Date:23/01/2003 URL: http://www.thehindu.com/2003/01/23/stories/2003012307111200.htm

National

'Distortions in subsidy pattern'

By Our Special Correspondent

NEW DELHI JAN. 22. With the combined subsidies given out by the Central and all the State Governments amounting to 85.8 per cent of the total revenue receipts, the Governments have been advised to weed out urgently non-merit subsidies, cut merit-II subsidies and streamline the merit-I subsidies to target them specifically for the poor and the needy.

A study on `Budgetary subsidies in India' conducted by the National Institute of Public Finance and Policy (NIPFP) and presented to the Deputy Chairman of the Planning Commission, K.C. Pant, here today has found that in 1998-99, while the Centre's and States' combined subsidy on merit-I economic services was only Rs. 1,494 crores, the amount spent on non-merit services was as high as Rs. 1,06,348 crores. Merit-II subsidies in this category cost Rs. 36,867 crores.

In case of social services, merit-I services attracted a subsidy component of Rs. 33,743 crores and merit-II services Rs. 30,439 crores and non-merit services Rs. 26,861 crores.

The study also found that richer States were providing higher subsidy to their citizens whereas the poorer States were providing less. For instance, Tamil Nadu was providing Rs. 1,053 as per capita social services subsidy and Rs. 755 as economic services subsidy, Karnataka Rs. 877 and Rs. 1,045, Andhra Pradesh Rs. 1,038 and Rs. 800, Punjab Rs. 953 and Rs. 1,280, Haryana Rs. 857 and Rs. 1,491, Maharashtra Rs. 1,028 and Rs. 978 and Goa Rs. 2,718 and Rs. 1,453, a poor State like Bihar was providing Rs. 265 as per capita subsidy on social services and Rs. 399 on economic services, Uttar Pradesh Rs. 534 and Rs. 564 and Orissa Rs. 585 and Rs. 746, respectively.

Another data brought out by the study shows that in the last two years — that is 2000-01 and 2001-02, food subsidy went up from Rs. 12,060 crores to Rs. 17,612 crores but fertilizer subsidy declined from Rs. 13,811 crores to Rs. 11,944 crores.

The study also brings out data on relative share of individual services in total Central subsidies. In the category of social services, general education has 6.27 per cent share (elementary education 2.90, secondary education 1.34, university and higher education 1.85 and other general education 0.18), technical education, sports, arts and culture 1.68 per cent, medical and public health 1.86 per cent, family welfare 0.38, water supply and sanitation 0.82, housing 2.73, urban development 0.20, information and broadcasting 2.09, welfare of SCs, STs and OBCs 0.38, labour and employment 0.97, social welfare and nutrition 1.29 and other social services 0.01. In case of economic services, agriculture, rural development and allied services have the lion's share of 24.04 per cent though most of it goes as food subsidy.