The government is preparing to change the whole math of subsidies. The budget has a clear glimpse of it. The government has had to spend a record amount of Rs 5.96 lakh crore on subsidies during the current financial year, but this is due to the situation arising out of the corona. If we talk about the budgetary provision, an amount of Rs 3,27,794 crore was allocated for subsidy in 2020-21, which has been increased to Rs 3,35,361 crore for the next financial year, an increase of Rs 7,567.
Large scissors will be turned on petroleum subsidy, the burden of LPG price will thus fall on man
It is clear that whoever needs it now, the government will subsidize it. Petroleum subsidies, which are sometimes very politically sensitive, have been slashed by a total of Rs 27,920 crore. One of the sensitive issues is that most people no longer get subsidy on domestic cooking gas i.e. LPG. At the same time, the increase in food subsidies is an indication that the government does not want to take any risks with regard to food security. Reforms will remain the same, but with a political balance.
A large amount of subsidy will be used to provide new connections to Ujjawala
The amount of petroleum subsidy during Finance Minister 2021-22 has been reduced to Rs 12,995 crore from the budget estimate of Rs 40,915 crore for the financial year. The subsidy will be available only to the poor living in the hinterland or in the rural areas. A large amount will be spent on one crore new bright connections. Another implication is that if crude becomes more expensive in the international market in the coming days, the general public will have to buy expensive LPG along with expensive petrol and diesel.
LPG cylinder prices have risen several times over the past few months. In this way, the finance minister has also made it clear that kerosene subsidy will no longer be given. The government argues that earlier kerosene subsidy was given for making meals, but now the poor are being given LPG connection, so it is not needed.
Don’t worry about food security
The finance minister has allocated Rs 2,42,836 crore for food subsidy. The amount allocated in the current financial year was Rs 1,15,570 crore, but the actual cost is estimated at Rs 4,22,618 crore due to the way the government distributed foodgrains at a very cheap rate for eight months due to Corona. The government continues to believe that the number of people who needed help during the Corona period may have to continue in the next financial year. Between April and November 2020, with the help of the central government, 800 million people were provided free or at low cost foodgrains. The huge increase in food subsidies has forced the government to provide a total of Rs 5.96 lakh crore in subsidies during the current financial year, the largest ever. Fertilizer subsidy has been increased from Rs 71,309 crore to Rs 79,530 crore.
