Govt eyes Rs 4 trillion for next year's food, fertiliser subsidies

In preparation for the upcoming fiscal year, the Indian government is reportedly considering allocating approximately Rs 4 trillion ($48 billion) for food and fertilizer subsidies, signalling a cautious fiscal approach ahead of the general election.

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These subsidies, constituting around one-ninth of the total budget spending of Rs 45 trillion in the current fiscal year, are crucial for managing India’s fiscal deficit targeted at 5.9% of GDP this year. The Ministry of Consumer Affairs, Food and Public Distribution estimates the food subsidy bill for the next fiscal year at Rs 2.2 trillion, representing a 10% increase from the current fiscal year. Additionally, the fertilizer subsidy is anticipated to be Rs 1.75 trillion, a decrease from the current fiscal year’s estimate. While maintaining subsidies at their current level might seem unusual for a government facing imminent elections, Prime Minister Narendra Modi is widely expected to secure a rare third term. The budget for the fiscal year 2024/25 is set to be unveiled on February 1 by Finance Minister Nirmala Sitharaman.