Budget 2024: India likely to allocate $48 billion for food, fertiliser subsidies

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food and fertilizer subsidies for the next fiscal year, indicating fiscal caution ahead of 2024 Lok Sabha elections, said two government sources as quoted by Reuters. During the current fiscal year, which concludes on March 31, India's total budget spending is 45 trillion rupees, of which approximately one-ninth comes from subsidies on food and fertiliser. They said the Ministry of Consumer Affairs, Food and Public Distribution has projected that the cost of food subsidies in 2019 will be 2.2 trillion rupees ($26.52 billion).

That represents a 10% increase over the estimated spending for the current fiscal year, 2023–24, of nearly 2 trillion rupees ($24.11 billion). In addition, the fertilizer subsidy for the upcoming fiscal year is anticipated to be 1.75 trillion rupees ($21.10 billion), which is less than the current estimate of nearly 2 trillion rupees for the fiscal year 2022–2023, one of the source said, on the condition of anonymity.

Union Finance Minister Nirmala Sitharaman will unveil the interim budget 2024-25 on February 1. Prime Minister Narendra Modi is expected to win an unprecedented third term in the April and May elections, but maintaining the combined subsidies at their current level would be unusual for a government facing a national election in just a few months.

Also, containing food and fertiliser subsidies is crucial for managing India's fiscal deficit, which Modi's government is targeting at 5.9% of gross domestic product this year and planning to lower by at least 50 basis points in the fiscal year 2024-25. Given that the Modi administration extended its popular free food welfare program for an additional five years late last year, the cost of food subsidies is probably going to increase in the