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RBI flags rising subsidies by states as incipient stress
The Statesman
|December 20, 2024
The Reserve Bank of India (RBI) on Thursday termed increasing spending by states on subsidies as an "incipient stress" and called for rationalisation of such outgoes.
The central bank in a report 'State Finances: A Study of Budgets of 2024-25' said that the states need to contain and rationalise their subsidy outgoes so that such spending does not crowd out more productive expenditure.
Subsidies provided by the states include farm loan waivers, free/subsidised services (like electricity to agriculture and households, transport, gas cylinders) and cash transfers to farmers, youth and women.
Subsidies, sometimes termed freebies in political discourse, are being resorted by political parties, specially ahead of polls.
Several states have announced sops pertaining to farm loan waivers, free electricity to agriculture and households, free transport to a section of people, allowances to unemployed youth and monetary assistance to women.
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