Question

“A significant proportion of subsidies on fertilizer was a key component of the fiscal statement of the Central Government for year 2023–24.”
Identify the nature of government expenditure and its objective.

Hint:

Subsidies like those on fertilizers are revenue expenditures that aim at supporting farmers and ensuring food security through lower input costs.

Answer 1

The given statement refers to subsidies on fertilizers, which are financial support extended by the government to reduce the price of fertilizers for farmers. These subsidies help in promoting agricultural productivity and supporting the farming community. Such an expenditure falls under the category of Revenue Expenditure in government accounts. This is because it does not create any physical or financial asset for the government and is recurring in nature. Fertilizer subsidies are not associated with the creation of capital assets, but are instead aimed at immediate welfare and economic support. The primary objective of this government expenditure is social welfare and equitable growth. By providing fertilizer subsidies, the government aims to:
Support farmers, especially marginal and small ones, by lowering input costs.
Ensure food security by promoting agricultural output.
Maintain affordable food prices in the economy.
Promote balanced use of fertilizers for sustainable farming practices. Additionally, such expenditures reflect the government's commitment to inclusive growth and ensuring that the benefits of economic development reach vulnerable sections of society. It is a non-developmental but welfare-oriented expenditure, ensuring that agriculture remains viable and productive in a developing country like India.