subsidy bill: India braces for a Rs 50,000 crore rise in its subsidy bill for FY24

New Delhi: India’s overall subsidy bill may surge by ₹50,000 crore this fiscal year because of increased expenditure on fertiliser, cooking gas and food security.

The government expects to meet this higher spending from savings under other heads in its ₹45-lakh crore FY24 budget.

Subsidy outgo for FY24 had been budgeted at ₹4.03 lakh crore, but may shoot up to ₹4.53 lakh crore. However, even this stretched welfare spend would be far less than the previous fiscal’s subsidy bill of ₹5.62 lakh crore.”There will be ₹50,000 crore additional outgo towards the subsidy bill in the revised estimates on account of higher food, fertiliser and LPG subsidy…But it would be met out of savings in spending on other heads,” a senior government official told ET.

The fertiliser subsidy may see the sharpest rise – by ₹25,000 crore from ₹175,100 crore budgeted for FY24. Food and cooking gas subsidies could increase by ₹15,000 crore and ₹10,000 crore, respectively.

The official said the overall outgo, though higher, was still at a comfortable level.

“We have enough headroom and this is certainly much lower than the revised estimate last year, as we had been able to plug leakages in fertiliser subsidy,” said the official cited earlier.In FY23, the Centre budgeted Rs 1.05 lakh crore for fertiliser subsidy, which was revised to Rs 2.54 lakh crore, amid a sharp rise in fertiliser prices due to the Russia-Ukraine war.

Extension of the cooking gas subsidy to Rs 300 per cylinder to about 96 million low-income households, ahead of assembly elections in five states, has already inflated the LPG subsidy bill. The Centre, which had provisioned Rs 2,257 crore for LPG subsidy this fiscal year, will seek an additional Rs 10,000 crore in the supplementary demand for grants itself, in the upcoming Winter Session of Parliament.

The food subsidy, which reached Rs 2.87 lakh crore in FY23, has been pegged at Rs 1.97 lakh crore this fiscal. However, higher procurement costs and extension of the free foodgrain scheme may add Rs 15,000 crore to the overall bill this fiscal year.