FISCAL DEFICITS AND HUMAN DEVELOPMENT IN INDIA: AN ANALYSIS OF UNION BUDGETARY TRENDS AND PUBLIC EXPENDITURE

Abstract

This study examines the trends and structural changes in the Union Government’s fiscal deficit and analyses public expenditure on education, health and other human development sectors. The findings indicate that India’s fiscal deficit increased sharply during the COVID-19 pandemic and reached 9.2 percent of GDP in 2020–21. It subsequently declined as fiscal consolidation measures were introduced. The fiscal deficit was estimated at 4.4 percent of GDP in the Revised Estimates for 2025–26 and is budgeted at 4.3 percent of GDP in 2026–27. During this period the government has also increased its emphasis on capital expenditure to support economic growth and infrastructure development. Public expenditure on human development has also increased. Household out-of-pocket expenditure accounted for approximately 39.4 percent of Total Health Expenditure. India’s Human Development Index increased from 0.676 in 2022 to 0.685 in 2023 and India ranked 130th among 193 countries. The study concludes that fiscal consolidation and human development can be achieved together through efficient allocation of public resources. Protecting expenditure on education health nutrition and social protection while directing public borrowing towards productive investment is essential for achieving inclusive and sustainable development in India.