Subsidy likely to be increased to $47 billion in budget

By Sandy Verma On Jan 23, 2025

Delhi Delhi:India may increase spending on food, fertilizer and cooking gas subsidies to 4.1 trillion rupees ($47.41 billion) in the next fiscal year, up 8% year-on-year, to cover rising food and energy costs, government sources said. There is a slight increase of %. Finance Minister Nirmala Sitharaman will present the budget on February 1 amid slow growth in Asia's third-largest economy and rising global uncertainties. The main reason for the recent economic slowdown is the weakness in urban areas and investment from companies. The rural economy, where a large part of the core subsidies are earmarked, is showing signs of improvement and maintaining subsidies will be an important support. The government has estimated that its budget for the next financial year starting April 1 The food subsidy bill will rise by about 5% to about 2.15 trillion rupees ($24.86 billion), a source said.

Higher purchases of rice from farmers and rising storage costs are expected to increase food subsidies next year, the source said. The budgetary outlay for food subsidies is Rs 2.05 trillion ($23.70 billion) in the current fiscal year ending March 31. Subsidies including food, fuel and fertilizers account for about 8% of the country's total annual expenditure of $557 billion for the current fiscal year. The government is also expected to allocate about 250 billion rupees ($2.89 billion) for subsidies for cooking gas, up from 119 billion rupees ($1.38 billion) in the current fiscal year, the second source said. The third source said fertilizer subsidies for the next fiscal year were likely to be maintained at the current year's level of 1.7 trillion rupees ($19.66 billion). India's finance, food and fertilizer ministries did not immediately respond to separate emails seeking comment on the subsidies.