As part of the non plan expenditure presented in the Union budget for the year 2008-09 the government?s subsidy bill including food, fertiliser and petroleum has been hiked by 2.41%. The major subsidies bill for 2008-09 is estimated at Rs 66,537.38 crore, up from the revised estimates for 2007-08 of Rs 64,928.60 crore. The total amount spent is more than the government expects to spend in writing off farmer loans as part of the new farmer debt relief package. The rise in the total bill is equal to the total amount of money if every Indian (taking the population is 100 crore) gave around Rs 16.
As part of the subsidies, food subsidy is provided in the budget of the Department of Food & Public Distribution and also by the central government in order to procure food-grains and is provided to the Food Corporation of India.
Eleven states and Union Territories including Uttar Pradesh, Madhya Pradesh, Chhattisgarh, West Bengal, Uttarakhand, Tamil Nadu, Andaman & Nicobar Islands, Orissa, Gujarat, Kerala and Karnataka have undertaken the responsibility of procuring food-grains from within and also distribution under TPDS and other welfare schemes.
The food subsidy bill of the government has gone up from the revised estimates for 2007-08 of Rs 31,454.59 crore to Rs 32,666.59 crore for 2008-09.
Fertiliser subsidy is another major subsidy provided in three categories by the government. ?Government will continue to provide fertilisers to farmers at subsidised prices and is examining proposals to move to a nutrient based subsidy regime and alternative methods of delivering the subsidy,? finance minister, P Chidambaram said when presenting the Union Budget on Friday. The total subsidy bill for fertiliser has gone up from an estimated Rs 30,501.01 crore in 2007-08 to an estimated Rs 30,986.36 crore for 2008-09. As part of the fertiliser subsidy, the concession given to indigenous fertiliser (urea) and for sale of decontrolled fertiliser with concession to farmers has been capped while the subsidy given to imported fertiliser (urea) has gone up from an estimated Rs 6,753.54 crore to an estimated Rs 7,238.89 crore for 2008-09. This is a hike of around 6.7%.
Another subsidy is the petroleum subsidy given to LPG and kerosene under the PDS among other compensations after the administered price mechanism was dismantled. The subsidy bill for petroleum has been raised marginally by Rs 2 crore from Rs 2,882 crore in 2007-08 to Rs 2,884.43 crore for 2008-09.