Experts have noted that the move signals a normalisation of subsidy levels after two fiscals, which saw subsidy bills soar as the government sought to dampen the impact of the pandemic by offering a free food programme and bore the brunt of higher international fertiliser prices.
The Budget projected the Centre’s total subsidy bill for FY23 at Rs 3.56 lakh crore, down 27.1 per cent from Revised Estimates for the current fiscal. The food subsidy bill in the upcoming fiscal is projected to come down to Rs 2.07 lakh crore from Rs 2.86 lakh crore and the fertiliser one is set to come down to Rs 1.05 lakh crore from Rs 1.40 lakh crore in the current fiscal.Higher food and fertiliser subsidy levels in FY21 and FY22 have been a departure from a trend of falling subsidies on both food and fertilisers between FY16 and FY20.fter the onset of the pandemic, the government had announced 5 kg of free grain per person a month, apart from the regular 5 kg quota of wheat or rice at Rs 2 and Rs 3/kg, respectively. The programme, which was initially announced for the first quarter of FY21, has been extended till March 2022.
D K Joshi, chief economist at CRISIL, said the reduction in subsidies was part of a process of normalisation as the pandemic winds down.Aditi Nayar, principal economist at ICRA, said the Budget allocation for subsidies was in line with expectations, adding the food subsidy would likely be reinstated if the country witnesses “a moderate to severe wave of Covid-19 infections.”
Fertiliser subsidy bill for this fiscal was about 76 per cent higher than Budget Estimates due to high international prices, according to experts. “Fertiliser subsidy is to a large extent dependent on global prices of fertilisers. This fiscal global prices were very high, that’s why there was a need to increase fertiliser subsidy during the year,” said D K Pant, chief economist at India Ratings.
According to the World Bank data, in December 2021, the international price of urea had risen to $890 per tonne, up from an average of $351 per tonne in the first quarter of the fiscal, while the price of di-ammonium phosphate had risen to $745 per tonne from an average price of $574 per tonne in the same period.Aditi Nayar, principal economist at ICRA, said the Budget allocation for subsidies was in line with expectations, adding the food subsidy would likely be reinstated if the country witnesses “a moderate to severe wave of Covid-19 infections.”
Fertiliser subsidy bill for this fiscal was about 76 per cent higher than Budget Estimates due to high international prices, according to experts. “Fertiliser subsidy is to a large extent dependent on global prices of fertilisers. This fiscal global prices were very high, that’s why there was a need to increase fertiliser subsidy during the year,” said D K Pant, chief economist at India Ratings.
According to the World Bank data, in December 2021, the international price of urea had risen to $890 per tonne, up from an average of $351 per tonne in the first quarter of the fiscal, while the price of di-ammonium phosphate had risen to $745 per tonne from an average price of $574 per tonne in the same period.
