The-Evolution-of-Indias-Welfare-System-From-2008-2023

To put this in historical perspective, we note that the type and size of grants-in-aid have varied over a period of time. There have been five different types of grants: (a) revenue deficit grants, (b) grants for local governments, (c) grants for disaster management, (d) sector-specific grants and (e) State-specific grants. Except for the revenue d

The RBI’s report highlights three priorities for states:

1. Control Subsidies: States need to rethink their freebies and focus on sustainable spending.




2. Rationalize Expenditure: Invest more in future development rather than daily operations.




3. Improve Transparency: Standardized reporting and robust data systems are essential.

The distinction between revenue and capital accounts is, in fact, rooted in the history of budget making process, and in the Constitution of India. Revenue deficit grants emanate from the requirement to meet the fiscal needs of the States on their revenue accounts that remain to be met, even after considering their own tax and non-tax resources and

This includes taxes like SGST (the state’s share of GST), excise duties on alcohol, property stamp duties, and vehicle taxes. The good news is that states’ tax collections have become stronger since the pandemic. Tax buoyancy—a measure of how tax revenue grows with the economy—has improved from 0.86 before the pandemic to 1.44 now. This means state

Besides revenue deficit grants, we have recommended grants and incentives for various sectors. These grants revolve around four main themes. The first is social sector, where we have focused on health and education critical to a large and particularly vulnerable subset of the population. Both these sectors face unprecedented challenges with the pan