Union Budget 2024-25: All about food, fuel and fertiliser subsidies

The Centre gives three reliefs to the poor and the needy. These are support for food, fuel and fertilizers. Parat from these, it also gives monetary assistance on health and education

New Delhi:Finance Minister Nirmala Sitharaman will present a comprehensive statement of the Union Government’s finances – estimated revenue receipts and expenditures for the next financial year that commences on April 1 this year. These details will also include about the money proposed to be spent on relief or financial assistance given to the needy sections of the society, which is popularly referred as subsidy.

The Union government grants three major reliefs to the needy sections of the society. These are financial support for food, fuel and fertilizers. Other than these three major financial supports, the central government also gives financial assistance on health and education and direct transfer of money to eligible farmers.

Over the years, the Centre’s subsidy bill on petroleum products has declined considerably and for the current financial year the budget estimate was below Rs 2,500 crores.

On the other hand, the Centre’s subsidy bill on food and fuel has increased substantially during the last five years. For example, the subsidy on fertilizers was around 1.54 lakh crore in the financial year 2021-22 but increased by over 46 percent in the next financial year to over Rs 2.25 lakh crore.

In the last financial year, the finance minister Nirmala Sitharaman’s budget estimates pegged the subsidy bill on fertilizers at a little over Rs 1.05 lakh crore but in the revised estimates (RE) it turned out to be more than 2.25 lakh crore, an increase of over 114 percent over the budget estimates (BE).

While explaining the major variations between the budget estimates related to fertilizer subsidy and the revised estimates, the finance ministry said it was due to higher requirements under fertilizer (urea) subsidy towards payments for indigenous urea and import of urea.

For the current financial year, Sitharaman had allocated over Rs 1.75 lakh crore for fertilizer subsidy but revised budget estimates, which are going to be presented early next month would give a clearer picture of the money spent on fertilizer subsidy this year.

Similarly, the Centre spends a significant sum on food subsidy every year. The Centre’s food subsidy bill touched a record Rs 2.89 lakh crore in the FY 2021-22 on account of increased support to the needy sections of the society during the Covid pandemic year.

For the last financial year (FY 2022-23), the budget estimates pegged the food subsidy bill at around Rs 2.07 lakh crore but the revised estimates revealed that it touched the subsidy bill of the second Covid year, at over Rs 2.87 lakh crores.

For the current financial year, the finance minister’s budget estimates suggested that the food subsidy bill will come down to below Rs 2 lakh crore, a decline of nearly one-third in the food subsidy bill. However, the extension of Pradhan Mantri Garib Kalyan Anna Yojana (PMGKAY) is expected to again take it over to Rs 2 lakh crore in the revised estimates that will be presented on February 1.

In addition to the regular food, fuel and fertilizer subsidies, Prime Minister Narendra Modi’s government started a direct transfer of Rs 6,000 to eligible farmers. The scheme was announced in the interim budget of FY 2019-20, just ahead of the last general election.

On an average, the Centre spends over Rs 60,000 crore on the PM-Kisan scheme every year.

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