Subsidies or financial assistance given to the needy and poor sections of the societies account for the fourth-largest expenditure of the Union government after interest payment, transport, and defence expenditure.
For example, if the Union government is going to spend one rupee in the current financial year then interest payment alone will account for 20 paisa, defence 8 paisa while subsidies will account for 6 paisa.
For the three-year period, from FY 2022-23 to FY 2024-25 (current financial year), the Centre’s cumulative subsidy bill on three items - food, fuel and fertilizers - alone accounts for a sum of Rs 13.26 lakh crores.
It is a challenge for any government to set aside nearly Rs 4 lakh crores to Rs 5 lakh crores in every budget as financial assistance for needy sections of society.
As per the budget documents, the Union government spent Rs 5.31 lakh crores on providing subsidies on three heads in 2022-23, while the revised estimate for the last financial year has been estimated at Rs 4.13 lakh crore, and the budget estimates for the current financial year has been estimated at over Rs 3.81 lakh crore, which shows a declining trend.
Subsidy bill for providing free food grains to over 810 million people under the Pradhan Mantri Garib Kalya Anna Yojana (PMGKAY) consumes the biggest chunk of overall subsidy bill of these three heads.
For example, the Centre’s food subsidy bill alone was Rs 2.73 lakh crores in FY 2022-23, and as per the revised estimate, it has been estimated at Rs 2.12 lakh crore for the last financial year and the allocation for the current financial year, as per the budget estimate, is over Rs 2.05 lakh crores.
