Which of the following best describes the current trend in welfare expenditure in India as per recent budgetary analysis?

State governments contribute a disproportionately higher share of welfare expenditure compared to the Union government.

The Union government accounts for the majority of the increase in social sector spending.

India's social security spending as a percentage of GDP is significantly higher than that of other middle-income countries.

The rights-based welfare regime has been completely replaced by unconditional cash transfers.

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9 July 2026

Welfare scheme expenditure debate

This topic provides a critical analysis of the fiscal federalism challenges and the shifting paradigm of welfare expenditure in India, which are core themes for GS2 and GS3 mains examinations.

Notes

The Indian welfare regime has transitioned from a 'rights-based' framework established in the 2000s to a model increasingly focused on cash transfers.
Total combined expenditure on selected welfare schemes for 2025-26 is estimated at ₹24.20 lakh crore, representing 6.77% of GDP.
The Union government's contribution to these welfare schemes is 1.89% of GDP, with the overall increase in social sector spending primarily driven by State governments.
States bear a disproportionate fiscal burden for social sector spending, including 75.2% of school education costs and significant shares of centrally sponsored schemes (e.g., 40% for ICDS and PMMVY).
The replacement of MGNREGA with the VB-GRAM G Act is expected to further increase the financial contribution required from States.
India's tax-to-GDP ratio is comparable to other middle-income countries, but its social security spending as a share of GDP remains relatively low.
Academic discourse (Bose and Banerjee) suggests a 'mutually reinforcing cycle' between human development and economic growth, advocating for increased Union fiscal commitment to the social sector.

Questions

Analyze the fiscal challenges faced by State governments in implementing centrally sponsored welfare schemes in India. How does the current distribution of expenditure impact the federal fiscal balance? 150 words

Attempt this — 150 words in 8 min

0 / 150 words 8:00
Discuss the evolution of India's welfare regime from a rights-based approach to a cash-transfer-oriented model. To what extent does the current level of social sector expenditure align with the constitutional mandate for human development and inclusive growth? 250 words

Attempt this — 250 words in 11 min

0 / 250 words 11:00

Prelims

Which of the following best describes the current trend in welfare expenditure in India as per recent budgetary analysis?

Syllabus

Topics

Sources

States contribute disproportionately more to welfare schemes

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