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Major financial deficit for FY 2020-21 in social sector funding

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Major financial deficit for FY 2020-21 in social sector funding

According to a recent report, India is facing a major financial deficit of around Rs. 8 crores in the FY 2020-21. This deficit can be seen in social sector funding, in which the country saw annual growth of 12% in total expenditure. The previous expenditure in the social sector was valued at Rs. 10 crores, which has been increased to Rs. 17.5 crore this FY 2020-21. With these figures, it is estimated that if the country wants to achieve United Nations STD goals, it will likely see Rs. 10 lakh deficit for FY 2025-26. 

After the outbreak of coronavirus hit the nation, there has been an increase in fiscal deficit and debt burden within the country. The state and central government have been spending 93% of total expenses in the social sector but it can be seen that the government finances will most likely be limited in the near future.

For India’s growth in the future, robust infrastructure development in all segments of the economy is a must. For this, private philanthropy would help bridge the burning gaps between government finances. There is an estimation that the nation will see a rise of nearly 12% in private philanthropic funding in the five years to come. This will include three major segments of philanthropic activities: CSR (Corporate Social Responsibility), family philanthropy, and retail. 

Private foreign funding has been declined in recent years because of the imposed regulatory barrier. But corporate trust will turn to grow at 15-20% value annually, whereas the total private funding will most likely contribute at around 2%. The compulsory contribution of 2% of profit, in the name of CSR, has been grown to 15% yearly in six years. It amounted to Rs. 10,000 crore in the year 2014-15 and is now at Rs. 24,000 in the year 2020-21. The percentage of CSR contribution is expected to increase at 19% yearly to Rs. 57,000 crore by the FY 2025-26.

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