Social sector expenditure
Topic: Government Budget, Fiscal Policy and FRBM · NCERT: Class 11, Ch 3 "Liberalisation, Privatisation and Globalisation: An Appraisal"; Class 11, Ch 4 "Human Capital Formation in India"; Class 11, Ch 8 "Comparative Development Experiences of India and its Neighbours"
Meaning
Social sector expenditure is government spending on education, health, social security and welfare. It builds human capital, meaning the skills, knowledge and health of people. Its returns come slowly, over many years, as people become more productive. For this reason it is easy to cut when budgets are tight, even though the long-run cost of cutting it is high.
Example
Spending on teachers' salaries, government hospitals and old-age pensions is social sector expenditure. Class 11 argues that the reforms after 1991 limited public spending, especially in social sectors. NCERT also warns against cutting education and health to reduce deficits.
Don't confuse with
- Capital expenditure: most social spending, such as salaries, is revenue expenditure in the budget, even though it builds human capital. It creates no physical or financial asset for the government.
Related concepts
- Revenue expenditure
- Capital expenditure
- Plan and non-plan expenditure
- Committed expenditure
- Interest payments
- Effective capital expenditure
- Welfare expenditure
- Wagner's law
- Peacock-Wiseman hypothesis