New Delhi: The food subsidy remains the largest component of the Indian government’s total subsidy expenditure in FY 2024-25, accounting for more than 50% of the total disbursed amount, according to a Bank of Baroda report.
Subsidy Breakdown (April-December 2024):
The government spent a total of ₹3.07 lakh crore on subsidies during the first nine months of the financial year (April-December 2024).
- This is higher than the ₹2.77 lakh crore spent in the same period last year (2023).
- However, it is still lower than the ₹3.51 lakh crore spent in April-December 2022.
Food and Fertilizer Subsidy Trends:
- Food Subsidy:
- April-December 2024: ₹1.64 lakh crore
- April-December 2023: ₹1.34 lakh crore
- April-December 2022: ₹1.68 lakh crore
- Key reason: Increased allocation to food security programs.
- Fertilizer Subsidy:
- April-December 2024: ₹1.36 lakh crore
- April-December 2023: ₹1.41 lakh crore
- April-December 2022: ₹1.81 lakh crore
- Trend: Declining due to lower global fertilizer prices and subsidy reforms.
Decline in Non-Debt Capital Receipts:
- The government’s non-debt capital receipts (revenue from asset sales and disinvestments) have declined significantly:
- December 2024: ₹27,296 crore
- December 2023: ₹29,650 crore
- December 2022: ₹55,107 crore
- Indicates: Weaker revenue collection and reduced success in disinvestment programs.
Weakening Foreign Direct Investment (FDI) Inflows:
- November 2024 FDI Inflows: $2.4 billion
- October 2024 FDI Inflows: $4.3 billion
- Impact: Increased foreign investor outflows from Indian stock markets, adding pressure on India’s overall capital inflows.
Implications:
- Rising food subsidy expenditure suggests a higher focus on welfare schemes.
- Declining fertilizer subsidies may reduce fiscal burden but could impact agricultural costs.
- Lower non-debt receipts and FDI inflows may increase fiscal pressure, requiring alternative revenue sources.