This paper presents trends in public expenditure in the social and poverty-alleviation sectors since 1990/91, about the time the Economic Reforms were initiated. Individual States account for a considerable proportion of this expenditure, but in India the Centre’s share of expenditure seems to be increasing over time. This paper therefore analyses trends in State expenditure, expenditure by the Central government through annual budgets, Centre- and State-adjusted combined expenditure. Overall it appears that expenditure on social-sector schemes is increasing in real terms, but mainly through increased expenditure by the Centre. Thus, the State Governments seem to be easing out of their constitutional commitment to sustain programmes in social sectors, this is a matter of concern. There are large inter-sectoral reallocations of funds in the poverty-alleviation sectors. One major development has been that huge funds that were allocated to employment-generation strategies have now been diverted to the rural road-construction programme. While the previous employmentgeneration programmes were both inefficient and unproductive, they were aimed at providing daily wages through employment generation. This provided income to sustain the bare minimum of required nutrition. The reallocation of poverty-alleviation funding may not generate employment because rural road-construction activity is likely to be capital-intensive with labour replacing technology because of pressure to create rural infrastructure. A promise to link enhanced socialsector allocations to disinvestment proceeds after labour welfare functions are complete is disillusionary, and should be a matter of concern to all. Another noteworthy aspect is that both the State and Central Governments do not fully utilise their allocated funds, especially in selected programmes.