Budget 2024: What will be the condition of subsidy in the new budget? What is the trend seen in the economic survey and 10 years data

According to the Economic Survey 2023-24 presented on Monday, the government’s expenditure on major subsidies has decreased by 22.1 per cent on an annual basis. According to the survey, the biggest decline of 24.6 per cent in FY24 has come in fertilizer subsidy, while food subsidy has also decreased by 22.4 per cent. The special thing is that this has happened despite the extension of the free grain scheme for the poor launched by the government during the Coivd 19 Pandemic in the financial year 2023-24. Revealing the reason for the decline in fertilizer subsidy, the survey states that in FY23, due to the Russia-Ukraine war, the prices of fertilizers had increased significantly, due to which the expenditure on subsidy also had to be increased. But in FY24, the prices of fertilizers have largely returned to the old levels, due to which the expenditure on fertilizer subsidy has come down.

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Data of last 10 years: How was the trend

If we look at the total expenditure of the government on subsidy in the last 10 years, some trends will be clearly visible.

• The total subsidy bill of the government has declined rapidly from financial year 2014-15 to 2017-18.

• The total subsidy bill was Rs 2,49,015.6 crore in the financial year 2014-15, which declined for three consecutive years thereafter.

• The total subsidy bill of the Central government was Rs 2,41,833.17 crore in the financial year 2015-16, Rs 2,04,024.6 crore in 2016-17 and Rs 1,91,209.75 crore in 2017-18.

• The total subsidy bill of the government increased slightly to Rs 1,96,768.75 crore in FY 2018-19 and further to Rs 2,28,341.46 crore in FY 2019-20.

• In the financial year 2020-21, due to the Covid 19 pandemic, the subsidy bill suddenly increased sharply to Rs 7,07,706.52 crore.

• After Covid 19 came under control, the government once again started reducing subsidies.

• In the revised budget estimates for the financial year 2023-24, it was expected to be limited to Rs 4,13,465.8 crore.

• The (interim) budget estimate for FY 2024-25 is expected to bring down the total subsidy bill further to Rs 3,81,174.82 crore.

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Central government subsidy bill (in Rs crore)

BE: Budget Estimates; RE: Revised Estimates.Source: Budget Documents

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The share of subsidies in total government expenditure decreased

The interesting thing is that although the total expenditure of the Central Government on subsidy has increased many times in the last 10 years, the share of subsidy in the total expenditure of the government has decreased.

• The share of subsidies in the total expenditure of the Central Government was 16.3% during the financial year 2013-14, which decreased to 9.6% by the financial year 2018-19.

• The share of subsidies in government expenditure increased to 22% in the financial year 2020-21, but this was due to the extraordinary circumstances created by Covid 19.

• According to the budget estimates for the financial year 2023-24, the share of subsidy in total government expenditure is expected to decline to around 9%.

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Subsidy: Where it decreased, where it increased

There have been major changes in the subsidy structure during the 10 years of Modi government. Government subsidy has decreased in some places and increased in others. For example,During the last decade, food and fertilizer subsidy has increased rapidly, while the subsidy on fuel (petrol-diesel, LPG) has decreased.

• In the financial year 2013-14, the share of fertilizers in the total subsidy bill of the government was 26.4%, share of food subsidy was 36.1% and share of petroleum subsidy was 33.5%.

• During the financial year 2022-23, the share of food subsidy increased to 47.7% and that of fertilizer to 44%, while the share of fuel subsidy declined to just 1.2%.

• Due to the reduction in fuel subsidy, the share of subsidy in the total expenditure of the government has remained under control despite a huge increase in food subsidy.

• The total subsidy on fuel in the financial year 2014-15 was Rs 60,268.82 crore.

• In the Revised Budget Estimates (RE) for the financial year 2023-24, the total subsidy amount on fuel is only Rs 12,240 crore.

• In the Budget Estimates (BE) for the financial year 2024-25, the fuel subsidy has been kept at only Rs 11,925.01 crore.