India’s budget may raise subsidies by 8% to $47 billion in next budget Reuters

By Sarita Chaganti Singh and Mayank Bhardwaj

NEW DELHI (Reuters) – India will increase spending on food, fertilizer and cooking gas subsidies to 4.1 trillion rupees ($47.41 billion) in the next fiscal year, government sources said. It covers high food and energy costs.

India’s Finance Minister Nirmala Sitharaman will present the national budget on February 1 amid slowing growth in Asia’s third-largest economy and rising global uncertainty.

The recent economic slowdown is mainly related to weakness in urban areas and corporate investments. The rural economy, where most of the major subsidies are deployed, is showing signs of recovery and maintaining subsidies will be a key support.

The government expects to increase its food subsidy bill by about 5% to 2.15 trillion rupees ($24.86 billion) for the next fiscal year, which starts April 1, one of the sources said.

Higher procurement of rice from farmers and increase in storage prices will increase the food subsidy next year, the source said.

As of March 31 of the current fiscal year, the budget allocated for food subsidies is 2.05 trillion rupees ($23.70 billion).

Subsidies, including food, fuel and fertilizer, account for about 8% of the country’s total annual spending of $557 billion this fiscal year.

In addition, the government is expected to allocate around 119 billion rupees ($1.38 billion) to 250 billion rupees ($2.89 billion) in subsidies for cooking gas this fiscal year.

Fertilizer subsidies for the next financial year are likely to remain at the current 1.7 trillion rupees ($19.66 billion), a third source said.

India’s finance, food and fertilizer ministries did not immediately respond to emails seeking comment on the subsidy.

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