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Government subsidies on food and fertilisers have been pegged at Rs 3.69 lakh crore for 2024-25, about 8% lower than the estimated outgo in the current fiscal.

According to the Budget 2024-25 presented in the Lok Sabha by Finance Minister Nirmala Sitharaman, an amount of Rs 2,05,250 crore has been earmarked for food subsidy in the next fiscal. This is lower than the revised estimates of Rs 2,12,322 crore for the fiscal ending on March 31, 2024. The food subsidy bill was Rs 2.72 lakh crore in 2022-23.

The allocation for fertiliser subsidy is at Rs 1.64 lakh crore for 2024-25 as against the revised estimates of Rs 1.89 lakh crore for the ongoing financial year. The government had given Rs 2.51 lakh crore towards fertiliser subsidy in the previous year.

Food subsidy is provided to meet the difference between the economic cost of foodgrains procured by the government and their sales realisation at the PDS rate called central issue price (CIP) under the National Food Security Act (NFSA) and other welfare schemes.

The government is providing free ration to about 80 crore poor people. Similarly, the Centre provides fertiliser subsidies to manufacturers.

The government fixes the MRP of urea being sold in the market. The difference between the selling price and production cost is provided as a subsidy. A nutrient-based subsidy is also being provided on non-urea fertilisers like DAP and MOP.

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The government also provide subsidies for petroleum products, mainly for cooking gas (LPG).

The subsidy for petroleum has been pegged at Rs 11,925 crore for the next fiscal, lower than Rs 12,240 crore estimated for the current financial year.

In her Budget speech, Finance Minister Nirmala Sitharaman stressed that the worries about food have been eliminated through free rations for 80 crore people.

“Minimum support prices for the produce of Annadata’ are periodically increased appropriately,” she added.

Free ration and higher MSP on crops along with the provision of basic necessities have enhanced real income in the rural areas, Sitharaman said, in the last major economic document ahead of the general elections.