Budget 2023: Govt May Cut Fertiliser Subsidy To Reduce Budget Deficit, Says Report
This fiscal year government has already spent more than Rs 2.2 trillion fertiliser subsidises allocated in the Budget 2022
The central government may cut fertiliser subsidies in the upcoming Budget 2023 to narrow its budget deficit, report Bloomberg. The report quoted people familiar with the matter saying, officials, are considering slashing the fertiliser subsidy bill to Rs 1-1.5 trillion for the 2023-24 fiscal year starting April.
This move will help India cut its budget deficit, the report added. After Russia’s invasion of Ukraine Food and energy prices has been soaring high. On food, fertiliser, and fuel, the government has already spent 70 per cent more than it had allocated in the last Budget.
Although, officials expect fertiliser costs to come down globally and domestic production to increase, the report said. Adding that talks are ongoing and a final decision is yet to be taken.
This fiscal year government has already spent more than Rs 2.2 trillion on fertiliser subsidies allocated in the Budget 2022. India imports about a third of its fertiliser requirements from other countries.
The report added that If in the upcoming Budget, the government spends less on subsidising fertilisers it could lead to higher inflation. If the government cuts subsidies, which is a reimbursement to companies for selling fertilisers at below-market prices, farmers will have to bear higher costs. It would lead to higher inflation.
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It was previously reported that fertiliser subsidy will rise to Rs 2.3-2.5 lakh crore in this fiscal but the bill may fall by 25 per cent in the 2023-24 financial year with moderation in global prices. This estimate was according to the Fertilisers Association of India (FAI). They had expressed concern that the fixed cost of urea has not been increased affecting the viability of urea plants. FAI said that the fertiliser industry is running on a very thin margin, which is hampering new investments in this sector.
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