Welfare spending surge pushes subsidy outgo to 91% of target

Subscribe to enjoy similar stories.New Delhi: The government’s subsidy spending has already reached 91% of the revised estimate for financial year 2026 in the first 11 months, highlighting sustained strain from welfare commitments that is unlikely to ease soon, as the West Asia war fuels cost pressures in the economy.According to the Department of Expenditure data, reviewed by Mint, total expenditure on major subsidies including food and fertilizers stood at ₹3.89 trillion during April–February, against the revised estimate of ₹4.29 trillion. The department is still collating the final month's figure.The subsidy spending is higher than ₹3.63 trillion recorded in the same period of FY25.Despite higher subsidy spending, the fiscal deficit moderated to ₹12.52 trillion during April–February FY26, lower than the ₹13.46 trillion in the same period last year, the ministry data showed.

The narrowing gap indicates that stronger revenue inflows have partly offset expenditure pressures.This comes in the backdrop of supply chain disruptions and rising fertilizer costs due to the West Asia war beginning to strain the government’s fiscal calculations.Queries sent to the spokesperson of the ministry of finance remained unanswered till press time.Analysts said the war-induced stress could force the government to raise subsidies.“The current scenario indicates that the FY26 revised estimates for subsidies may require a further upward revision. Moreover, FY27 could require a relatively larger allocation for major subsidies in the Government of India’s budget, which may result in a higher fiscal deficit than what has been projected in the FY27 Budget,” said D.K.