Social Sector Expenditure

empirical front, some economists have made an attempt to link different components of public expenditure viz-social sector and economic sector with growth but there exists no uniform result. The level of social sector spending and its impact on the growth has emerged as a major public choice issue being faced by economies in transition. Therefore, it is important to understand this relationship in context of India, which is undergoing macroeconomic adjustment since economic liberalization of 1990s.

It has been argued by policymakers that social sector expenditure plays an important role in expanding the course of economic development of a nation via imparting social justice. The changing needs of the economy and society to enhance overall standard

However, the effects of social protection expenditures of governments on long-run economic growth are not clear with two opposite evidence. On the one hand, the benefit these programs provide can discourage people from working. Because of the decline in the amount of labor supplied in the economy, the level of output and, in some circumstances, the level of capital investment and hence growth can lower. On the other hand, social protection expenditures will make a positive contribution to the economic growth since the individuals are insured against disease and unemployment risk and therefore they become more productive and motivated to work. These two different suggestions keep the debate open about whether social protection is an expenditure or an investment.

The study aims to understand the effects of governments’ expenditures in social areas like education, health, and social protection, which also embodies social security on economic growth for India. The study is organized as follows: In section 2, major Indian social policies are analyzed along with the trends in Indian social expenditures. This is followed by section 3, wherein a brief comparative analysis with other countries is provided. The example of OECD countries and East Asian Model is provided.

Some definitions of social policy in the literature should be considered. The World Bank, defines social development as “transforming institutions to empower people,” and goes on to specify three operational principles—Inclusion, Cohesion and Accountability. As a working definition, social development can be described as the process of increasing -the assets and capabilities of individuals to improve their wellbeing, -the capacity of social groups to exercise agency, transform their relationships with other groups, and participate in the development processes, -the ability of society to reconcile the interests of its constituent elements, govern itself peacefully, and manage change. Social Policies then are public policies aimed at promoting equality of opportunity to benefit individuals, equality of agency to benefit groups, and both horizontal and vertical social integration. Social development can also be defined as a process of planned social change designed to improve the welfare of the population as a whole in conjunction with economic development. Social policy, on the other hand is the set of measures that affect people’s well being, whether through the provision of welfare services or by means of policies that impact upon livelihoods more generally. Finally, Social policy should be conceived of as involving overall and prior concerns with social