Unpacking the water and sanitation budget

What does slashed funding for the water and sanitation sector in this year’s budget mean? Is the government’s claim that the states will get more money because of the latest Finance Commission recommendation, spot on? Sona Mitra and Kanika Kaul of the Centre for Budget and Governance Accountability (CGBA) shed light on these at the All India Convention on the Right to Sanitation.

States to get more, but social sectors hit

There has been an increase in the state’s share in central taxes from 32 to 42 percent based on the 14th Finance Commission’s recommendation. Devolution, federalism and fiscal autonomy to the states are encouraging developments, but will the states be able to use these finances based on local needs? Also, if central taxes do not increase, like the trend in the last few years indicate, will not the state share in this pool remain stagnant?

In Budget 2015-16, there has been a decrease in the overall spending capacity of the government (both Centre and States combined). In addition, the net increase in the spending capacity of the State Governments has been modest at best. According to a report by CGBA, this amounts to a miniscule 0.33 percent of Gross Domestic Product (GDP) for the year.

Central assistance is in two forms: Plan and Non-Plan. The Plan assistance has been cut by about 19 percent when compared to last year’s budget estimate. Now, this is where the social sector spending comes from. Spending on social sectors like education, health, water and sanitation have been slashed. Rights, be it to work or food, will have little meaning in the absence of budgetary allocations. 

The Centre argues that over the next few years, the major social sector programmes will be transferred to the states. CGBA is of the view that this will not be matched by adequate spending by the state governments. Therefore, there is a need to watch out for the state budgets. 

Drinking water sector more affected than sanitation

During the Twelfth Plan period, the budget of the water and sanitation sector as a percentage of overall budget has shown an overall decrease. In this year’s budget, the Ministry of Drinking Water and Sanitation’s has incurred a budget cut of over fifty percent from Rs. 15,000 crore to Rs. 6,200 crores. Within the Ministry, the drinking water sector has been affected more than sanitation in Budget 2015-16. Also, in water and sanitation schemes, the Centre will spend onone-time capital expenditure but is moving back from having to pay for revenue (recurring) expenditure like operation and maintenance or salaries.

The Ministry of Drinking Water and Sanitation’s National Rural Drinking Water Programme and Swachh Bharat Mission are going to be affected. In any case, the fund sharing pattern of new schemes like Swachh Bharat Mission is very different from the former schemes. Moreover, it is likely that the Mission’s guidelines will be altered substantially in times to come.

Rural water and sanitation to be more affected

Water and sanitation services are a state subject, and the states are already bearing a disproportionate burden of the spending. States spend two thirds while the centre’s share is just a third of the overall budget. Most of the centre’s spending in the water and sanitation sector is in rural areas while the state’s spending is mostly for urban. It now seems that the Central Government has stepped back from the extensive role it had in water provisioning in rural areas.  

How will states meet the ambitious targets set under Swachh Bharat Mission?

Per government estimates, the proposed investment over the next five years is to the tune of Rs.1.34 lakh crore for rural areas and Rs. 62,009 crore for urban areas. It is doubtful if the states will be able to spend enough on water and sanitation. It remains to be seen how the ambitious targets of Swachh Bharat Mission will be met.