09 JAN,2023 | MEDC
The government aims to cut spending on food and fertilizer subsidies to Rs. 3.7 trillion in the coming fiscal year. That will be down 26% from this year, and it is being done to rein in a fiscal deficit that rose during the pandemic. Food and fertilizer subsidies alone account for over 10% of the total Budget spending of Rs. 39.45 trillion this fiscal year. However, with elections around the corner, reductions in food subsidies will need political courage. Taming the fiscal deficit by cutting down on subsidies, is the way to go, and it will prove to the world that the Indian government is not afraid to make difficult decisions to boost its socio-economic competitiveness. Subsidies tend to have a detrimental long-term effect on the attitudes of their recipients as well as a distortionary effect on market pricing, so any policy effort to phase them out should be supported.
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