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India is projected to have a fiscal deficit of 5.5 percent in the year to March 2010, and government officials have said it needs to trim its welfare schemes to help cap this.
Here are the major welfare schemes that contribute to the fiscal deficit:
PUBLIC DISTRIBUTION SYSTEM FOR FOOD
India provides cheap foodgrains and pulses to nearly 180 million poor or low-income families, a scheme that will cost nearly $12.6 billion in the year to end-March 2011, about 1 percent lower than the previous year.
It accounts for about 5 percent of the budget.
The Public Distribution System is widely seen as inefficient, with food meant for the poor being sold off in the open market.
India has considered providing food coupons instead, to plug leakages, but it is unlikely that this proposal will be implemented in the near future.
The government is drafting a food security law that would provide the poor with even cheaper grain, estimated to cost an additional $2 billion each year.
India shelved a plan to raise the prices of some of the subsidised grains it provides, fearing political backlash at a time of high inflation.
CHEAP FERTILISERS
To help farmers and boost farm output, the government fixes the prices of some fertilisers and pays a subsidy to producers to compensate for selling below cost. The bill is pegged at $11.2 billion in the current fiscal year, an increase of 5.7 percent on the previous year.
It accounts for 4.5 percent of the budget.
A coupon system has been suggested here too, but the chances of it being implemented are slim. The government eased controls on pricing of some fertilisers, but said it reserved the right to intervene to protect farmers' interests.
Farmers constitute a core voter base, so any change in the subsidy scheme would almost certainly be minimal.
STATE SET FUEL PRICES
India sets the prices of motor and cooking fuels, and partially compensates oil marketing firms for their losses. The fuel subsidy is seen at $697 million this year, below last year's $3.4 billion, due to controversial hikes in fuel prices and the government passing on the fiscal burden to oil firms.
A government-appointed panel has recommended dismantling of the administered price mechanism, but the government is unlikely to take this politically risky step.
INTEREST WAIVERS
The government subsidises the interest costs on some farm and housing loans and for some pension plans, at a cost of about $1 billion.
RURAL EMPLOYMENT
The government guarantees each rural household 100 days of work in a year, a scheme that costs it just under 1 percent of GDP, or 3.6 percent of the budget.
The scheme is credited with returning it to power in 2009, but critics say it is inefficient and has not reached much of the people it is meant for.
There is a plan to extend the scheme to include urban families as well, a proposal that might be part of the government's agenda.
HOUSING FOR THE POOR
India has various programmes to build houses for the poor. The government has budgeted $224 million for these schemes in 2010/11
FACTBOX - India's major welfare schemes | Top News | Reuters
Here are the major welfare schemes that contribute to the fiscal deficit:
PUBLIC DISTRIBUTION SYSTEM FOR FOOD
India provides cheap foodgrains and pulses to nearly 180 million poor or low-income families, a scheme that will cost nearly $12.6 billion in the year to end-March 2011, about 1 percent lower than the previous year.
It accounts for about 5 percent of the budget.
The Public Distribution System is widely seen as inefficient, with food meant for the poor being sold off in the open market.
India has considered providing food coupons instead, to plug leakages, but it is unlikely that this proposal will be implemented in the near future.
The government is drafting a food security law that would provide the poor with even cheaper grain, estimated to cost an additional $2 billion each year.
India shelved a plan to raise the prices of some of the subsidised grains it provides, fearing political backlash at a time of high inflation.
CHEAP FERTILISERS
To help farmers and boost farm output, the government fixes the prices of some fertilisers and pays a subsidy to producers to compensate for selling below cost. The bill is pegged at $11.2 billion in the current fiscal year, an increase of 5.7 percent on the previous year.
It accounts for 4.5 percent of the budget.
A coupon system has been suggested here too, but the chances of it being implemented are slim. The government eased controls on pricing of some fertilisers, but said it reserved the right to intervene to protect farmers' interests.
Farmers constitute a core voter base, so any change in the subsidy scheme would almost certainly be minimal.
STATE SET FUEL PRICES
India sets the prices of motor and cooking fuels, and partially compensates oil marketing firms for their losses. The fuel subsidy is seen at $697 million this year, below last year's $3.4 billion, due to controversial hikes in fuel prices and the government passing on the fiscal burden to oil firms.
A government-appointed panel has recommended dismantling of the administered price mechanism, but the government is unlikely to take this politically risky step.
INTEREST WAIVERS
The government subsidises the interest costs on some farm and housing loans and for some pension plans, at a cost of about $1 billion.
RURAL EMPLOYMENT
The government guarantees each rural household 100 days of work in a year, a scheme that costs it just under 1 percent of GDP, or 3.6 percent of the budget.
The scheme is credited with returning it to power in 2009, but critics say it is inefficient and has not reached much of the people it is meant for.
There is a plan to extend the scheme to include urban families as well, a proposal that might be part of the government's agenda.
HOUSING FOR THE POOR
India has various programmes to build houses for the poor. The government has budgeted $224 million for these schemes in 2010/11
FACTBOX - India's major welfare schemes | Top News | Reuters
