Opinion Indian states are spending more on welfare, but the RBI handbook tells only part of the story

Yet, these absolute increases tell only a part of the story. When social sector spending is viewed as a share of total state budgets, a different picture emerges. Despite rising expenditure, the proportion of budgets devoted to social sectors has declined over time in several states. The example of Karnataka, one of the highest performers in terms of Gross State Domestic Product rankings, is useful to illustrate the declining share of the social sector within state budgets. Between 2018-19 and 2023-24, the state’s allocation to education fell from 13.1 per cent of the total expenditure to 11 per cent. This was lower than the average allocation for education by states in 2023-24 (14.7 per cent).

Second, despite increased expenditures and actual improvements on critical social welfare outcome indicators in several states, there have also been notable declines. In Chhattisgarh (along with other states such as Odisha, Bihar, Uttarakhand, Gujarat, Telangana, and Andhra Pradesh), the maternal mortality ratio (MMR), a health outcome indicator which has been a policy focus in India for decades, has actually increased. In 2015-17 it was 141, but in 2021-23, it was 146. Worryingly, even in a state like Kerala, one of India’s best-performing states in health, the MMR has increased from 18 (2020-22) to 30 (2021-23). It remains below the national average and above the SDG target but it has increased nevertheless. In several other states (12 out of the 20 listed in the handbook), MMR remains higher than the SDG target of 70.

Third, the selection of social welfare indicators in the RBI handbook reinforces a skewed picture of social welfare, particularly in health and education. Improvements in outcome indicators reported in the handbook coexists with deep intra-state disparities in both outcomes and access to facilities and services. For example, Rajasthan’s improvements in MMR from 87 (2020-22) to 86 (2021-23), coexists with a 39 per cent shortfall in the Urban Primary Healthcare Centres (UPHCs), a data point provided in the Rural Health Statistics (RHS) 2021. In states such as Odisha, according to the RBI handbook, the infant mortality ratio (IMR) has declined from 32 (2022) to 30 (2023). But the most recent National Family Health Survey (NFHS) data highlights the poor state of urban IMR. Just as the data quoted in RBI’s statistics, in NFHS-Odisha data, the overall IMR had reduced from 65 (NFHS-3) to 36.3 (NFHS-5). But urban IMR had actually increased from 21 (NFHS-4) to 31 (NFHS-5). RBI data does not provide urban IMR data to understand if the pattern is repeating itself.

Sector-specific datasets in health and education, the National Achievement Survey (NAS), and the National Sample Survey Office (NSSO), among others, do present an in-depth picture. It can also be argued that the RBI handbook cannot cover all indicators at the sector level. But as a snapshot into social welfare at the state level, the handbook cannot be a limited one. Select indicators for sectors must present a comprehensive picture of access and outcomes across rural and urban areas, at the state and sub-state level.

We argue for the inclusion of the following indicators and data points in the RBI handbook. First, state-level aggregations should be disaggregated between urban and rural. The state of infrastructure, uptake and outcomes differ significantly, and more policy interventions targeting social welfare challenges in urban areas are needed. Accessible and regularly released data on urban facilities and outcomes are an important need.

Second, the most incisive data of the state of health and education are included in the handbook. Some of the important data points are: Enrolment figures in government and private schools must be made available which can highlight the uptake of government versus private facilities. For health, uptake of facilities right from the extension clinic to the hospital in rural and urban areas (included as part of one question in NFHS data) must be included.

Third, for each key indicator, the intra-state disparity should be represented. This can be easily done by including the range of data points for each indicator at the sub-state level between the best and worst-performing districts in the state.

The RBI Handbook remains an indispensable resource for understanding the fiscal trajectories of India’s states. But as social sector budgets expand, the limits of aggregate indicators become increasingly apparent. The next phase of fiscal scrutiny must ask harder questions — not just about how much states spend on social sectors, but about what that spending delivers, where it is directed, and for whom it ultimately works. Taken together, these patterns point to a deeper problem in how social sector spending is tracked and interpreted. Without clarity on the composition of expenditure, its spatial distribution, and its link to outcomes, rising budgetary allocations risk creating an illusion of progress.

Priyadarshini Singh is Fellow, CSEP. Anoushka Gupta is Research Associate, CSEP. The views expressed are personal