Health and Education has high association with GDP Per Capita Growth

The Economic Survey has set the target of becoming a 5 trillion economy. A lot of debate has been on how this can be achieved . What are areas should be focused on in order to achieve this objective. IPD examines how outcome of different socio-economic indicators are associated with the GDP Per Capita. In the article titled “State wise Performance across Different Socio-Economic Parameters“, the state wise ranks where given and a composite index was created based on four dimensions, viz., Health, Education, Unemployment and GDP Per Capita. The same data is used to find out the association of health, employment and Unemployment performances with the GDP Per Capita.

GDP Per Capita and Health

Source: NITI Aayog health report and CSO

The index published by NITI Aayog was used to measure the performance on health across states. The Health indicator has a 77 percent association with GDP Per Capita . This is the highest association among the other socio economic indicators.

Source: Union Budgets
* Revised estimates

The health budget is around 65000 crores in 2019-20. In terms of trend , there has been a steady increase in the absolute budget from 2015-16. For the last three financial year the actual estimates are higher than the budget estimates

The share of health budget in the total budgetary allocation declined from 2.4% in 2011-12 to 1.7% in 2015-16. Since then it has been rising. This year it is at 2.3% of the central budget. The story is different if one looks into the share of actual estimates on the total spending. The share has been rising since 2014-15. It was 2.5% in 2017-18. The same was at 2,3% in 2018-19 (revised estimates). This year the share of health budget in the total budgetary allocation is 2.3% of the central budget.

Source: Union Budgets
*Revised estimates

GDP and Education

For education, the male and female literacy rates and the percentage of male and female attainment of secondary or above level of education are considered as performance measures. It is observed that percentage of attainment of secondary or above level of education has a high association with the per capita GDP as compared to the literacy rates. This is true for both male and female.

Source: Annual PLFS report, CSO data

The percentage of male attaining secondary or above education has a 76% association with the per capita GDP. The same is 73% of females. In terms of literacy the association was around 40% for males.

Source: Annual PLFS report and CSO

The education budget allocation is over 94,000 crores in 2019-20. This is 3.4% of the total central budget allocations. There has been an increase in the absolute allocation since 2017-18. In terms of actual estimates it is observed that there was a sharp decline in the percentage of actual spending out of the budgetary allocation amount from 2014-15 and this continued till 2016-17. 2017-18 show a more than 100% spending on education out of the budgetary allocation.

Source: Union Budgets
*Revised estimates

But the percentage of education allocation out of the total budget has seen a steady decline since 2014-15. There has been a slight increase in this year’s budget. The share of education hovered over 5% of the central budget till 2015-16. For the past three years this has hovered around 3.5%. The same is true with the percentage of actual estimates. The percentage of actual spending of education out of the total actual spending hovered over 4% till 2014-15.But there has been a steady decline on this since 2014-15. Now the same stood at 3.7% in 2017-18. Based on revised estimated for 2018-19, this declined further to 3.4%.

Source: Union Budgets
*Revised estimates

GDP and Unemployment

Unemployment rates is at a historical high as per the Annual PLFS report. In terms of association with per capita GDP it is observed that higher the unemployment rate lower is the GDP. The highest association is with urban unemployment for male. This is around -48%.

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