India’s food grain subsidy cost is expected to increase 30% this year to $33 billion: Source

by Mapping Returns

According to a government official and a document accessed by Reuters, India’s spending on subsidised foodgrain to the poor could increase to Rs 2.7 lakh crore ($32.74 billion) this fiscal year as the government continues to feed the needy at least until December.

The person, who spoke on the condition of anonymity because the conversations are private, predicted that federal government food subsidies will likely rise by 30% over the Rs 2.07 lakh crore ($25.14 billion) planned in the budget.

Despite this year’s excellent tax collections, increased foodgrain and fertiliser subsidies are projected to put a strain on the federal budget. According to Reuters, this could force it to reduce other spending in order to close the 6.4% GDP budgetary imbalance that was planned.

According to a government document seen by Reuters, the state-run Food Corporation of India and states have already received foodgrain subsidies from the Department of Expenditure totaling nearly Rs 1.5 lakh crore.

Since the government announced a plan in April 2020 to give free rice or wheat to around 800 million people in an effort to ease household economic pressure from the COVID-19 pandemic, India’s foodgrain subsidy bill has increased dramatically.

The plan is expected to cost a total of Rs 3.9 lakh crore ($47.25 billion) and run from April 2020 to December 2022.

The extension of the measures has been rejected by India’s finance minister due to pressure on the country’s budget.

But if the government keeps the programme going after December 31, the costs might go up even more.

The official noted that if the programme is prolonged until March 2023, the cost will soar to around 3.1 trillion rupees, the second-highest amount ever.

The cost of India’s food grain subsidies in 2022/23, when the government’s free food grain distribution programme was in full swing, was Rs 2.9 lakh crore.

The government spent nearly Rs 5.3 lakh crore on food grain subsidies in 2020–21, however this was partially because it opted to pay off the Food Corporation of India’s previous debts.

Reuters sent emails to the Ministries of Finance and Consumer Affairs, Food, and Public Distribution, but neither ministry responded right away.

For 2022–2023, the expected total federal government spending in India is Rs 39.4 lakh crore.

Due to the price increase brought on by the Ukrainian conflict, the government is also facing a huge fertiliser subsidy expenditure that will likely exceed the budget’s predicted Rs 1.05 lakh crore.

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