Budget 2024: Why subsidy is given in the budget, did the expenditure increase or decrease in 10 years of Modi government

Union Budget 2024 : Finance Minister Nirmala Sitharaman is once again going to present the first budget of the new government and her sixth full budget next month. It is believed that some big and surprising announcements can also be made in this budget. At present, the major part of the budget is subsidy (Subsidy Bill). In such a situation, the discussion has started that what is going to be announced regarding subsidy this time in the Union Budget 2024. Subsidy is a financial assistance, so one should know what is a subsidy bill and why it is given.

Financial assistance from the government

Subsidy in Budget is a financial benefit or financial assistance given by the government, which is usually given to institutions or individuals. This privilege is usually either in the form of cash or tax deduction. Its purpose is to promote the economic and social policies of the government as it enhances the general interest of the public. Everyone wants financial help from the government, so subsidy becomes important in the budget. Generally, subsidy in India is given keeping in mind farmers, industries and consumers. This can be in direct or indirect form. Subsidy figures have a great impact on the balance sheet of the government. On this basis, it is estimated whether the government will be able to meet its fiscal deficit target or not.

The purpose behind giving subsidy

The purpose of a subsidy is to reduce the financial burden of people or to promote a particular service or product. That is, the purpose of any subsidy is usually to promote social or economic policies, so government subsidy should not be seen as just a government expenditure (or loss of revenue).

Where is the subsidy available (Form of Subsidy)

Generally, food subsidy is important and about 50 percent of the total subsidy given by the government is spent on food subsidy. This expenditure is made on cheap grains given to the poor. Apart from this, the government gives subsidy on fertilizer, kerosene, LPG cylinder, food items and in selected cases, on interest.

Subsidy is also available in this form

Export Subsidy
import subsidy
Tax subsidies
oil subsidy
Housing Subsidy
Employment Subsidy
Transport Subsidy
environment subsidy

Benefits of Subsidy

The benefits of subsidy are that people from weaker sections get financial help through subsidy. Through this, farmers get cheap fertilizers, machinery or equipment and products related to farming. The subsidy given to industries helps in expanding the business, which directly benefits the economy and increases employment. The subsidy given to small industries also creates new employment opportunities.

Disadvantages of subsidies

There are advantages as well as disadvantages of subsidy. More subsidy means that the pressure on the government’s balance sheet will increase. Actually, due to unwanted events in some sectors, the government has to spend more on subsidy bills than the provision. In such a situation, the government makes cuts in other sectors to improve its balance sheet.

Spending on subsidy in Modi government

FY25: The estimated expenditure on subsidies for the financial year 2025 is Rs 4.10 lakh crore.
FY24: For the financial year 2024, the government spent Rs 4.40 lakh crore on subsidies.
FY23: For the financial year 2023, the government spent Rs 5.78 lakh crore on subsidies.
FY22: In the financial year 2022, the government’s expenditure on subsidy was Rs 4.33 lakh crore.
FY21: Government’s expenditure on subsidy in the financial year 2022 was Rs 7.07 lakh crore.
FY20: Government’s expenditure on subsidy in the financial year 2022 was Rs 5.96 lakh crore.
FY19: Government’s expenditure on subsidies in the financial year 2019 was Rs 3.39 lakh crore.
FY18: Government expenditure on subsidies in financial year 2018 was Rs 3.01 lakh crore.
FY17: Government expenditure on subsidies in financial year 2017 was Rs 2.60 lakh crore.
FY16 Government expenditure on subsidies in financial year 2016 was Rs 2.31 lakh crore.
FY15 Government expenditure on subsidies in financial year 2015 was Rs 2.58 lakh crore.