India plans over $40 billion for food, fertiliser subsidy for 2022/23

NEW DELHI, Jan 29,2022 (Reuters) - India is likely to set aside about 3 trillion rupees ($40 billion) on food and fertiliser subsidies in its budget next week for 2022/23, officials said, roughly the same amount the government budgeted for this fiscal year ending in March.

India's subsidy bills have spiralled due to pandemic relief measures for the poor and a sharp rise in global prices of chemicals. New Delhi has already raised fertiliser subsidies twice in this fiscal year, and sources said that its payouts for 2021/22 could be its highest yet.

In the budget Finance Minister Nirmala Sitharaman is due to present on Tuesday, the government will allocate 1.1 trillion rupees to fertiliser subsidies, and 2 trillion rupees to food subsidies, three officials told Reuters on condition of anonymity.

The fertiliser ministry had sought assistance of as much as 1.4 trillion rupees for 2022/23, another official said.

For the current fiscal year the finance ministry had budgeted 835 billion rupees for fertiliser subsidies, although the real allocation could rise to a record 1.5 trillion rupees.

The bulk of fertiliser subsidies are used to provide urea at cheaper government-fixed rates to farmers. The government also provides a fixed amount of subsidy to companies for selling other fertilisers at lower rates to help farmer, a key vote bank.

For food subsidies, India had budgeted 2.43 trillion rupees in 2021/22 although the government later provided an additional 600 billion rupees.