Photo by Nikhita S on Unsplash

Extraordinary times require extraordinary policy responses.

This blog explores the efficacy of ‘child budgeting’ in public financial management (PFM) to deal with the COVID-19 pandemic. We argue that this should be an essential component of government fiscal responses. Globally an estimated 6,000 child deaths every day from preventable causes in the next six months will be a reality, apart from the exponential rise in death due to coronavirus, cautions the United Nations Human Development Programme (UNDP). Around 60 per cent of school-age children are now in the ‘effective out-of-school rate’ category, deprived of education due to ‘digital divide’ (lack of access to internet), a situation that has become dire because of the pandemic. Given the immediate and medium-term consequences on human development, the United Nations Children’s Fund (UNICEF) has recommended adopting a multi-sectoral response strategy towards the COVID-19 crisis.

The approach of ‘child budgeting’ is defined as a specifically targeted PFM tool to ensure equity for children. The significance of this PFM tool in the present context is that it tries to minimize the adverse impact of the COVID-19 crisis by ensuring women and children have adequate access to essential public service provisioning.

The challenge of implementing child budgeting in India’s federal system

We explore child budgeting in the specific context of India’s federation and sub-national government responses to the pandemic, with a focus on the State of Karnataka. In Indian federalism, a systematic rather than a sequential policy response towards addressing the three-pronged impact of COVID-19 – on education, health and income – requires targeted interventions at the State government level.

India has a significant vertical fiscal gap between the States (who undertake major expenditure functions) and the Central Government (who has the most power to tax). As a result, the final recommendations of the 15th Finance Commission (due in October 2020) in designing ‘COVID grants’ for the States to augment their fiscal space to deal with the pandemic are very important.

Karnataka’s implementation of child budgeting during COVID-19: Little allocation

Karnataka has historically been a fiscally prudent state. This State has had all its fiscal parameters well within the stipulated limits of India’s ‘fiscal rules’ (for example, maintaining zero revenue deficit and a fiscal deficit-GDP ratio at 3 per cent). Yet the Government of Karnataka was historically not well equipped to respond to the pandemic. A major reason was the meager budget allocation of Karnataka for the social sector, where the allocation for public education, health and nutrition was around 1 per cent of gross state domestic product (GSDP).

In March 2020, the Karnataka Government has for the first time introduced child budgeting in its State Budget 2020-21. The budget proposes funding 279 programmes for children below 18 years, amounting to INR 363.4 billion (USD 4.84 billion), which is 15.28 per cent of the annual budget. A significant portion of the child centric allocation – specifically targeted programmes for children – in Karnataka State Budget 2020-21, is devoted to education (67 per cent) and health (16 per cent). Despite the focus on child budgeting, the child centric allocation for education as a per cent of GSDP is only 1.36 per cent and for health it is 0.23 per cent of GSDP.

The State of Karnataka also benefits from the Integrated Child Development Scheme (ICDS), which is the largest nutrition programme for children sponsored by the Central Government aimed at providing nutrition supplements for children and lactating mothers. Through this scheme, the State is expected to ensure children mental, physical and social protection at all times. This is especially important during the pandemic where the lockdown has inflicted severe physical as well as mental distress on children, particularly in lower income households.

This is not significantly improved by the State of Karnataka’s economic response to COVID-19, released in May 2020. The macroeconomic policy package to COVID-19 announced by the Government of Karnataka allocates INR 17.22 billion (USD 0.23 billion) mainly to mitigate the economic disruption caused by the pandemic. However, nothing concrete has been allocated as an emergency pandemic package for medical aid, health and nutrition especially for children.

The minuscule allocation for child development and protection only reflects the lack of political will to design an emergency pandemic package for children. The frugal allocation for a child budget could be a ramification of the state’s pre-occupation with fiscal prudence. In so doing, the State has resorted to ‘episodic expenditure compression’, in other words cutting expenditure on one component while increasing on another component, in social sector spending and it has not remedied this so far in the response to COVID-19.

Children are severely affected by both the pandemic and the lockdown

Karnataka is witnessing a spike in COVID-19 cases since the start of the ‘unlock’. From 3,221 cases in May before the ‘unlock’ began, the COVID-19 case count in Karnataka has spiked to 139,571 cases as of 4 August (of which 62,500 cases have recovered and 2,594 patients died). The more alarming situation is the increasing COVID-19 cases among children below 10 years, where the number has crossed 5000 since May.

Consider the example of education. The inevitable lockdown aimed to rein in the spread of coronavirus, has confined people to their homes, with offices and schools going online. As educational institutions are shut down indefinitely, schools and colleges are conducting online classes. How far do these virtual classes reckon with the question of accessibility?

Our estimation based on the National Sample Survey Office’s (NSSO’s) 75th round on Social Consumption – Education 2017-18 reveals a glaring digital divide among school children in Karnataka. Only six per cent of total school aged children from class I to XII has access to computers, of which only 4.6 per cent has computer with internet facility. The digital divide between rural and urban Karnataka is huge with only 0.8 per cent of the school students having access to computers with internet facilities in rural sector whereas it is 11.9 per cent in urban sector.

It is clear that 95 per cent of school students in Karnataka are deprived of education in the pretext of online education during the pandemic, even when Karnataka’s net enrolment ratio at primary, upper primary and secondary levels stand at 95.72, 81.77 and 64.45, respectively (Economic Survey of Karnataka 2018-19), and a combined net enrolment ratio at elementary and secondary levels stands at 85.54, as per a report by the National Institution for Transforming India (NITI Aayog) in 2019.

The school closures during the pandemic also mean a loss of the nutritious mid-day meal for children of lower income households which depend on the mid-day meal (MDM) schemes delivered through schools. Though Anganwadi (rural child care centre) workers were commissioned to home deliver MDM to children during the nationwide lockdown, it was reported that schoolchildren in Karnataka got MDM only till March. The government has now limited the distribution of MDM to 49 drought-hit regions of the state.

All of this will have serious negative effects on Karnataka’s already fragile anthropometric profile of children below 10 years. Malnutrition is a silent emergency in the State. The Comprehensive National Nutrition Survey reports high rate of stunting at 32.5 per cent among children below five years, of which 12.4 per cent are severely stunted; 19.3 per cent of the same age group are (4.6 per cent severely); and 32.4 per cent are underweight (9.5 per cent severely). Stunting among children aged 5-9 years is 21.5 per cent (4.5 per cent severely); 28.2 per cent are underweight (6.7 per cent severely); and 3.8 per cent are obese (1.1 per cent severely).

This makes it compelling to take a re-look at the fiscal space for ‘child budgeting’ and scale it up to ‘whatever it takes’ to deal with the pandemic. Considering the gravity of the catastrophic impact of the COVID-19 pandemic on education, health and income, it is imperative for the State to look beyond the prescribed fiscal rules and make adequate allocation in the social sector – in particular child budget – of the State.


This piece is based on work-in-progress research by the authors. The authors are Research Fellow and Professor at NIPFP.

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