Budgetary Subsidies and Fiscal Deficit

This paper focuses on the fundamental question of whether the government's budgetary subsidies, estimated as unrecovered costs, can exceed the gross fiscal deficit. It explores the reasons for the wide gaps in the measure of fiscal deficit and the estimate of aggregate subsidy, and suggests an improvement in methodology for the latter, using the example of Maharashtra to tally the aggregate unrecovered costs. The paper shows that the subsidy estimated as unrecovered costs of the present consumption programme should not exceed the budgetary fiscal deficit.