Centre sees no quick hit to fiscal math from war, but next year may different

Fertilizer is the largest commodity, the global price of which has a direct bearing on subsidy bills. In the case of petroleum, central subsidy is limited to cooking gas and kerosene, and often, state-owned auto-fuel retailers absorb the volatility in global prices by spreading out retail fuel price adjustments.On Friday, the government assured adequate fertilizer availability for the upcoming kharif season starting June.

The Department of Fertilisers said India currently has a strong inventory buffer, supported by advance stocking and relatively lower consumption during the lean season. It said fertilizer manufacturers have advanced their annual maintenance shutdowns to March, a period of relatively low demand, allowing plants to remain fully operational during the kharif season.

It has also asked refiners to increase production of cooking gas.The second supplementary demands for grants for the financial year ending in March, to be tabled in Parliament later in the current session, is likely to reflect the final fiscal adjustments that are typically part of the budget session exercise. This is unlikely to be affected by the ongoing Iran war.

Data from Controller General of Accounts (CGA) showed that by the end of January, 98% of the ₹1.86 trillion of the revised subsidy estimate for the current fiscal has been used, which is likely to be replenished in the second supplementary demands.The conflict needs to be observed for how it evolves, said Suranjali Tandon, associate professor at the National Institute of Public Finance and Policy.“If it prolongs beyond a month, then energy and commodity supply disruptions could result in costlier fertilizers and fuel. Inflationary pressures will compel central banks to tighten