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India to reduce spending on food and fertilizer subsidies by $17 billion

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NEW DELHI: India plans to reduce spending on food and fertilizer subsidies to ₹3.7 trillion in the fiscal year beginning in April, a 26 per cent reduction from this year. The goal is to reduce the fiscal deficit, which grew significantly during the COVID-19 pandemic.

About one-eighth of India’s 2019 budget, or ₹3.7 trillion rupees, are spent on food and fertiliser subsidies alone. However, reducing these subsidies could be politically controversial given that elections are around the corner. According to two officials, the government intends to allocate roughly ₹2.3 trillion for food subsidies in the upcoming fiscal year as opposed to ₹2.7 trillion for the current fiscal year.

According to one of the officials, spending on fertilizer subsidies will probably decrease to around 1.4 trillion from approximately 2.3 trillion this year. With a target budget deficit of 6.4 per cent of GDP for the current fiscal year, the government is eager to reduce spending.               

Team Urban Update

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