$17 BN CUT IN FOOD, FERTILIZER SUBSIDY

  • India aims to cut spending on food and fertilizer subsidies to ₹3.7 trillion in the fiscal year from April, a 26% cut from this year, two government officials said, to rein in a fiscal deficit that ballooned during the COVID-19 pandemic.
  • Food and fertilizer subsidies alone account for about one-eighth of India’s total budget spending of ₹39.45 trillion this fiscal year, but reductions in food subsidies in particular may prove politically sensitive with elections looming on the horizon.
  • The government expects to budget about ₹2.3 trillion for food subsidies in the coming fiscal year, compared with ₹2.7 trillion for the current year, the two officials said.
  • Spending on fertilizer subsidies will likely fall to about ₹1.4 trillion, according to one of the officials and a third official. That compares with almost ₹2.3 trillion this year, the third official added.
  • A large part of the savings will come from the end of a COVID 19-era free food scheme, which will be replaced with a lower-spending programme, the first two officials said. The government is eager to rein in its fiscal deficit, which is targeted at 6.4% of GDP for the current fiscal year.

SOURCE: THE HINDU, THE ECONOMIC TIMES, PIB

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