At a cost of Rs. 1,400 crore, the Karnataka State Budget announced the distribution of one kilo of ragi or jowar in addition to five kilos of rice to 4.34 crore recipients. However, the State Government's subsidy to the Food and Civil Supplies Department has dropped dramatically from 3,946.56 crores in 2021-22 to 2,810 crores in 2022-23, creating several questions.
The State Government had carried out the required procurement through the rolling fund in the current fiscal, which inflated the subsidy bill in 2021-22, but showed a lower bill for 2022-23, despite an additional distribution of one kilo of ragi or jowar, with no cuts or replacement to the current distribution through the Public Distribution System, according to Ekroop Caur, Secretary (Budget and Resources), Finance Department.
Despite a new programme costing 1,400 crore, the subsidy payment for food and civil supplies is the lowest in the last four years, not only compared to the previous year.
"This has to be studied more," said Jyotsna Jha, Director of the Centre for Budget and Policy Studies. "There's a potential the government may have launched something new while cutting old programmes, which may not be in PDS but elsewhere." T.N. Prakash Kammardi, an agricultural economist, said the procurement of commodities under the Minimum Support Price (MSP) system is gradually being phased out, and the lower subsidy bill might be an indicator of this.
Except for Commerce and Industries, most other subsidies, such as Social Welfare, Education, and Women and Child Development, were substantially cut during the pandemic years – 2020-21, 2021-22 – and are slowly returning to pre-pandemic levels in terms of absolute allocations in 2019-20.
Subsidies for the education sector, for example, which were previously Rs 567.83 crore in 2019-20, was slashed to Rs 295.72 crore in 2020-21 and Rs 284 crore in 2021-22, but up to Rs 388.27 crore for 2022-23, still less than 2019-20 levels. Similar is the case with subsidy for Women and Child Development, ₹187.04 crore for 2022-23, still less than Rs 304.30 crore in 2019-20. The Social Welfare subsidy bill for 2022-23 is pegged at Rs 168.5 crore, slightly more than Rs 166.4 crore in 2019-20.
"This only demonstrates that, while these subsidies may have grown relative to the previous year, they have not increased in actual terms." Even in absolute allocations, key sectors have yet to return to pre-pandemic levels. Even those who have done so have done so nominally rather than in actual terms, as inflation has soared in recent years and the size of the budget has grown over the previous four years," Dr. Jha explained.
The commerce and industry subsidy bill nearly increased to 1,672.16 crores in 2020-21 from 896.76 crores in 2019-20. The bill for 2022-23 has been decreased to 1,490.50 crores from 1,585.54 crores in 2021-22. "This is largely due to the assistance and incentives provided to companies during the epidemic," Ms. Caur explained.
"The reduction of subsidies for all social welfare sectors while increasing subsidies for industry demonstrates successive governments' objectives." "It is apparent that governments are shifting away from the welfare state paradigm," said K. S. Vimala of the All India Democratic Womens' Association.
