Budget 2024: FM allocates ₹4.09 Lakh Crore towards Subsidies, up 1% From Last Year
Upstox
3 min read • Updated: February 1, 2024, 11:06 PM
Summary
In the Interim Budget 2024-25, the Finance Ministry allocates ₹4.09 lakh crore towards subsidies, marking a 1% increase from the previous fiscal year. Subsidies serve as a financial aid mechanism for vulnerable sections of society and stimulate economic growth. Major subsidy allocations include food, fertilizer, and petroleum subsidies, aimed at bolstering the agriculture, energy, and social welfare sectors. The government's commitment to improving the economic status of the vulnerable population is evident through these allocations, with potential changes expected post-elections. Subsidies directly impact the welfare of the population and play a significant role in enhancing their quality of life.
Key Takeaways:
- The government uses subsidies to provide financial aid to the public and stimulate the economy’s growth.
- As the Indian economy is recovering from the aftermath of COVID-19, subsidies provide a sort of safety net for the vulnerable sections of society.
According to the Interim Budget for the financial year 2024-25 (FY25), the finance ministry has decided ₹4.09 lakh crore as the budgeted estimate (BE) on subsidies to provide financial aid to the public. In comparison to last year (₹4.03 lakh crore), the subsidies are slightly higher.
Understanding Subsidies
Subsidies are an excellent financial tool used by the government to support the vulnerable sections of society and stimulate economic growth. In essence, subsidies benefit the general public who cannot afford to pay the high rate for necessities, such as food and fuel. The resultant reduced living costs can greatly influence people’s lives and stimulate economic growth. The government can provide financial aid to the economically weaker sections (EWS) of society by providing them resources at a reduced price than the current market price or lowering taxes, for example.
Subsidy Allocation in the Interim Budget
Subsidy expenditure is a direct expense under the Central Sector Schemes in the Union Budget. Subsidy allocation in the Interim Budget for FY25 has increased from the previous year likely due to the increased support under the Pradhan Mantri Ujjwala Yojana (PMUY) and the Centre’s free food programme.
The following schemes are some of the most significant heads of expenses under the BE for subsidy:
- Urea subsidy
- Nutrient based subsidy
- Food subsidy to the Food Corporation of India under the National Food Security Act (NFSA)
- Food subsidy for decentralised procurement of food grains under NFSA
Impact of Subsidies on the General Public
Subsidies are directly linked to the welfare of a country’s population. The BE for subsidies is one of the most lucrative items to watch out for people. This number indicates how much the government intends to spend on the betterment of the people’s quality of life.
The introduction of direct transfer of funds and integration of technology to manage subsidies have been revolutionary for many people. The government is able to reach the beneficiaries directly in many cases, such as the PM KISAN scheme, by avoiding unnecessary middlemen.
Conclusion
The government of India has allocated ₹4.09 lakh crore towards subsidies for the upcoming financial year. A significant portion of this budget goes towards strengthening the agriculture sector, energy sector, and social welfare.
The government’s commitment to improving the economic status of the vulnerable population of the country is evident through the numbers in this interim Budget. However, there may be some changes in the subsidy allocations for different segments, such as food and agriculture, later this year post-elections.