Cut in subsidy bill from Rs 3.38 lakh crore to Rs 2.62 lakh crore

With a steep decrease in food subsidy, the subsidy bill for the country will decrease by 22.48 per cent in 2020-21 fiscal from Rs 3.38 lakh crore to Rs 2.62 lakh crore.

In the Economic Survey, authored by Chief Economic Advisor Krishnamurthy Subramanian, there was a strong pitch for revision of the rates at which food grains are offered to the poor through fair price shops.

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According to the budget documents, fertiliser subsidy too has decreased while the subsidy on petroleum has seen a rise.

In total, the previous budget has estimated Rs 3.38 lakh crore as the subsidy bill for 2019-20, while it was later revised to Rs 2.63 lakh crore. For the next fiscal, the government has not earmarked even revised estimates.

For food subsidy, the budget has allocated Rs 1.15 lakh crore, down from Rs 1.84 lakh crore provided in budget proposals which was later revised to Rs 1.08 lakh crore.

Fertiliser will cost the exchequer Rs 71,309 crore as against the allocation of Rs 79,996 in 2019-20. The actual spending in 2018-19 was Rs 70,604.80 crore. Of the Rs 71,309 crore, urea subsidy will be Rs 47,805 crore, which is a decrease from Rs 53,629 crore.

However, there is an increase in subsidy for petroleum products from Rs 37,478 crore to Rs 40,915.21 crore.