India needs to scale up welfare spending sharply: Niti Aayog-IMF study

India needs to find additional sources of financing for a sharp scaling up of welfare spending needed to achieve sustainable development goals (SDG) such as eradication of poverty and inequality by 2030, federal policy think tank Niti Aayog said in a report on Monday.

A voluntary review of the country’s performance in sustainable development that Niti Aayog presented at a virtual UN meeting said the country has made remarkable progress in this area but there were several challenges ahead and that there was a need for finding more resources given that coronavirus pandemic has disrupted plans and timelines.

The voluntary national review of sustainable development, the second such report by Niti Aayog, said the ambitious goals and targets set under the sustainable development goals framework must be supported with adequate financial resources. Niti Aayog said it has partnered with the International Monetary Fund (IMF) to find the cost of achieving the welfare goals.

“The study has made preliminary estimates that India needs to increase its SDG spending by an additional 6.2% of its GDP until 2030. The ways and means for this additional financing needs to be identified,” the report said.

It was also crucial to make sure that budget allocations align with SDG priorities. This signals the need for a sharp scale up in public spending. India’s total central government spending including transfers to states in FY20 was estimated in February at ₹26.9 trillion, which was 13% of the estimated ₹204 trillion GDP, union budget documents showed.

Rajiv Kumar, vice chairman of Niti Aayog said in his message, which is part of the report, that a ten-year period was a compact time frame for implementing sea changes across sectors for a nation and that India did not have the luxury of time. “The COVID-19 pandemic has caused disruptions to plans and timelines. Therefore, we have every reason to double or triple our efforts for achieving the targets of the Agenda 2030,” said Kumar.

The challenges ahead include regional disparities in poverty reduction, feminisation of poverty (women being more poor), demand-supply gaps in housing and other amenities as well as in economic opportunities due to rapid urbanisation and the need for redesigning education and skill development so that workers get gainful employment, the report pointed out.

“Much of India’s poverty is concentrated in rural areas and in low-income states. The difference among states in terms of the proportion of people living below the poverty line is stark: Chhattisgarh has 39.9% of people living below poverty while the corresponding figure for Andaman & Nicobar Islands is 1%,” the report said.

The Narendra Modi administration had set the target of scaling up the economy to $5 trillion by 2024, but the pandemic and the national lockdown dealt a severe blow to the economy. Analysts expect a GDP contraction in the June quarter. As per India’s own assessment, states like Kerala, Himachal Pradesh, Chandigarh, Tamil Nadu and Puducherry have scored well in welfare activities. – Livemint

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