Declining Funding to Welfare Schemes


From UPSC perspective, the following things are important :

Prelims level: Brief information about Various welfare schemes

Mains level: welfare schemes, advantages and issues.


  • Over the past three years, over 50% of existing central government sponsored schemes have been discontinued, subsumed, revamped or rationalized into other schemes. The impact has been varied across Ministries.

Social welfare Schemes which are discontinued, subsumed or revamped

  • Schemes under Ministry of women and child development: There are just three schemes now out of 19 schemes, i.e., Mission Shakti, Mission Vatsalya, Saksham Anganwadi and Poshan 2.0. Mission Shakti itself replaced 14 schemes which included the ‘Beti Bachao, Beti Padhao’ scheme.
  • Schemes under Ministry of animal husbandry and dairy: Just two schemes remain out of 12. Additionally, the Ministry has ended three schemes which include Dairying through Cooperatives, National Dairy Plan II, etc.
  • Schemes under Ministry of Agriculture and Farmers’ Welfare: There are now three out of 20 (Krishonnati Yojana, Integrated Scheme on Agricultural Cooperatives and the Rashtriya Krishi Vikas Yojana), while there is little information on the National Project on Organic Farming or the National Agroforestry Policy.

Government spending on fertilizers

  • Declining fertilizer subsidies: Subsidies having been in decline over the last few years; actual government spending on fertilizers in FY2021 reached ₹1,27,921 crore. In the FY2122 Budget, the allocation was ₹79,529 crore (later revised to ₹1,40,122 crore amidst the COVID19 pandemic). In the FY2223 Budget, the allocation was ₹1,05,222 crore.
  • Price rise in NPK fertilizers: Allocation for NPK fertilizers (nitrogen, phosphorus, and potassium) was 35% lower than revised estimates in FY2122. Such budgetary cuts, when fertilizer prices have risen sharply after the Ukraine war, have led to fertilizer shortages and farmer anguish.

The status of other important schemes

  • Reduced budget of MGNREGA: The allocation for the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) went down by approximately 25% in the FY2223 Budget earlier this year, with the allocated budget at ₹73,000 crore when compared to the FY21-22 revised estimates of ₹98,000 crore. The Economic Survey 2022-23 has highlighted that demand for the scheme was higher than pre-pandemic levels as rural distress continues. Anecdotal cases show that actual funding disbursal for MGNREGA has often been delayed, leading to a decline in confidence in the scheme.
  • The Garib Kalyan Rojgar Abhiyaan: The GKRAY (June 2020, for a period of 125 days) sought to provide immediate employment and livelihood opportunities to the rural poor; approximately 50.78 crore person days of employment were provided at an expenditure of approximately ₹39,293 crore (against an announced budget of ₹50,000 crore, Ministry for Rural Development). The scheme subsumed 15 other schemes. With between 60 million to 100 million migrant workers who seek informal jobs, such a scheme should have been expanded.
  • Delayed payments for Accredited Social Health Activists (ASHA): ASHA, who are the first responders, there have been delays in salaries for up to six months. Regularisation of their jobs continues to be a struggle, with wages and honorariums stuck at minimum levels. There is one more example. Biodiversity has also been ignored.
  • Less funding or wildlife habitat development: Funding under the Ministry of Environment, Forest and Climate Change has declined: from ₹165 crore (FY18-19), to ₹124.5 crore (FY19-20), to ₹87.6 crore (FY2021). Allocations for Project Tiger have been slashed ₹323 crore (FY18-19) to ₹194.5 crore (FY20-21). A pertinent question is about meeting climate change obligations in the face of funding cuts.

What are the reasons behind slashing of Funds?

  • Funds lying idle: There are challenges such as funding cuts, disbursement and utilization of funds. As of June 2022, ₹1.2 lakh crore of funds meant for central government sponsored schemes are with banks which earn interest income for the Centre.
  • Some of the unutilized funds: For instance, the Nirbhaya fund (2013) with its focus on funding projects to improve the public safety of women in public spaces and encourage their participation in economic and social activities is an interesting case; ₹1,000 crore was allocated to the fund annually (2013-16), and remained largely unspent. As of FY2122, approximately ₹6,214 crore was allocated to the Nirbhaya fund since its launch, but only ₹4,138 crore was disbursed. Of this, just ₹2,922 crore was utilised; ₹660 crore was disbursed to the Ministry of Women and Child Development, but only ₹181 crore was utilised as of July 2021.

Various reasons for corruption in implementation of welfare programmes:

  1. Lack of scrutiny: Government schemes are meant to implement at local level. Lack of effective scrutiny through timely inspections, audits lead to unaccountability and gross mismanagement of funds.
  2. Lack of awareness: Due to illiteracy and unawareness of various government schemes and its provisions lead to corruption. False beneficiaries, fake documents are used to misuse funds meant for the benefit of schemes.
  3. Weak enforcement of laws: Weak enforcement of laws for punishing corrupt has led to a sense of fearlessness among corrupts. India’s anti-corruption law has failed to punish the corrupt and instil fears regarding corruption.
  4. Political inaction: Most of the time, officials involved in corruption have political backing. Many times politicians or their family members are involved in corruption. Thus, any effort to punish the culprit goes in vain due to political interference.
  5. Centralised administration: The welfare bureaucracy is deeply centralised that comes at the cost of building a local government system that is genuinely responsive to citizen needs.
  6. Judicial delays: Judiciary in India is overburdened. A case of corruption drags for years. In the meantime, the culprit is able to destroy the evidence against him and influence the judiciary.
  7. Weak local governance: Local governance is must for effective implementation of welfare programmes. Due to absence of strong Panchayats and lack of effective local scrutiny the programmes are used as an opportunity for corruption.

What should be the way forward?

  • State should get more funding for welfare: Rather than downsizing government schemes and cutting funding, one should right size the government. After the Goods and Services Tax reform, the Centre-State relationship has been transformed, with fiscal firepower skewed towards the Centre.
  • Need of efficient civil services: Our public services require more doctors, teachers, engineers and fewer data entry clerks. We need to build capacity for an efficient civil service to meet today’s challenges, i.e., providing a corruption free welfare system, running a modern economy and providing better public goods.
  • Making public service delivery effective: Rather than having a target of fewer government schemes, we should raise our aspirations towards better public service delivery.


  • Welfare schemes are absolutely necessary where large population still lives under poverty. Inflation and unemployment further exacerbate the problem. Rather than reduction or cutting the funds government should rationalize the spending on welfare schemes.

Mains Question

Why is there continuous decline in spending on various welfare schemes? How can government rationalize its spending on welfare schemes?

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