Avani Kapur and Sharad Pandey, Indiaspend.org 
New Delhi: The Union budget presented by finance minister Nirmala Sitharaman comes at a time when India faces the challenge of balancing economic growth with inclusive social development.
While debates often centre on fiscal deficit targets, capital investments and tax reforms, the social sector plays a fundamental role in ensuring equitable progress. Investments in education, health, nutrition and social protection are essential not just for welfare, but for building human capital, reducing inequality and ensuring long-term economic resilience.
In the financial year 2023-24, 26% of total general government expenditure was spent on the social sector, as per the Economic Survey 2024. While states implement most social sector programmes, the Union government has been responsible for providing key social and public goods and ensuring a minimum standard of investment across states.
How has the Union government prioritised social sector spending over the years? We analyse four key trends in Union financing for the social sector.
The term ‘social sector’ in this context refers to areas such as education, health, water and sanitation, nutrition, social security, food security, and rural development. It also covers skill development, sports and culture, tribal and minority affairs, and urban poverty alleviation.
The Union government’s social sector expenditure has been calculated by adding the ministries associated with the sectors mentioned above across 16 ministries: education, youth affairs and sports, culture, health, Ayush, housing and urban affairs, Jal Shakti, information and broadcasting, rural development, social justice and empowerment, tribal affairs, minority affairs, labour and employment, skill development and entrepreneurship, women and child development, consumer affairs, food and public distribution.
For the analysis, we have looked at the past 12 years and broadly divided them into three phases:
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2014-15 to 2019-20: The period before the COVID-19 pandemic.
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2019-20 to 2024-25: A phase marked by economic slowdown, the pandemic and recovery efforts.
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2024-25 to 2025-26: The post-pandemic recovery period.
Declining share in total expenditure
The Union government’s total expenditure increased by 7% in budget 2025, rising from Rs 47.16 lakh crore in 2024-25 to Rs 50.65 lakh crore in 2025-26.
However, these increases have not translated into a proportional rise in social sector allocations. (For 2024-25, this analysis uses revised estimates.)
Over the past decade, the share of social sector spending in total Union government expenditure has stagnated. During 2014-15 to 2019-20, it averaged 21% of total expenditure and 2.8% of gross domestic product (GDP). The trend continued during 2019-20 to 2024-25, with the share remaining at 21%, and 3.3% of GDP, though pandemic-related spending caused fluctuations.
In 2020-21, the Pradhan Mantri Garib Kalyan Anna Yojana and Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS) expansions pushed social sector spending to an all-time high of 30% of total expenditure and 5.3% of GDP. However, since then, the share has steadily declined, reaching 19% in 2023-24 (2.8% of GDP), marginally lower than 2014-15 level.
For 2024-25, the social sector’s share stood at 17%, an all time low in the last decade, and in 2025-26, it is projected at 19%.
Medical and health spending stagnates; infrastructure gains priority
To understand which ministries and sectors have seen shifts in funding, spending trends were analysed in two ways: relative shares of different ministries and growth rates over time.
In Phase 1, food subsidy and civil supplies constituted the largest share, averaging 27% of social sector expenditure, followed by rural development (22%) and education (18%).
Phase 2, which marked COVID-19 and the subsequent recovery, i.e. between 2019-20 and 2024-25, has seen some expenditure switching.
Food subsidy and civil supplies again held the largest share, accounting for 35% of total social sector spending. But despite it being a phase with the pandemic at its height, the share going to medical health has fallen, averaging only 10%.
Similarly, the share of education and rural development has also declined to 12% and 20% respectively.
Instead, in keeping with the government’s focus on infrastructure development via the Jal Jeevan Mission and the Pradhan Mantri Awas Yojana, the share of housing, urban development, water and sanitation in total social sector spending has gone up. While it averaged 12% between 2014-15 and 2019-20, it increased to 15% during 2019-20 to 2024-25.
For 2025-26, the estimated share for food subsidy and civil supplies is 23%, which is four percentage points lower than last year, still accounting for the largest share.
The share for rural development is estimated at 20%, a two percentage point decline from last year.
On the other hand, the spending on housing, urban development, water and sanitation is projected at 21%, which is six percentage points higher than last year.
Growth slows in key sub-sectors
Since shares may obscure the actual allocations rising or falling, the second way of understanding relative priority is by looking at average annual growth rates.
Over the past decade, the growth trajectory of social sector spending has slowed, reflecting shifting policy priorities. While overall social sector expenditure grew at an average annual rate of 8% between 2014-15 and 2019-20, this pace declined to 4% in the period between 2019-20 and 2024-25. This slowdown signals a recalibration in government spending – where certain sectors continue to see robust growth, while others experience a deceleration.
The budget estimates for 2025-26 project further changes, with growth expected at 20% compared to 2024-25, driven though with expenditure contraction in the current fiscal rather than enhancement in social sector allocations.
The composition of growth across sub-sectors has also shifted over time. Between 2014-15 and 2019-20, most areas within the social sector outpaced the overall sectoral growth rate, except for education, arts and culture (6%) and food subsidy and civil supplies, which saw a contraction (-3%).
In contrast, labour, employment and skill development (26%) and welfare of Scheduled Castes, Scheduled Tribes, Other Backward Classes and minorities (11%) registered some of the fastest growth rates, reflecting a policy emphasis on targeted welfare and employment-linked interventions.
However, in the more recent period between 2019-20 and 2024-25, the pattern has reversed. Except for education, arts and culture, which saw a modest acceleration to 8%, most social sector components experienced a clear deceleration.
This is particularly striking for medical public health and family welfare, where the pace of growth declined from 16% in the pre-pandemic era to 5% during the pandemic era – lower than even inflation rates during the period.
Similarly, the category ‘Others’ (which include welfare of Scheduled Castes, Scheduled Tribes, Other Backward Classes and minorities, labour, employment and skill development, information and broadcasting, social security and welfare, and nutrition) saw a significant decline from 11% to 3%, between the two phases.
In the current budget, the focus once again appears to be on housing, urban development and water and sanitation, growing at 70%, due to the slow pace of utilisation this fiscal.
Key scheme allocations remain low in real terms
An important mechanism through which the Union government finances the social sector is through Centrally Sponsored Schemes (CSSs). Over the years, more than 90% of total CSS spending was towards the social sector. Data for CSSs are only available from 2015-16 onwards.
Over the years, ministries such as education, health, water and sanitation, women and child, and rural development accounted for more than 80% of CSS expenditure.
We analysed Union government allocations for nine schemes over time within these ministries. This has been done in two ways: a) in nominal terms, or measured in terms of the prevailing actual prices at the time; and b) in real terms, or adjusting the allocations for changes in prices, i.e. inflation.
In the first phase, in nominal terms, growth for every scheme has increased, except for PM POSHAN. In fact, nominal growth was 25% for Swachh Bharat Mission-Gramin (SBM-G), 17% for MGNREGS and 14% for the PM Awas Yojana-Gramin. Among these schemes, SBM-G allocations increased nearly threefold, while PM Gram Sadak Yojana (PMGSY) allocations more than doubled.
However, real allocations declined for four of the nine schemes, which included Samagra Shiksha, Jal Jeevan Mission, PM POSHAN and the National Social Assistance Programme (NSAP).
While looking at the period between 2019-20 and 2024-25, except for the Jal Jeevan Mission, all other schemes saw decline in allocations.
Largely, the schemes that saw a big decrease in real terms are related to education (Samgara Shiksha and PM POSHAN), health (NHM), employment (MGNREGS), social security (NSAP), rural development (PMGSY) and direct entitlement (SBM-G).
In 2025-26, allocations for MGNREGS, SBM-G and NSAP remained stagnant.
This article was originally published on Indiaspend.org, a data-driven, public-interest journalism non-profit.