The government’s expenditure on subsidies has been falling, according to the Economic Survey 2018-19.
“More than two-thirds of the fiscal space created by compression of revenue expenditure is on account of reduction in food, fertiliser and petroleum subsidies,” the Survey highlights. “This is an outcome of decline in global crude prices, decontrol of prices and better targeting through direct benefit transfer of subsidies.”
The proportion as per revised estimates at 12% is the same as that of the defence expenditure. After interest payments, these two together make up the second-largest share in the government’s total expenditure in FY2019.
In value terms, major subsidies which include food, fertiliser and petroleum subsidies have been pegged at ₹1.97 lakh crore for FY2019 (provisional actuals), slightly higher than ₹1.91 lakh crore in FY2018—the lowest in the last five fiscals. FY2015 saw the highest subsidies spend in recent times: ₹2.49 lakh crore.
Interestingly, the government had estimated the major subsidies spend at ₹2.64 lakh crore from FY2019. During FY2014 to FY2019 (provisional actuals), the total budgetary expenditure of the government has declined by 1.7% of GDP. During the period, revenue expenditure declined by 1.6% and capital expenditure by 0.1%.