The government is soon going to present the budget for the next financial year and expectations from the budget are doing round. However, according to some media reports, the government may set aside about Rs 3 lakh crore ($40 billion) on food and fertiliser subsidies in its budget for 2022-23, disclosed officials to Reuters. However, it is approximately the same number that the government budgeted for this fiscal year ending in March.
The subsidy bills have been proposed as pandemic relief measures for the poor and an intense rise in global prices of chemicals. The government has already lifted fertiliser subsidies twice in this fiscal year, and reports suggest that its payouts for 2021-22 could be its hugest yet.
However, in the budget finance minister Nirmala Sitharaman is going to present on Tuesday, the government will assign Rs 1.1 lakh crore to fertiliser subsidies, and Rs 2 lakh crore to food subsidies, three officials revealed to Reuters. The fertiliser ministry had aimed for the assistance of as much as Rs 1.4 lakh crore for 2022-23, another official told.
Meanwhile, for the current fiscal year, the finance ministry had allocated Rs 83,500 crore for fertiliser subsidies, although the actual allocation could surge to a record Rs 1.5 lakh crore. The majority of fertiliser subsidies are used to provide urea at a cheaper government-fixed price to farmers. The government also gives a regular amount of subsidy to companies for selling other fertilisers at lower rates to help farmers.
Moreover, in the case of food subsidies, India had allocated Rs 2.43 lakh crore in 2021-22 but the government later procured an additional Rs 60,000 crore. India usually modifies its budget for fertilisers and food subsidies upwards in the last months of a fiscal year.
The Rs 3 lakh crore budgeting for food and fertiliser subsidies is yet greater than average in the seven years since Prime Minister Narendra Modi came to power, but far below what could be up to Rs 4.8 lakh crore that the government used on the same this year. In India, subsidies set a tenth of the total annual expenditure intended for the year.
