The Survey said government responsibilities need to be met from rationalisation of the subsidy regime for which a discussion paper focusing on reducing the volume of subsidy related to revenue receipts was placed in Parliament in December 2004.

The rise in subsidy bill in 2002-03 and 2003-04 was on account of higher allocation for 'food for work' programme to soften the impact the drought on the poor and enhanced coverage under the 'Antyodya Anna Yojana' and other welfare schemes, the Survey said.

Economic Survey 2004-05: Complete Coverage

The undulating pattern observed in the subsidies arises primarily from the expenditure on food subsidies, which is determined increasingly by the minimum support price of food grains, operational efficiency of the public distribution system, highly subsidised welfare schemes, and special interventions in the drought affected areas, it said.

As a proportion of total expenditure, subsidies after declining from 12.4 per cent in 1991 to 7.5 per cent in 1995-96 maintained the rising trend till 1998-99 when it reached 9.2 per cent.

After briefly declining to 8.2 per cent in 1999-2000 and 2000-01 subsidies rose to 10.5 per cent of total expenditure in 2002-03, the Survey noted.