Fri Jan 31 07:40:00 UTC 2025: ## India’s Social Spending Fuels Economic Growth and Reduces Inequality, Says Economic Survey

**New Delhi** – India’s commitment to citizen empowerment through increased spending on social services is paying dividends, according to the Economic Survey 2024-25, tabled in Parliament today by Finance Minister Nirmala Sitharaman. The survey reveals significant progress in education, healthcare, and social infrastructure, leading to reduced inequality and boosted consumption, particularly among low-income households.

Social service expenditure (SSE) has seen a remarkable surge, rising from 23.3% of total expenditure in FY21 to 26.2% in FY25 (Budget Estimates), representing a 15% compound annual growth rate (CAGR). This translates to a substantial increase in outlay from ₹14.8 lakh crore in FY21 to ₹25.7 lakh crore in FY25 (BE). Education expenditure has grown at a 12% CAGR, reaching ₹9.2 lakh crore in FY25 (BE), while health expenditure has witnessed an even faster growth of 18%, reaching ₹6.1 lakh crore. The government’s share of total health expenditure has increased significantly from 29% in FY15 to 48% in FY22.

The survey highlights the positive impact of government welfare schemes. These initiatives, including free and subsidized food grains (PMGKAY), subsidized cooking fuel, insurance coverage, and direct benefit transfers, have demonstrably increased household incomes, especially among the financially vulnerable. This has led to a decline in the Gini coefficient, a measure of income inequality, in both rural and urban areas. The urban-rural gap in consumption expenditure is also narrowing, with the lowest income quintiles experiencing the highest growth in per capita expenditure.

The Pradhan Mantri Garib Kalyan Anna Yojana (PMGKAY) alone received 6.5% of the Union government’s budget in 2022-23, providing crucial support to low-income households. Analysis shows that the benefits of this and other schemes are disproportionately concentrated among the lowest consumption groups, effectively acting as a safety net against income shocks and poverty. In 2022-23, 84% of the population had access to a ration card, with 59% holding BPL, AAY, or PHH cards.

The Economic Survey concludes that the government’s fiscal policies are effectively reshaping income distribution, driving economic growth, and improving the lives of millions of Indians.

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