The last few years have seen a surge in Government expenditure, or at least promises of such expenditure; denominated in dollars, the National Infrastructure Pipeline promised expenditure of US$ 2408.29 billion (Rs.205 lakh crore) between 2019 and 2025, but nothing has been heard about it for quite some time; even the Pipeline’s website has not been updated since 2022.
Then an ambitious National Monetisation Pipeline, envisaging asset monetisation of Central ministries and public sector entities, totalling to Rs.6 lakh crore between 2021 and 2025 was announced in Union Budget 2021 but the achievement is rather sketchy. Also, PM Gati Shakti, or National Master Plan for Multimodal Connectivity was launched on 15 August 2021, with a projected outlay of US$ 1.2 trillion i.e., Rs.102 lakh crore, which is under execution. Pending a detailed audit, it would, perhaps, be appropriate to ponder whether the public has benefited in proportion to the expenditure incurred on these initiatives? According to a statement in Rajya Sabha by Union Minister of Road Transport and Highways Nitin Gadkari, “From amongst 952 projects, including National Highways (NHs) projects, costing more than Rs.150 crore which were under construction in March 2024, 419 projects spilled beyond their original completion schedule, missing one or the other of the various stages of project completion up to March 2024.”
The cost overrun for these projects has been estimated at Rs.5.71 lakh crore, which speaks volumes about the Government’s thrift and punctuality. Budgeted expenditure also reflects this profligacy; expenditure in Union Budget 2000-01 totalled Rs.3.38 lakh crore, which went up to Rs.50.65 lakh crores in 2025-26 i.e., almost doubling every six years. Inflation definitely took a toll, a rupee’s worth in the year 2000 is only 20 paise in 2025. However, allowing for inflation, the Government is spending more than three times on our welfare, so the question arises whether we are three times better off than before, or alternatively, where does this money go? Every budget, since Independence ~ though worded differently ~ had the same objectives; create employment, remove poverty, help farmers and the like, so one wonders why these objectives have not been achieved even after so many years?
Or, are these objectives like the Government’s promise of doubling farmers’ income by 1 April 2022, or making India a US$ 5 trillion economy by 1 April 2025, which have not been achieved so far, and are unlikely to be achieved in the near future? Visit any government sch – ool or hospital, and you will see the same poor infrastructure, the same shortage of doctors, teachers and staff. There has been a marked improvement in the road infrastructure but the new roads are expressways with tolls, which do not allow vehicles of common folk, tractors, bullock carts etc. Other roads, especially internal roads, are still potholed. Civic amenities have not improved, an hour of rain floods most metropolises, and even in normal times traffic moves at a snail’s pace. There are new smart railway stations and swanky new trains like Vande Bharat, but delays are endemic, and the railway’s safety record is nothing to write home about. A glance at Union Budget 2025, would explain some anomalies.
At Rs.42.70 lakh crore, tax revenues were 24 times that of FY 2000-01, showing tax receipts had grown much faster than Government expenditure, obviously tax collectors and the public both had played their part. However, the pattern of expenditure in both years is totally different. In 2025-26, fully 25.5 per cent of Budget Expenditure goes to interest payments and 42.5 per cent to Central Schemes, unavoidable items like Defence, States’ share, Subsidies, Finance Commission Transfers account for almost all Budget Expenditure, leaving little leeway for other kinds of expenditure. An unavoidable outcome is that there is little scope for spending on public goods, say upgradation of Government schools or Government hospitals that cater to the educational and medical needs of most of our poor countrymen. Then, ministers ‘gift’ infrastructure projects to every place they visit, raising questions about their financing. Union Budget 2025 envisages fresh borrowings of Rs.15.66 lakh crore, which will increase the interest burden of the Government for future years. Perhaps, the time has come to a) shun gigantism and focus on smaller projects with better monitoring; b) rein in expenditure.
For (a) Ministry of Statistics and Programme Implementation, regularly monitors projects above Rs.150 crore, yet corrective action is seldom, if ever, taken. The scope for corruption in projects that drag on for years with cost over-runs could be drastically reduced should we abridge the timeline of all civil projects to one year. Such a timeline is not impossible if we take a cue from our bête noir China, which built a 1,500-room hospital for Co vid-19 patients in five days. In the alternative, we can have smaller projects and break down bigger projects into smaller components that can be monitored comprehensively. Reining in expenditure can start with trying to economise on Central Schemes, the biggest component of the Budget. The Outcome Budget for 2025-26 is a lengthy document of around 280 pages which gives the financial outlay, outputs and outcomes statement, output and outcome indicators, and specific output and outcome targets but most importantly, omits to mention the achievement of targets set in Budget 2024-25.
Thus, there is hardly any monitoring of the 635 Central Sector Schemes that are funded to the extent of Rs.16.21 lakh crore, as also 81 Centrally Sponsored Schemes, funded to the extent of Rs.5.42 lakh crore. The Fifteenth Finance Commission had recommended a review of Central Schemes, with axing of unviable ones. Before and after the Finance Commission’s recommendation, I had consistently echoed this view, while writing on the Union Budget, the last article being ‘Budget Decoded’ on 6 February 2025. Fortunately, by a circular issued on 6 June 2025, the Government has decided that Schemes that are fully or partially funded by the Union government will be allowed to continue beyond 31 March 2026 only if the evaluation report for the Scheme shows that it has been effective in achieving its stated objective, and there is a need to continue the Scheme. Secondly, all schemes will have a sunset date.
Third parties have been hired to evaluate all fully funded Central Schemes, while Niti Ayog would appraise Centrally Sponsored Schemes, that are partially funded by the Centre. Most importantly, the circular prescribes a formula for restricting expenditure on individual schemes. As a corollary, the Government could utilise savings from discontinued Schemes to ramp up the quality of public goods and utilities like Government schools, hospitals, and village infrastructure. Further, renouncing its “Big is Hot” mindset, which encourages waste, corruption and conspicuous consumption, the Government needs to turn the dial to “Small is Cool,” and try to develop neglected areas like villages and small towns. In the new model of development, the Government could concentrate on promoting agriculture-based industries in smaller cities, which would ensure better returns to farmers, and provide jobs to village youth. Decentralisation of Government offices from capital cities could also help job creation in smaller centres.
An initiative on the lines of US President Franklin D Roosevelt’s ‘New Deal’ of 1933, is required. A task force of unemployed village youth could be created to fight perennial agricultural problems like soil alkalinity, desertification, flooding, menace of weeds like lantana, parthenium and water hyacinth. A part of this task force could build much-needed schools, municipal buildings, waterworks, sewers, streets, and parks, giving a boost to both agriculture and civic amenities, of smaller cities. Such an initiative would solve our unemployment problem, and rebuild India as a better, more responsive, resilient, and equal country.
(The writer is a retired Principal Chief Commissioner of Income-Tax)