Budget 2021: Govt Makes Subsidy Cuts To Fill Its Empty Coffers

by GoNews Desk 3 years ago Views 11307

Budget 2021: Govt Makes Subsidy Cuts To Fill Its E
Preparing the Budget 2021-22 was no less than a double-edged sword for Finance Minister Nirmala Sitharaman. Reason being the constantly falling income and rising fiscal deficit. In such a situation, the finance minister has cut the subsidies to the poor in order to fill the empty coffers. Farmers and the common man have been the worst hit.

For example, where the government spent Rs 1,33,947 crores on subsidies on fertiliser to farmers in 2020-2021, in the Budget 2021-22, a provision of Rs 79,530 crore has been made for fertilizer subsidy i.e. 40.62% reduction.

Similarly, the government has made a massive cut on food subsidy. The Food Security Act is in force in the country and under this, the government provides ration to the 67% population of the country at cheap rates. On this, the government spent Rs 4,22,618 crore in 2020-2021, in Budget 2021-22, the provision of food subsidy has been reduced to Rs 2,42,836 crore i.e. a reduction of 42.54%.

Keep in mind, the people taking the food subsidy are the poorest people for whom earning two meals a day is nothing short of climbing a mountain. GoNews has also reported earlier how the government is continuously reducing food subsidies.

Similarly, the government has also reduced the subsidy on petroleum products. It is quite possible that this will increase the prices of petrol-diesel, which will directly affect the common man's pockets. The government gave petroleum subsidy of Rs 38,000 crore in the financial year 2020-21 and in the budget 2021-22, only Rs 12,995 crore has been allocated. The government has also cut spending on pension. The government had spent Rs 2,0,393 crore in the allocation of pension in 2020-2021, in the budget 2021-22, only Rs 1,89,328 crore has been allocated for it.

After all, why did the government reduce subsidies? Why did not you collect money from somewhere else? The answer lies in how the government spends a rupee. So the states giving the most money i.e. 20 paise, which is a part of their right to GST and other taxes, 18 paise is spent on paying interest and salary on debt, the government spends 22 paise on different welfare schemes, 10 paise is spent on finance commission, 8 paise is spent on army, 6 paise goes in giving different subsidy, 6 paise is spent on pension and 10 paise is spent in other items. In such a situation, the government could either reduce the expenditure on different schemes, or money for subsidies. The government opted for subsidies and reduced the relief to the people.

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