One robust result from the study of economic and human development in the post-Second World War era has indicated that successful nations have spent at least 10% of their gross domestic product in areas such as health and education. This, too, they have done over the long duration of a couple of decades. Capitalist economies based on private property and markets have been leaders in public spending on these two sectors. During the past six or seven decades, nations like China, Taiwan, Singapore, Malaysia, South Korea and Hong Kong have extensively built their capabilities in health and education. India’s performance, in this regard, has been particularly sluggish. The inability to spend on building basic human capabilities has been marked since Independence and it had continued both before and after economic liberalisation. Recent data from the National Institute of Public Finance and Policy reveal that from 1990-91 to 2019-20 spending on social development had inched up from 5.8% of GDP to 6.8%. Spending on human development has stagnated at around 4% of GDP during the past three decades. According to the current government’s own admission, spending on health ought to be at 2.5%, and on education 6%. These ratios are quite low by international standards. Yet, the government’s own modest targets have remained unfulfilled. In 2020, India’s spending on health was at 1.36% and on education at 2.88%.
Some clarifications are in order on this continuing failure of the developmental strategy of successive governments. First, the absolute spend on health and education has obviously increased over time since the GDP has gone up during this corresponding period. But the increase has been inadequate. In some years, the increase did not even cover for inflation. The second clarification is that given our federal set-up, states also spend on education and health. Even if one amended the budgetary figures to account for these, the total spend would still be inadequate compared to successful nations that consider health and education to be vital elements in their development strategy. The third and final aspect concerns seeking an answer to the following question: why cannot the government spend more on these sectors? This would require cutting down on other heads of expenditure rather than dallying in tax increases, or indulging in borrowing. This is difficult to do in India since different and powerful lobbies have different claims on the economic pie. Those who stand to benefit from the improvement in health and educational services have the weakest voice in the polity. India needs to bolster these voices.