The Budget for 2016-17 is around the corner and all eyes are now on Finance Minister Arun Jaitley. Should the government spend more, or keep its wallet shut? The global economy wades through crashing commodity prices and unsure policy moves and shaky investors. In the midst of this India has to decide which course to take, to ensure jobs to millions of youth joining the workforce every year. We at Catch bring you a series with a focus on all sections of the population and their requirements from Mr Jaitley's Budget.
A few days back, Prime Minister Narendra Modi defended subsidies aimed at helping poor. Within days of his statement, media reports suggested that the Union government is slated to increase food subsidy to Rs 1.3 lakh crore, about Rs 6,000 crore more than last year's budget.
In our latest report in our Budget series #NotesforMrJaitley, we take up the behemoth called subsidies and analyse its benefits and shortcomings.
Total subsidies that were allocated during the Budget 2015-16.
Total food subsidy allocated in 2015-16, or more than half of the total subsidy.
The amount that was allocated in Budget 2014-15 as compensatory payment to oil companies for under recoveries on account of sale of fuel.
This is the amount allocated as fertiliser subsidy in 2015-16.
Subsidies in India are highly controversial. Costs are rising (mainly due to mismanagement) every year, which may spike fiscal deficit, borrowing and debt. This is not good news for the health of the economy.
However, a reduction in subsidies may push the poor towards hunger, cause inflation in retail and affect the income of small and marginal farmers, who are the biggest beneficiaries of the fertiliser subsidy.
What Jaitley needs to do is increase public accountability and strengthen the logistics of subsidies.