India plans over £30b for food, fertiliser subsidy

INDIA is likely to set aside about rupees 3 trillion (29.8 billion) on food and fertiliser subsidies in its 2022-23 budget to be unveiled on February 1, officials said, according to Reuters. The move comes ahead of elections in a number of key states such as Uttar Pradesh and Punjab.

The amount is roughly the same the government had budgeted for the fiscal ending March 2022.

According to the Reuters report, India’s subsidy bills have gone up due to pandemic relief measures for the poor and sharp rise in the prices of chemicals across the world.

The country has raised fertiliser subsidies twice in the current fiscal and according to sources, its payout for 2021-22 could be the highest yet, the Reuters report added.

In the budget which will be presented by Indian finance minister Nirmala Sitharaman, the government will allocate rupees 1.1 trillion (£10.9 billion) to fertiliser subsidies and rupees 2 trillion (£19.8 billion) to food subsidies, three official sources told Reuters on condition of anonymity.

The country’s fertiliser ministry had sought assistance of as much as rupees 1.4 trillion (£14 billion) for 2022-23, another official said.

For the current fiscal, the finance ministry allocated rupees 835 billion (£8.3 billion) for fertiliser subsidies. In reality, the allocation could go up to a rupees 1.5 trillion (£15 billion).

Most of the fertiliser subsidies are used to give urea at a cheaper government-fixed rates to farmers. The government also gives a fixed amount of subsidies to companies for selling their festilisers at lower rates to help the peasant community, which is an important vote bloc.

India had budgeted rupees 2.43 trillion (£24.1 billion) rupees in 2021/22 for food subsidies and later provided an additional rupees 600 billion (£5.9 billion).

The Indian government generally revises its budget for fertilisers and food subsidies upwards towards the end of a fiscal year.