Subsidies in India can be broadly classified into economic and welfare schemes based on the sector they cater to or the section of the population they benefit.
Let’s further dive into these classifications of these schemes to understand them better:
The economic schemes primarily aim at providing benefits to the required sectors by subsidising the costs of various products. That is, providing them at cheaper rates. The common products that are offered at subsidised rates are food grains, petrol, fertilizers and so on.
The fertilizer and petroleum subsidies add majorly to the government expenditure. For instance, a whopping Rs. 70,000 crore and Rs. 25,000 crore was allocated for fertilizers and petroleum respectively in this year’s budget.
In a bid to uplift the rural population, the government has rolled out a number of welfare schemes. These schemes aim to benefit the sects who are socially and economically backward. Schemes for employment generation, national schemes for education, child development and pension schemes fall under this category.
These schemes aim to enhance the living standards, ensure secure livelihood and to bring equality in the country. For instance, in order to eradicate hunger and poverty, the government provides food grains at subsidised rates.
Although the idea and concept of subsidies sound like it’s a great help to the rural population, it all depends on the implementation. Subsidies in India can be claimed to be a success only if the benefits are felt by the needy. However, that does not seem to be the current scenario in our nation.
Most often, the disbursement of these schemes remains unmonitored. There are further debatable issues whether this money can be used for developmental work. Further, the government needs to maintain a balance between the economic and welfare schemes. In the past few decades, the government is spending more on schemes which barely contribute to the economic growth.