An autonomous research institute under the Ministry of Finance


Central Budgetary Subsidies in India

Publication date

Dec, 2004


Report submitted to the Ministry of Finance, Government of India


Surender Kumar, Tapas K. Sen, N. J. Kurien


Using essentially the same methodology that has been developed at the Institute over the years, the study first estimates the amount of subsidies – in the sense of unrecovered costs – given by the central government on various types of services provided. This is done for two years, 2002-03 (accounts data) and 2003-04 (provisional data). The subsidies are estimated for each service (by major heads in most cases) and also for three groups under Merit I, Merit II and non-Merit services. It examines three types of subsidies in some detail – on food, fertilizer, and petroleum – that account for a large part of the central subsidies, along with an assessment of a number of schemes initiated by the central government for poverty alleviation. The main focus of the detailed analyses based on available literature is on the success of these subsidies/schemes in reaching the target group of the poor and on suggesting reforms that would enhance the targeting. Using this study report as the main input, the Ministry of Finance tabled a report on the subject in the Parliament in December 2004.

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