Government subsidies for policy programs in the proposed fiscal 2003 budget come to a record 22.32 trillion yen, up 1.1 percent from the previous year’s initial budget, reflecting the nation’s growing social welfare costs, the Finance Ministry said Friday.

The total amount of subsidies account for 46.9 percent of discretionary spending, called general expenditures, the ministry said.

Social welfare spending-related subsidies are up 5.6 percent to 11.28 trillion yen, accounting for 50.5 percent of overall subsidies and surpassing half of the total for the first time.

The subsidies include surging medical outlays for the elderly, linked with the aging of society, and an increase in allowances paid to impoverished households due to the weak economy and rising unemployment, a ministry official said.

Subsidies related to public works projects shrank 3.8 percent to 3.57 trillion yen, as the government cut back on public works spending as part of structural reform efforts.

Subsidies concerning education and scientific research programs are down 4.4 percent to 4.68 trillion yen, the ministry said.

The biggest portion of the subsidies, or 17.45 trillion yen, is for local governments, up 0.6 percent from a year earlier, the ministry said. The rest is for government-linked institutions and private groups.

The government submitted an 81.79 trillion yen general account budget for fiscal 2003 earlier Friday. The spending includes 47.59 trillion yen in policy-related general expenditures.

Shiokawa defiant

Finance Minister Masajuro Shiokawa on Friday shrugged off criticism over a drop in tax revenues for fiscal 2002, saying the fall was due to inevitable economic developments, not mistakes in policy.

“The drop in tax revenues is not necessarily the fault of the Cabinet of Prime Minister Junichiro Koizumi,” Shiokawa was quoted as saying by Cabinet members at an informal meeting in the morning.

“There is a view that it is all the responsibility of the Koizumi Cabinet, but there are factors from the past, such as the recession sparked by the information technology sector,” he was quoted as saying.

Opposition parties have criticized the government for not being able to meet tax revenue projections, which are expected to fall short by 2.54 trillion yen in the current fiscal year.

But some ministers said they were puzzled by Shiokawa’s comments, saying that since tax revenue projections are drawn up every year, factors from the past have little to do with them.

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