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  23Economic Outlook, Prospects, and Policy Challenges

Table 1.2 : How much do subsidies benefit the poor

Product Producer Consumer Fiscal Fiscal What share of benefits accruesubsidy subsidy expenditure expenditure to the poor?

 (Cr.) (percent of 2011-12GDP)

Railways N/A Subsidised   ` 51,000 0.57 The bottom 80 percent of 

 passenger households constitute onlyfares¹ 28.1 percent of total passenger 

through fare on railways

Liquefied N/A Subsidy   `  23,746 0.26 The bottom 50 percent of  petroleum gas (now via DBT) ho useh ol ds on ly co nsume 25

 percent of LPG

Kerosene N/A Subsidy via PDS   `  20,415 0.23 41 percent of PDS keroseneallocation are lost as leakage, andonly 46 percent of the remainder isconsumed by poor households

Fertiliser & Firm and nutrient Maximum   ` 73,790 0.82 Urea and P&K manufacturersnitrogenous specific subsidies derive most economic benefitcommodities to manufacturers. from the subsidy, since farmers,

Import of urea especially poor farmers, haveregulated by elastic demand for fertiliser  the government

Rice (paddy) 15 percent of PDS rice is lost asleakage. Households in the

 bo tt om 3 deci le s cons ume 53 percent of the remaining 85 percentthat reaches households

Wheat 54 percent of PDS wheat is lost asleakage. Households in the bottom3 deciles consume 56 percent of theremaining 46 percent that reacheshouseholds

Pulses Price floor Subsidy via   ` 158 0.002 The bottom 3 deciles consume(MSP) PDS 36 percent of subsidised pulses

Electricity Subsidy Capped below   ` 32,300 0.36 Average monthly consumptionmarket price of bottom quintile = 45 kWh vs top

quintile = 121 kWh. Bottom quintilecaptures only 10 percent of the totalelectricity subsidies, top quintilecaptures 37 percent of subsidy

Water N/A Subsidy   `  14,208 0.50 Most water subsidies are allocatedto private taps, whereas 60 percentof poor households get their water from public taps

Sugar Minimum price Subsidy via   `  33,000 0.37 48 percent of PDS sugar is lost

for sugar PDS as leakage. Households in thecane farmers, bottom 3 deciles consumesubsidy to 44 percent of the remainingmills 52 percent that reaches households

Total   ` 377,616 4.24

All expenditure deciles are based on data from the household expenditure module of the 68th Round of the NSS (2011-12)Railways – www.ncaer.org/free-download.php?pID=111 , p107 & NSS 68th roundLPG – Computations from the 68th Round of the NSS (2011-12)Kerosene – Economic Survey of India 2014-15, Vol. I ,Chapter 3.Fertiliser – Agricultural Input Survey, http://inputsurvey.dacnet.nic.in/nationaltable3.aspxRice & wheat – Economic Survey of India 2014-15,Vol. I, Chapter 3.Pulses – Computations from the 68th Round of the NSS (2011-12)Water – Report by MIT and World Bank http://web.mit.edu/urbanupgrading/waterandsanitation/resources/pdf-

files/WaterTariff-4.pdf , p2Sugar – Department of Food & Public Distribution (http://dfpd.nic.in/fcamin/sugar/Notice1.pdf)

Price floor Subsidy via(minimum PDSsupport price)

` 129,000 1.14