Consider the following statements with respect to subsidies in India:
1. The volume of Non-merit subsidies is much larger than the subsidies on merit goods
2. The volume of subsidies provided by the central government is much larger than those provided by state governments
Which among the above statements is / are correct?

Answer: [A] Only 1

  • Most of the subsidies in India are Non-merit subsidies. In 1998-99, the non-merit subsidies accounted 75.3% of the total subsidies. As per a 2003-04 study, the non-merit subsidies amounted to about 56.5 percent of total subsidies in 1998-99.
  • The share of social services which include education, health, family welfare, water supply and sanitation and labour and employment is only 21.2 percent in total subsidies, and the share of economic services, viz., agriculture, rural development, energy, industry and minerals, irrigation and flood control, science, technology and environment is 78.8 percent in the total subsidies.
  • The relative share of centre is about one-third of the total subsidies, and that of the states, two-thirds • Total Central Government subsidies in 2012-13 were in the tune of Rs. 1, 90,015 crores. Out of this, the food subsidy accounts for Rs. 75,000 crores (39.5%), fertilizer subsidy Rs. 60,974 crores (32.1 %) and petroleum subsidy Rs. 43,580 crores (22.9%).
  • Taking food, fertilizer and petroleum, these three subsidies account for 94.5 percent of the total explicit subsidies. Other Central Government subsidies on Railways, interest subsidy etc. account for barely 5.5 percent.

This question is a part of GKToday's Integrated IAS General Studies Module