Subsidies
Expenditure Beginnerसब्सिडी
Definition
Subsidies are financial assistance given by the government to consumers or producers to reduce the market price of essential goods and services. Major subsidies in India include food subsidy (through PDS), fertiliser subsidy (to keep farming costs low), and petroleum subsidy (on LPG and kerosene). Subsidies are classified as revenue expenditure.
How Subsidies Appears in India's Budget
Total subsidy bill for 2026-27 exceeds Rs 4 lakh crore, with food subsidy being the largest component.
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Why Subsidies Matters
Understanding subsidies is essential for anyone following government finances, preparing for competitive exams, or analysing India's economic policy. This concept directly affects how the government allocates resources and plans its fiscal strategy.
In the context of India's Union Budget 2026-27, with a total size of Rs 53.47 lakh crore, terms like subsidies help citizens and analysts evaluate whether the government is on the right fiscal path. The numbers in the budget are only meaningful when one understands the underlying concepts.
For UPSC aspirants, subsidies is frequently tested in both Prelims and Mains, particularly in Paper III (Economic Development). For CA and MBA students, this concept appears in public finance and macroeconomics courses.
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