Indian Economy Quiz: Subsidies in India and Direct Benefit Transfer

Direct Benefit Transfer began on that date in a small group of districts and for a limited number of schemes, and was then extended across the country and to hundreds of central schemes, paying scholarships, pensions, wages and subsidies into the beneficiary's own bank account.

The Economic Survey of 2014-15 used the expression JAM number trinity for these three, because together they make it possible to send money to a poor household without a middleman: the Jan Dhan account receives the payment, the Aadhaar number identifies the beneficiary and removes duplicate names, and the mobile…

PAHAL, the direct benefit transfer scheme for cooking gas, was begun in fifty-four districts in November 2014 and extended to the whole country from 1 January 2015; the consumer buys the cylinder at the market price and the subsidy is credited to his bank account, and the Give It Up…

The budget documents group food, fertiliser and petroleum together as the major subsidies, because they are the three largest explicit subsidy payments made by the central government.

The Act divides the covered population into priority households, who receive five kilograms of grain for each member every month, and Antyodaya Anna Yojana households, which are the poorest and receive thirty-five kilograms for the whole household every month.

Under this scheme a fixed subsidy is announced for each nutrient contained in a phosphatic or potassic fertiliser, and the manufacturer is free to fix the selling price, the aim being to encourage a balanced use of nutrients in the soil.

A subsidy neither creates an asset for the government nor reduces any liability, so in the budget it is classified as revenue expenditure, and a large subsidy bill therefore widens the revenue deficit as well as the fiscal deficit.

Section 7 of the Aadhaar (Targeted Delivery of Financial and Other Subsidies, Benefits and Services) Act, 2016 permits the central or a state government to require proof of an Aadhaar number, or of having applied for one, for any subsidy, benefit or service whose expenditure is met from the Consolidated…

The committee headed by Shanta Kumar submitted its report in 2015 and recommended that the coverage of the National Food Security Act be reduced, that procurement and storage be handed over in part to the states, and that the grain subsidy be gradually replaced by cash transfers into bank accounts.

The Act provides that the ration card shall be issued in the name of the eldest woman of the household who is eighteen years of age or more, and that if there is no such woman, the eldest male member holds the card until a female member of eighteen years…

An implicit subsidy does not appear in the budget as a payment; it is hidden in the low price at which a public service is provided, so that the government simply recovers less than it spends, as happens with canal water and with electricity supplied to farms.