Spending on Government subsidy on rise

  1. Expenditure on subsidies is expected to be at 9.83% of total expenditure in 2019-20, up from the 9.65% in 2018-19.
  2. Spending on subsidy has been falling consistently from 18.2% in 2012-13 to 8.15% in 2017-18.
  3. However, the reason for reversal this year accounts to sharp rise in food and petroleum subsidies due to hike in Minimum Support Price and increased allocation for the Direct Benefit Transfer scheme for LPG respectively.
  4. Two major schemes in LPG sectors are PAHAL scheme and Ujjwala Yojana. First, involves direct cash transfers to LPG consumers and second seeks to give free LPG connections to poor households. Interesting facts is allocations for Ujjwala Yojana have fallen nearly 15% in 2019-20 despite an increase in coverage.
  5. Rising trend in subsidy expenditure for social welfare schemes is not a serious matter of concern as long as it doesn’t hampers fiscal consolidation plan of the government.