Education and Health Expenditures in Post-bifurcation Telangana and Andhra Pradesh

The date of 2 June 2022 marks eight years of bifurcation of the erstwhile Andhra Pradesh state. Committee for Consultations on the Situation in Andhra Pradesh¹ (CCSAP) was constituted by the union government in February 2010, to examine the demands of all stakeholders across all the regions of the erstwhile state and propose solutions for its reorganisation. The committee report identified that the demand for a separate Telangana state was primarily due to “the partial implementation of the Gentlemen’s Agreement,² unsatisfactory implementation of Presidential Order of 1975 on employment issues, the gap in educational standards among the regions, the denial of fair share of water and irrigation resources, and perceived neglect in economic development of Telangana region” (Government of India 2010: 441). The proponents for the separate state claimed that formation of Telangana would be able to arrest the years of neglect and usher in an era of equitable development (Srikanth 2011). It was argued that political autonomy through a separate state could ensure that the resources of Telangana would not get diverted to other regions (Ram 2007). The relative underdevelopment of education and health sectors associated with poorer outcomes (and infrastructural backwardness) in Telangana,³ along with increasing privatisation of these services, were some of the concerns in the erstwhile state, which fuelled the separate statehood movement (Government of India 2010; Haragopal 2010; Rao 2014). Therefore, it is now an opportune time, nearing eight years of bifurcation, to evaluate the fiscal priorities towards these sectors. The aim is to identify if the desires of the people of Telangana (TS), prior to the separation, were adequately reflected in the government’s spending towards education and health between 2014–15 and 2022–23. Additionally, Telangana’s figures would be compared with those of Andhra Pradesh (AP), to identify the similarities and differences in government expenditure for these two Telugu states.

 

The next section presents the data description and the details of the sources with some discussion on the methodology. The third and fourth sections deal with education and health expenditures respectively. The final section discusses some welfare schemes and presents concluding remarks.

 

Description of Data

 

This study uses the expenditure figures between 2014–15 and 2022-23. The figures for 2022-23 are budget estimates (BE) available from the respective states’ budget documents (Government of Telangana 2022a; Government of Andhra Pradesh 2022a). The figures for 2021-22 are revised estimates (RE). The expenditures for the remaining years are all "actuals"  and were sourced from the State Finances: Study of Budgets (Reserve Bank of India 2021a). For calculating expenditures as proportion of gross state domestic product (GSDP), we use GSDP based on current prices, available from the Handbook of Statistics on Indian States (Reserve Bank of India 2021b). The GSDP data for the advanced estimates for 2021-22, is taken from the respective states’ economic surveys (Government of Telangana 2022b; Government of Andhra Pradesh 2022b). Since GSDP data is available only until 2021-22, we restrict the indicators which use GSDP to that year (including real expenditures).

 

Comparing only nominal expenditures over a longer period can lead to downward biased interpretations of the growth in expenditure figures. Therefore, to account for the general price rise, we compute real expenditures using GSDP deflator⁴ as an index for inflation. Deflator is calculated as a ratio of GSDP in current prices and GSDP in constant prices (2011-12 prices).

 

The proportion of expenditures in total expenditure or GSDP only provides a partial comparative view as these indicators do not provide information on the average amount being spent by the state government for an individual concerned. Therefore, to compare the spending levels in Telangana and AP, we compute per capita expenditures. For per capita education expenditure, population only within the age group of 5 to 24 was considered, as this age group indicates the amount the government spends to meet the needs of educating those within that age group. We acknowledge that such a measurement could incorrectly mean that education expenditure caters only to those within that age bracket. Nonetheless, it provides at least a crude understanding of expenditure per person (student or otherwise) within the age and thereby allows us to compare between states. The population figures were computed from the projections available through the Census of India 2011 (National Commission on Population 2020). Age-wise disaggregated projections are available only for every five years between 2011 and 2036. So, for the other years, we have projected the figures based on a constant linear growth assumption.⁵ On the other hand, per capita health expenditure is computed by dividing the expenditure by the total projected population of the state.⁶

 

Education Expenditure

 

Educational backwardness and gaps in outcomes between Telangana and coastal AP was highlighted by the CCSAP. The report points out the “inadequate provision for education infrastructure (excluding Hyderabad)” (p 543) for the Telangana region. Furthermore, it is presented that the “access to education is one of the major issues in their demand for a separate state” (Government of India 2010: 125). Prior to the state’s bifurcation, Telangana was behind in several educational outcome indicators as highlighted in the CCSAP report,  “the data on educational achievements reveals that most districts of Telangana continue to lag behind districts of coastal Andhra and Rayalaseema not only in terms of literacy rates but also in female literacy rates, percentage of children in school as a whole as well as for the SC, ST groups” (Government of India 2010: 128). Furthermore, Rao (2014) argues that the cost of education in the combined state was rising due to the large-scale privatisation of education accompanied by a lack of affordable public education, hurting the prospects of the poor and marginalised. There was also a fall in the quality of public education that was reflected in the increasing dropout rates and the growing preference for private schooling (Rao 2014). Rao (2014) argued that the new state of Telangana should spend adequately to address the educational disparities within the state.

Figure 1

Source: Author’s calculations.

 

Figure 1 shows the expenditure in education as a percentage of the GSDP at current prices (base: 2011-12). It can be seen that the education spending declined for both AP and Telangana as proportions of GSDPs: indicating that both the states have not increased their spending as their economy expanded. The decline for AP was even sharper than Telangana; however Telangana’s share was significantly lower than AP’s. In 2021-22, AP spent 2.2% of its GSDP on education, while Telangana spent only 1.2%. These shares were 3.2% and 1.4%, respectively, in 2014-15. Furthermore, during the initial years, Telangana witnessed an increase with the share rising from 1.4% in 2014-15 to 1.8% in 2015-16 and then to 1.9% in 2016-17. Subsequently, however, there has been a steady decline.

 

Figure 2

 

Source: Author’s calculations.

 

 

The share of education in total expenditure declined sharply for Telangana over the years, while AP’s share in 2022-23 (BE) remained at the same level as it was in 2014-15 (Figure 2). Telangana’s share fell from 11.2% in 2014-15 to 7.3% in 2022-23, while AP’s increased marginally from 12.6% to 12.7%. The gap in expenditure shares had widened significantly over the years. AP’s share increased during four years over this period, while Telangana’s share increased only twice. It was seen in the previous graph (Figure 1) that education spending in Telangana increased as a percentage of GSDP from 2014-15 to 2016-17, but it had decreased as a share of total expenditure from 11.2% to 10% during that period. This indicates that while the state had increased its education spending, it was not commensurate with the increase in its total expenditure. Nonetheless, as shown in Table 1, absolute expenditure in education increased substantially to the tune of 51.6% and 15% during 2015-16 and 2016-17. Even in real terms (after deflating GSDP deflator), there was an increase of 48% from 2014-15 to 2015-16 and a further increase of 10.5% from 2015-16 to 2016-17. At the same time, AP’s real education expenditure fell by 1.86% in 2015-16, and by 2.18% in 2016-17. While the nominal education expenditure for AP increased by 1.54 times from 2014-15 to 2021-22 (RE),⁷ its real expenditure increased only by 1.01 times (very marginal increase) (Appendix Table A1). During the same period, Telangana’s nominal expenditure increased by 1.93 times, while its real expenditure increased only by 1.39 times. Real expenditure in Telangana increased substantially from 2014-15 to 2015-16 by Rs 2,800 crore. But the real spending in 2021-22 in Telangana was lower than the spending in 2015-16 by Rs 500 crore; contrastingly, nominal spending increased by around Rs 3,000 crore. Furthermore, in real terms, education expenditure in 2021-22 was the third lowest for Telangana (after 2014-15 and 2019-20). However, its nominal expenditure in 2021-22 was the second highest spending (after 2022-23). Similarly for AP, 2021-22 nominal expenditure was the third highest (after 2022-23 and 2019-20), while the real expenditure in 2021-22 was only the fifth highest (Table A1). This indicates that despite high expenditures in nominal terms, the education spending has not improved in real terms. Same can be concluded if we consider the compound annual growth (CAGR) from 2014-15 to 2021-22 (Table 1)—while nominal expenditure grew at 9.86% annual for Telangana, its real growth was only 4.85%, that is, less than half the rate. The difference is even stark for AP, whose nominal growth was 6.32% and real growth being a mere 0.16%.

 

Table 1: Growth Rates of Education Expenditures (%)

	Real Education Expenditure		Nominal Education Expenditure
	AP	Telangana	AP	Telangana
2014-15	-	-	-	-
2015-16	-1.86	48.06	0.71	51.6
2016-17	-2.18	10.46	2.26	15.07
2017-18	10.54	-1.37	15.33	2.4
2018-19	-7.36	-9.96	-2.15	-5.7
2019-20	30.79	0.95	36.03	6.36
2020-21	-12.87	-10.31	-9.15	-4.98
2021-22	-9.69	5.94	6.93	13.45
2022-23	-	-	17.40	18.76
CAGR	0.16	4.85	6.32	9.86

CAGR is for 2014-15 to 2021-22.

Source: Author’s calculations.

 

Although absolute expenditure figures enable us to examine the trends within the state, they are not useful for interstate comparisons due to various state-specific differences (such as population). Therefore, we compute per capita education spending as shown in Figure 3. It can be seen that per capita nominal and real expenditures in Telangana are substantially lower than in AP across all the years. In 2021-22, per capita real and nominal expenditure for AP was Rs 9,145 and Rs 16,395; it was Rs 6,763 and Rs 11,393 for Telangana, that is, lower than AP’s by Rs 2,382 in real terms and by Rs 5,002 in nominal terms. The gap between Telangana and AP in terms of per capita expenditure widened over the years. For instance, in 2014-15, AP’s nominal expenditure was higher than Telangana’s by Rs 4,342. But, by 2021-22, this gap rose to Rs 5,002. The real per capita expenditures are substantially lower than nominal figures for both the states. Per capita nominal expenditure more than doubled in 2021-22 from Rs 5,382 in 2014-15 for Telangana. For AP, it increased by 1.69 times in 2021-22 compared to Rs 9,724 in 2014-15. However, the real per capita expenditure only increased by 1.53 times for Telangana, and by 1.11 times for AP.

 

Figure 3

Source: Author’s calculations.

 

Disaggregating education expenditure into revenue and capital, it can be observed that in recent years, there has been an increase for both the states in capital expenditure as reflected by its share in the total capital outlay (Table 2). But the increase was much more significant in AP than  in Telangana. AP’s share of capital expenditure in education was 18%, 17% and 14%, respectively in 2020-21, 2021-22 (RE) and 2022-23 (BE). However, it was only 3%, 2% and 0.6% in Telangana during the same period. Furthermore, the revenue expenditure share of education in total revenue expenditure has been on a continuous decline since 2018-19 for AP and since 2017-18 for Telangana. Increase in capital expenditure is a positive development as it signals an improvement in educational infrastructure and an upgradation of the facilities.

 

Table 2: Revenue and Capital Expenditures in Education

	Revenue Expenditure % of Total Revenue Expenditure		Capital Expenditure % of Total Capital Outlay
	AP	Telangana	AP	Telangana
2014-15	14.19	13.43	4.85	2.26
2015-16	17.3	13.79	2.64	0.98
2016-17	14.82	14.68	0.95	0.74
2017-18	16.21	14.35	2.69	1.04
2018-19	15.04	11.85	1.23	1.23
2019-20	19.13	11.26	2.78	1.67
2020-21	13.62	9.91	18.01	3.34
2021-22 (RE)	13.05	8.52	17.31	2.24
2022-23 (BE)	12.48	8.38	14.33	0.6

Source: Author’s calculations.

 

Health

 

The CCSAP report also highlights that the health infrastructure of Telangana was lagging behind coastal AP and Rayalaseema, while its health outcomes fared better than the other two regions of the erstwhile state (Government of India 2010). Furthermore, it is noted that the heavy concentration of modern health facilities in Hyderabad, accompanied by a relative neglect of other districts, deepened the problem of unequal access to adequate healthcare (Government of India 2010; Rao 2014). Rao (2014) points out two measures—number of hospital beds per lakh population and number of doctors per lakh population—in which Telangana region excluding Hyderabad lagged behind the other two regions. As was the case with the education sector,  erstwhile  AP was witness to a dominance of private provisioning of healthcare—public spending on health both as a share in total expenditure and in the GSDP was declining (Rao 2014). This section will present some post-bifurcation trends in the government expenditure on health for AP and Telangana.

 

Figure 4 shows the percentage of health expenditure in GSDP. Itt can be seen that Telangana’s percentage has been lower than AP’s for all the years. While there was an increase during the initial years for Telangana, it started to decrease continuously from 2017-18 to reach 0.36% in 2022-23 (BE). Telangana’s share in 2022-23 was marginally lower than its percentage in 2014-15 (0.37%). AP’s health expenditure which was 0.83% of its GSDP in 2014-15, decreased to about 0.55% in 2019-20, however since, it has risen to reach 0.85%, slightly higher than in 2014-15. Therefore, health expenditure in the recent years has been on a rise for AP—its nominal health expenditure increased by 11.7%, 69.4% and 13.35% in 2020-21, 2021-22 and 2022-23 (Table 3). Telangana budgeted around Rs 8,882 crore towards health for 2022-23, which is the highest-ever allocation for health, and which is an increase of 114% from the revised estimates of the previous year (Table A2).

 

 

 

 

Figure 4

Source: Author’s calculations.

 

While the share of education in total expenditure differed markedly between Telangana and AP, their health expenditure shares have been more or less similar between 2014-15 and 2019-20 (Figure 5). However, the share has fallen from 4.3% in 2019-20 to 3.4% and further to 2.3% in 2021-23 for Telangana, only to rise to 4.06% for 2022-23 (BE), but this is slightly lower than the share in 2014-15. Nonetheless, it is surprising that the share of health expenditure fell in Telangana during the peak of COVID-19 pandemic in 2020-21 and 2021-22. During both these years, AP not only increased health’s share, but also spent a much greater share of its expenditure on health than Telangana. Since 2019-20 (when the shares of both the states were similar), Telangana reduced its health’s share while AP increased. However, in 2022-23, AP reduced its health share, while Telangana increased. Overall, there has not been any substantial increase in share allocated to health over the years by Telangana, except during the latest budget. On the other hand, AP increased its share marginally during the initial years (2015-16 and 2016-17), and during the pandemic years.

 

 

 

 

 

 

 

 

 

 

 

Figure 5

Source: Author’s calculations.

 

Real health expenditure has grown at a much slower pace than nominal expenditures (Table 3). While Telangana has registered an increase in expenditure of 2.37% in 2019-20 from 2018-19 its real expenditure in fact has decreased by 2.84%. The real CAGR for both the states was almost half of nominal CAGR between 2014-15 and 2021-22 (Table 3). Nominal CAGR for AP was 12.84%, while its real growth was only 6.31%. Similarly, for Telangana, nominal CAGR was 11.85%, with real growth only being 6.75%. Both the states registered a decrease in real health expenditure for three years. Table A2 (in Appendix) presents the figures for real and nominal expenditures, and nominal health expenditure for Telangana in 2022-23 (BE) increased by 4.7 times of that in 2014-15, as opposed to 2.6 times for AP. However, much of the increase in Telangana is due only to the expenditure budgeted for 2022-23. And the expenditure in 2021-22 was 2.19 times of that in 2014-15 in Telangana, while AP’s was higher at 2.3 times. In real terms, Telangana’s health expenditure in 2021-22 increased by 1.58 times compared to 2014-15, while AP’s was marginally lower at 1.53 times. Furthermore, much of the increase in real expenditure for Telangana was observed in 2015-16, when it increased by 64% (Table 3). Since then the increase has been marginal. The real expenditure for Telangana in 2021-22 was lower than 2015-16 figures by around Rs 100 crore (Table A2).

 

 

 

 

Table 3: Growth Rates of Health Expenditures (%)

	Real Health Expenditure		Nominal Health Expenditure
	AP	Telangana	AP	Telangana
2014-15	-	-	-	-
2015-16	-14.03	64.23	-11.78	68.15
2016-17	26.3	11.34	32.04	15.99
2017-18	-12.38	-4.28	-8.59	-0.62
2018-19	9.68	6.59	15.85	11.64
2019-20	-4.01	-2.84	-0.17	2.37
2020-21	7.12	-19.79	11.69	-15.02
2021-22	43.02	8.65	69.35	16.34
2022-23	-	-	13.35	114.17
CAGR	6.31	6.75	12.84	11.85

CAGR is for 2014-15 to 2021-22.

Source: Author’s calculations.

 

The per capita figures⁸ show that the health expenditure in AP was lower than it was in Telangana for five out of the eight years (Figure 6)—AP’s was higher only in 2014-15, 2020-21 and 2021-22. However, during the pandemic years of 2020-21 and 2021-22, AP’s per capita expenditures have increased markedly compared to Telangana. As can be seen in the figure, per capita health expenditure (both real and nominal figures) in Telangana in 2021-22 was nearly half of AP’s expenditure. The per capita nominal expenditure increased from Rs 1,136 in 2020-21 to Rs 1,917 in 2021-22 in AP. In Telangana it increased only from Rs 943 to Rs 1,091. The real per capita expenditure in 2021-22 was 1.48 times that in 2014-15 in AP, the same is 1.51 times for Telangana.  The nominal per capita expenditure on the other hand increased by 2.24 and 2.09 times for AP and Telangana, respectively. The real per capita health expenditure in 2021-22 for both the states are nearly half the nominal figures. These large gaps between real and nominal per capita expenditures show that the researchers need to pay greater attention to inflation while comparing expenditure figures.

 

 

 

 

 

 

 

 

 

 

 

 

 

Figure 6