Today’s Coverage
- Welfare Expenditure and Fiscal Federalism in India — GS PAPER III — Economy | GS PAPER II — Governance & Fiscal Federalism
- ‘Right to be Forgotten’ and Indian Jurisprudence — GS PAPER II — Polity, Judiciary & Right to Privacy
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| Welfare Expenditure and Fiscal Federalism in India GS PAPER III — Economy | GS PAPER II — Governance & Fiscal Federalism |
| Why in News? The Constitution’s Preamble envisions India as a ‘Socialist’ and ‘Welfare State’, with Articles 38, 39, 41, and 47 under the Directive Principles directing the State toward social security, health, and education. Recent budget data, however, shows this constitutional promise is being funded overwhelmingly by the States rather than the Centre — reopening a long-running fiscal federalism debate. |
Who Collects the Money vs Who Spends It
A structural mismatch runs through India’s welfare architecture: the Central Government collects the bulk of national tax revenue, but the primary responsibility — and financial burden — of actually implementing welfare schemes at the grassroots falls on the States.
For 2025-26, the combined allocation for selected welfare schemes stands at ₹24.20 lakh crore, or 6.77 percent of GDP. Of this, the Centre’s own contribution is just 1.89 percent of GDP — meaning the much larger remaining share is being financed by State budgets.
This isn’t a one-year anomaly either. While total real spending on social services has risen over time, the Centre’s share within that spending has stayed nearly flat, meaning nearly all of the increase in India’s social security spending has landed on State finances.
From Legal Entitlements to Cash Transfers
The 2000s saw India build an entitlement-based welfare model, giving legal backing to promises around food, education, and employment through laws like MGNREGA and the Right to Education Act — a shift that turned citizens from supplicants into rights-holders.
Over the past decade, policy has drifted toward Direct Benefit Transfers instead. States alone now spend ₹4.14 lakh crore on unconditional cash transfers, marking a meaningful shift away from the earlier legal-entitlement approach.
How Centrally Sponsored Schemes Deepen the Burden
Major Centrally Sponsored Schemes have traditionally split costs 60:40 between Centre and States (90:10 for Northeastern states). But newer laws — such as the VB-GRAM G Act replacing MGNREGA — are set to push even more of the financial burden onto States.
States already carry the lion’s share of school education spending, contributing 75.2 percent of the national total, and are similarly dominant funders in the health sector.
Why This Matters for Long-Term Growth
Research by Ghose and Banerjee in the Economic and Political Weekly points to a mutually reinforcing cycle between human development and economic growth — investment in education and health raises productivity, which in turn strengthens GDP.
Yet despite a tax-to-GDP ratio broadly comparable to other middle-income countries, India spends far less on social security as a share of GDP than most global peers — suggesting the constraint is political and structural rather than purely fiscal capacity.
How Major Welfare Schemes Split Costs Between Centre and States
| Scheme | Cost-Sharing Pattern |
| ICDS & PM Matru Vandana Yojana | 60% Centre : 40% States |
| Samagra Shiksha Abhiyan (School Education) | States bear ~75.2% of total spending |
| MGNREGA (traditional structure) | 90% Centre : 10% States |
| State-funded unconditional cash transfers | ₹4.14 lakh crore borne entirely by States |
Way Forward
- The 16th Finance Commission should explicitly factor in States’ social sector commitments and fiscal burden while deciding vertical devolution of taxes.
- The Centre should raise its own budgetary commitment to social security beyond the current 1.89% of GDP to give real weight to constitutional Directive Principles.
- Grants to States should be linked to social outcome indicators — health, education, and nutrition improvements — to ensure spending efficiency.
- Policy should rebalance away from pure cash transfers toward long-term capacity building such as quality education and universal healthcare, reviving elements of the entitlement-based model.
India’s welfare architecture today asks States to carry a disproportionate share of a constitutionally mandated national commitment. Correcting this imbalance — through smarter devolution, higher central commitment, and outcome-linked grants — will be central to making India’s welfare state genuinely sustainable.
| UPSC Note — GS Linkage & Exam Angle This is a high-value GS II/III crossover — fiscal federalism, Centre-State financial relations, and the Directive Principles all converge here. The 1.89% vs 6.77% GDP figures are precise, examiner-friendly numbers worth memorising for any question on social sector financing. |
| Mains Practice Question “Tax revenue financially benefits the Central Government, but the burden of funding public welfare schemes falls disproportionately on the States.” Critically analyze this statement in the context of current trends in fiscal federalism in India. (250 words, 15 marks) |
| Prelims MCQ Practice With reference to welfare expenditure in India, consider the following statements: 1. For 2025-26, the Centre’s own contribution to combined welfare scheme allocation stood at about 1.89% of GDP. 2. States currently bear about 75.2% of total national expenditure on school education. 3. The cost-sharing ratio for Centrally Sponsored Schemes in the Northeast is generally 60:40 between the Centre and States. Which of the statements given above is/are correct? (a) 1 and 2 only (b) 2 and 3 only (c) 1 and 3 only (d) 1, 2 and 3 Answer: (a) Statements 1 and 2 are correct. Statement 3 is incorrect — the Northeast typically follows a 90:10 Centre-State cost-sharing ratio, not 60:40. |
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| ‘Right to be Forgotten’ and Indian Jurisprudence GS PAPER II — Polity, Judiciary & Right to Privacy |
| Why in News? The Delhi High Court, in Laksh Veer Singh Yadav v. Union of India, has clarified the principles behind the ‘Right to be Forgotten’ (RTBF), building fresh jurisprudence to protect the privacy of individuals harmed by persistent digital records. |
What RTBF Means and Where It Came From
RTBF gives an individual the right to seek removal, erasure, or de-indexing of personal information from public digital platforms — but only where continued availability causes harm and serves no public interest.
The concept traces back to Mario Costeja González v. Google (2014) before the European Court of Justice, and was later codified under Article 17 of the EU’s General Data Protection Regulation.
In India, K.S. Puttaswamy v. Union of India (2017) established privacy as a fundamental right under Article 21, explicitly recognising ‘informational privacy’ and, within it, the right to be forgotten.
How the Delhi High Court Balanced Competing Rights
The Court’s central innovation was applying a proportionality test rather than an all-or-nothing approach. Restrictions apply only to name-based searches; the underlying facts and legal reasoning of a case remain fully public.
Rather than deleting judgments outright — which would undermine open justice — the Court preferred redaction or anonymisation of names, keeping judgments accessible via case number or keyword search.
Where an offence is serious and public interest is high, the right to privacy stays limited; proportionality is reserved mainly for less serious or fully resolved cases, including acquittals.
Where the DPDP Act, 2023 Falls Short
Section 12 of the Digital Personal Data Protection Act, 2023 does provide a right to erasure, but it is built around user consent rather than a broader public-interest balancing test.
The Act is largely silent on judicial records and public archives — precisely where RTBF claims are most needed. Compounding this, as of 2026 the Act’s rules remain incompletely notified and the Data Protection Board is not yet fully functional, leaving the right practically toothless for now.
A Proposed Three-Tier Redressal Framework
Straightforward erasure or de-indexing requests would first go to the platform itself — the social media company or search engine. Disputes between platform and user would escalate to the Data Protection Board. Cases involving complex legal questions, high public importance, or court records would go directly to the courts for final resolution.
The Practical Roadblocks That Remain
Search engine algorithms tend to keep the original negative story ranked above later developments, so even a favourable court order doesn’t guarantee an acquittal judgment surfaces first in search results.
De-indexing only works at the level of a specific search engine — it cannot touch mirror sites, archived copies, or content already circulating on social media, and enforcing removal on servers hosted outside India raises serious cross-border legal challenges.
Until the Supreme Court issues nationwide guidelines and the Data Protection Board becomes genuinely operational, RTBF risks remaining a right that exists mostly on paper.
Balancing Privacy Against Open Justice — The Delhi HC’s Approach
| Constitutional Value | Point of Conflict | Court’s Balance |
| Privacy & Dignity (Article 21) | Digital footprints cause continued harassment even after acquittal | Restrict only name-based searches; keep case facts and legal reasoning public |
| Open Justice & Public Interest | Judgments must stay public for transparency | Prefer redaction/anonymisation over deletion; judgment stays accessible via case number |
| Freedom of Speech & Press (Article 19(1)(a)) | Public’s right to information vs individual privacy | Privacy yields in serious-offence cases; proportionality applies in minor/resolved cases |
Way Forward
- The Supreme Court should issue clear, nationwide guidelines to ensure legal uniformity on RTBF across High Courts.
- The government must make the Data Protection Board fully operational and empowered without further delay.
- Legal databases and tech platforms need to build robust technical systems for automatically masking names under court orders.
The Delhi High Court has built a thoughtful legal framework balancing dignity against transparency in the digital age. Turning this into an effective, enforceable right will require Supreme Court-level clarity, a functioning Data Protection Board, and real technical compliance from platforms.
| UPSC Note — GS Linkage & Exam Angle This topic combines GS II (fundamental rights, judicial reasoning) with a strong current-affairs technology angle — useful for questions on privacy, data protection, or judicial innovation. The proportionality test and the three-tier redressal framework are good structural anchors for any answer on this topic. |
| Mains Practice Question Highlighting the deficiencies of the Digital Personal Data Protection (DPDP) Act, 2023, evaluate the practical and technical challenges faced in effectively implementing the ‘Right to be Forgotten’ in the current era of the internet. (250 words, 15 marks) |
| Prelims MCQ Practice With reference to the ‘Right to be Forgotten’ in India, consider the following statements: 1. The right to privacy, including informational privacy, was recognised as a fundamental right under Article 21 in K.S. Puttaswamy v. Union of India (2017). 2. Section 12 of the DPDP Act, 2023 provides a right to erasure that is primarily based on user consent. 3. The Delhi High Court in Laksh Veer Singh Yadav ordered complete deletion of judgments to protect privacy. Which of the statements given above is/are correct? (a) 1 and 2 only (b) 2 and 3 only (c) 1 and 3 only (d) 1, 2 and 3 Answer: (a) Statements 1 and 2 are correct. Statement 3 is incorrect — the Court preferred redaction/anonymisation of names over deleting judgments outright, keeping them accessible via case number or keyword. |
| External References Union Public Service Commission — upsc.gov.in Ministry of Finance — finmin.nic.in Ministry of Electronics and Information Technology — meity.gov.in |
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