Explicit budget subsidies to drop 28% to ₹4 trn in FY24

Subsidy bill may not rise steeply in FY25 if global soil nutrient prices don't flare up

- SANDIP DAS

• SUBSIDY EXPENDITURE THIS YEAR WILL BE LOWEST SINCE FY19

THE UNION GOVERNMENT'S total expenditure on explicit subsidies food, fertiliser and LPG- is likely to drop 28% to 3.98 trillion in the current fiscal year, from ₹5.49 trillion in FY23.

This is due to the softening of global prices of soil nutrients and the termination of the extra grains supplies under the National Food Securities Act, effective December 2022, according to information gathered from various government sources.

This means subsidy expenditure this year will be the lowest since FY19 (₹2.36 trillion). In FY21, the government incurred an all-time high subsidy spend of ₹7.14 trillion partly because of provisioning of ₹3.8 trillion towards repayment of loans taken from the National Small Savings Funds to finance food subsidies.

The Budget Estimate of the total spending on the three subsidies in the current fiscal is ₹3.74 trillion, with ₹1.97 trillion for food, and Rs ₹1.75 trillion for fertilisers.

The rise in total subsidy over the BE this year is still lower than in recent years.

"Unless there is a sharp spike in the global price of fertilisers in the last quarter of the current fiscal, overall expenditure on account of subsidies should be substantially lower than last fiscal," an official said.