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The government’s subsidies on food, fertilisers and petroleum are estimated to rise 17 per cent this fiscal year to Rs 5.21 lakh crore and have been pegged lower by 28 per cent to nearly Rs 3.75 lakh crore in FY24.
According to the Budget document, the government has pegged total subsidies on food, fertilisers and petroleum at Rs 5,21,584.71 crore in its revised estimate (RE) for 2022-23, as against the actual budget of Rs 4,46,149.24 crore in last fiscal year.
Of the total subsidies on these three items, the food subsidy is estimated to decline marginally to Rs 2,87,194.05 crore in current fiscal year from Rs 2,88,968.54 crore in 2021-22.
However, the fertiliser subsidy is estimated to increase to Rs 2,25,220.16 crore during this fiscal from Rs 1,53,758.10 crore in the last financial year as subsidies on both urea as well as non-urea nutrients like DAP (di-ammonium phosphate) surged.
Subsidy on urea is set to rise to Rs 1,54,097.93 crore from Rs 1,00,988.13 crore, while that on phosphatic & potassic (P&K) fertilisers to Rs 71,122.23 crore from Rs 52,769.97 crore.
Petroleum subsidy, too, is estimated to rise to Rs 9,170.50 crore from Rs 3,422.60 crore in the said period.
During the current fiscal year, the Centre decided to increase subsidy on both urea as well as phosphatic and potassic (P&K) fertilisers in view of sharp rise in global prices amid Russia-Ukraine conflict in order to ensure that farmers continue to get fertilisers at a reasonable rate.
For next fiscal year, the total subsidies on food, fertilisers and petroleum are estimated to decline by 28 per cent to Rs 3,74,707.01 crore from Rs 5,21,584.71 crore in 2022-23.
Out of this, fertiliser subsidy is estimated to fall to Rs 1,75,099.92 crore during 2023-24 from Rs 2,25,220.16 crore this fiscal year. Petroleum subsidies are estimated to come down to Rs 2,257.09 crore from Rs 9,170.50 crore in the current fiscal.
Food subsidy is estimated to fall sharply to Rs 1,97,350 crore next fiscal year from Rs 2,87,194.05 crore in 2022-23 as the government has discontinued a free foodgrains scheme that was launched during the pandemic.
Food subsidy is provided to meet the difference between the economic cost of foodgrains procured by the government and their sales realisation at the PDS rate called central issue price (CIP) under the National Food Security Act (NFSA) and other welfare schemes.
Similarly, the Centre provides fertiliser subsidies to manufacturers.
The government fixes the MRP of urea being sold in the market. The difference between the selling price and production cost is provided as a subsidy. A nutrient-based subsidy is also being provided on non-urea fertilisers like DAP and MOP.
In petroleum, subsidies are mainly provided on LPG.
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