The Narendra Modi government is planning to cut spending on food, fertiliser, and fuel subsidies to rein in the fiscal deficit in the upcoming Union Budget 2023.
According to Union Finance Ministry data, the government's fiscal deficit in end-November touched 59 percent of the full-year budget estimate on increased capital expenditure and slow growth in non-tax revenue.
Food subsidy
The government is planning to discontinue the Pradhan Mantri Garib Kalyan Anna Yojana (PMGKAY) as the total cost of the free foodgrain scheme since its launch till December 2022 is set to be Rs 3.91 lakh crore.
The government expects to budget around Rs 2.3 lakh crore for food subsidies in the coming fiscal year, compared with Rs 2.7 lakh crore for the current year to March 31.
Fertiliser subsidy
For the current financial year, the fertiliser subsidy bill is about Rs 2.2 lakh crore, higher than the budget estimate of Rs 1.05 lakh crore. According to reports, fertiliser subsidies for the coming fiscal is likely about Rs 1.2-1.5 lakh crore.
The reduction in fertiliser subsidies is also driven by expectations of lower crude oil prices and the government's revised gas procurement policy for fertiliser companies. Food and fertiliser subsidies alone account for about one-eighth of India's total budget spending of Rs 39.45 lakh crore this fiscal year.
Due to the reduction in the price of natural gas and raw materials, the government is also likely to reduce the LPG subsidy.
Fiscal 2021-22
In its revised budget estimate for the 2021-22 fiscal, the government pegged total subsidies at Rs 4,33,108 crore against the actual budget estimate of Rs 7,07,707 crore in the previous financial year.
Out of this, the food subsidy is estimated to increase to Rs 2,86,469 crore in the current fiscal from Rs 5,41,330 crore in the 2020-21 fiscal, while petroleum subsidy is estimated to decline to Rs 6,517 crore from Rs 38,455 crore in the said period.
However, fertiliser subsidy is estimated to increase to Rs 1,40,122 crore during the ongoing fiscal from Rs 1,27,922 crore in the previous fiscal.
Fiscal 2022-23
For the 2022-23 fiscal, the government said total subsidies are estimated to further decline to Rs 3,17,866 crore from Rs 4,33,108 crore in the current fiscal.
Out of this, fertiliser subsidy is estimated to decline by 25 percent to Rs 1,05,222 crore during the 2022-23 fiscal from Rs 1,40,122 crore in 2021-22, while food subsidy is estimated to decline by 28 percent to Rs 2,06,831 crore from Rs 2,86,469 crore in the said period.
Petroleum subsidies are estimated to decline by 11 percent to Rs 5,813 crore during the 2022-23 fiscal as against Rs 6,517 crore in the current fiscal.
