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.
