Solution:
As per the Budget Estimates of the expenditure on major subsidies during 2019-20, the maximum expenditure was likely to be on food subsidy.
Expenditure on Subsidies:
In the year 2019-20, the total expenditure on subsidies is estimated to increase to Rs 3,38,949 crore (13.3%) over the revised estimate of 2018-19. This is owing to an increase in expenditure on petroleum, fertiliser, food, and other interest subsidies. Details are given below:
• Food subsidy: Allocation for food subsidy is estimated at Rs 1,84,220 crore in 2019-20, a 7.5% increase as compared to the revised estimate of 2018-19. In 2018-19 budget, Rs 1,69,323 crore was allocated for food subsidy; however, the revised estimate is higher than the budgeted estimate by Rs 1,975 crore. The revised estimate for 2018-19 is 71% higher than the expenditure on food subsidy in 2017-18.
• Fertiliser subsidy: Expenditure on fertiliser subsidy is estimated at Rs 79,996 crore in 2019-20. This is estimated to increase by Rs 9,910 crore (1%) over the revised estimate of 2018-19. Allocation to the subsidy in 2019-20 budget is Rs 5,010 crore higher than the allocation made in 2019-20 interim budget.
• Petroleum subsidy: Expenditure on petroleum subsidy is estimated to rise by Rs 12,645 crore (9%) in 2019-20. Petroleum subsidy consists of subsidy on LPG (Rs 32,989 crore) and kerosene subsidy (Rs 4,489 crore). The increase in allocation in 2019-20 is owing to an increase in LPG subsidy of Rs 12,706 crore (62.6%) from 2018-19 revised estimates.
• Other subsidies: Expenditure on other subsidies includes interest subsidies for several government schemes, subsidies for the price support scheme for agricultural produce, import of pulses, and assistance to state agencies for procurement, among others. In 2019-20, the expenditure on these other subsidies had increased by Rs 4,251 crore (9%) over the revised estimate of 2018-19. Table 4 provides details of subsidies in 2019-20.
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