverage of 800 million through the PDS that a UPA legislation (the NFSA 2013) enabled, is now associated much more with the BJP than the Congress. This is astonishing because the NDA’s failure to conduct the 2021 Census has excluded millions from the PDS. Estimates based on population projections show that applying NFSA mandated coverage ratios (50% in urban and 75% in rural areas) to the 2021 population would have added more than 100 million to the PDS.
State initiatives
The silver lining is that several State governments, especially those ruled by regional parties, have stepped up to the plate. For instance, while the Union government has barely increased per child cooking costs for school meals, even poorer States such as Bihar, Jharkhand and Odisha provide for eggs a few times a week in the MDM and ICDS.
Similarly, the central contribution to some social security pensions (for the elderly, widows) has stagnated at ₹200 per month since 2006. Meanwhile, most States provide a top up and several have increased coverage. Odisha’s Madhu Babu Pension Yojana supports 58% of pensioners in the State. Odisha and Tamil Nadu provide higher amounts (₹10,000 and ₹18,000, respectively) as maternity entitlements to pregnant women than the Centre’s PMMVY (₹5,000-₹6,000).
The NDA government has managed to build a reputation as a big welfare spender by renaming pre-existing programmes (MDM/POSHAN, PDS/PMGKAY), while underfunding them without any compensatory social assistance of its own. In an Orwellian world, “war is peace”, “freedom is slavery”, so under the NDA’s, “guarantee is precarity” and “welfare is self-care”.
Reetika Khera is a Professor of Economics at the Indian Institute of Technology Delhi. Md. Asjad studies economics at the Jamia Millia Islamia
