Centre lifts subsidy on distribution of sugar via PDS, onus now on states

Overall subsidy burden on the government would go up marginally by 5% in 2017-18

The Central government Wednesday quietly withdrew a Rs 4,500 crore subsidy that it gave to states for distribution of subsidised sugar through the public distribution system (PDS) which many said would from now onwards be the responsibility of the states. The allocation for 2017-18 under the head has been lowered to Rs 200 crore which is for payment of pending liabilities under the programme.

The word “subsidy”, in fact, found mention only once in the finance minister’s speech when he referred to credit linked subsidy for 1000 mini-labs to be set up by qualified local entrepreneurs called Krishi Vigyan Kendras for testing of soil samples and their nutrient level.

The overall subsidy burden on the government would go up marginally by 5 per cent in 2017-18. Food subsidy is estimated to be about 8 per cent higher next year at Rs 145,338.60 crore.

While fertiliser subsidy has been pegged at the last year’s level of Rs 70,000 crore, petroleum subsidy is expected to come down by Rs 2,532 crore, indicating that the government has not factored any increase in global petroleum prices. It is, in fact, reaping benefit of pricing reforms in the petroleum sector with LPG subsidy showing around 14 per cent decline in 2017-18.

In the current year, the spending on Ujjwala Yojana of the government under which LPG connections are given to poor households has shot up by Rs 500 crore in the revised estimates from the budgeted Rs 2,000 crore indicating a good pick-up in the programme. The subsidy outgo on this account is expected to be Rs 2,500 crore next year.