Fiscal Cost of Subsidies

In this article we will discuss Fiscal Cost of Subsidies

In this article, we will discuss Fiscal Cost of Subsidies. So, let’s get started.

Fiscal Cost of Subsidies

  • As India is a developing country, hence, there are limited budgetary resources to enhance subsidies net coverage to far more population.
  • In the central budget, the food subsidy amounts to Rs. 2.06 lakh crore, which is almost 1.9% of the GDP in 208-19 and 2.5% in 2019-2020.
  • The revenue to GDP ratio has been stagnating over a long period during 2010-11 to 2019-20, which is around the narrow range of 18.4% to 20.3%.
  • Whereas in many developed and emerging market economies, this ratio tends to be much higher. In 2019, these ratios were 36% and 30.1% for the UK and USA, 48.6% and 43.6% for Sweden and Netherlands, and 31.5% for Brazil.

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