Social sectors during economic reforms: The Indian experience

A range of issues, concerned with both macro and micro dimensions, have been affecting social sectors in India since economic reforms began in mid-1991. Given the unsatisfactory performance with respect to social indicators, the relevant question to be considered is not what the situation would have been in the absence of reforms, but what it ought to be and whether the process of reform can enable such goals to be achieved. The impact of reforms depends on initial conditions, growth rates and political commitment of state governments towards education, health and nutrition. Initial conditions showed a wide variation in attainment, lack of correspondence between economic performance and social conditions, low government expenditure in low attainment states, a distorted pattern of expenditure skewed towards tertiary facilities in urban areas, and under-utilization of existing infrastructure. The increase in real per capita expenditure on social services between 1986-91 (pre-reform period) and 1991-96 (reform period) has been lower than that of real per capita total expenditure. There was generally a reduction in the share of revenue allocated to social sectors during the reform years. Case studies to assess the situation in five villages in Maharashtra and Tamil Nadu pointed to the poor quality of services rendered in government delivery systems and to sharp differences in utilization of services across income groups as well as across villages. Perceptions of households indicated that quality was particularly poor in health and nutrition. A majority did not perceive any substantial improvement in quality during the period of reform.