India’s social sector subsidies should be reoriented so that beneficiaries don’t become dependent on them, the NITI Aayog said.
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In its three-year action plan for the economy the government think-tank mooted a reduction in food subsidies as a proportion of GDP by 2019-20 through better targeting and rationalisation measures.
“Within revenue expenditures, subsidies have tended to crowd out the socially more productive expenditures such as those on education and health,” the Aayog pointed out.
“The social subsidies should be reoriented so that beneficiaries become economically independent instead of remaining perpetually dependent on them,” it said.
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While in absolute terms, the allocation towards food subsidy, as per the Aayog, will increase marginally to ₹1.57 lakh crore from ₹1.24 lakh crore, as a proportion to GDP, the expenditure will come down to 0.73% from 0.90% in 2015-16.
“Given the recent subsidy rationalisation measures undertaken by the government, and the scope for better targeting through the use of the socio-economy caste survey, there is a scope to contain the food subsidy expenditure in future,” the Aayog has said in the three-year action plan document accessed by The Hindu .
“Therefore, our allocations are based on reduction in food subsidy as a proportion to GDP from 0.90% in 2015-16 to 0.73% in 2019-20,” it said.
As the government has been able to contain the expenditure on fertiliser subsidies to ₹70,000 crore in the past few years, the Aayog expects it to remain at this level for the next three years.
“through better targeting and reforms of fertiliser subsidies.”
The efficiency of social expenditure must be improved to deliver better outcomes, it noted. This may be done for example through better targeting and the use of direct benefit transfers. It said that open ended schemes that can absorb rising expenditures and lack clearly identified beneficiaries must be avoided.