Subsidy bill in FY25 Budget seen at Rs 3.81 lakh crore, down 8%

The subsidy bill is a major expenditure item for India’s central government.

The Indian government will spend Rs 3.81 lakh crore on major subsidies in 2024-25, the finance ministry has estimated in its Interim Budget for the next financial year.

Of the total, food subsidy accounts for nearly 54 percent.

The breakdown of the major subsidies is as follows:

Meanwhile, the money to be spent on fertiliser subsidy is seen declining to Rs 1.64 lakh crore from the revised estimate of Rs 1.89 lakh crore for 2023-24. The revised estimate is higher than the original estimate of Rs 1.75 lakh crore.

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Moneycontrol reported on January 11 that the Budget may lower the 2024-25 allocation for fertiliser subsidy from a likely revised estimate of Rs 1.88 lakh crore for 2023-24 due to a fall in international prices, the government's desire to push schemes promoting bio and organic fertilisers, and increased use of nano urea.

"After the successful adoption of Nano Urea, application of Nano DAP on various crops will be expanded in all agro-climatic zones," Finance Minister Nirmala Sitharaman said in her Budget speech in Parliament.

Of the total fertiliser subsidy bill, Rs 1.19 lakh crore will be spent on providing urea at discounted rates, while Rs 45,000 crore has been set aside for  nutrient-based fertiliser subsidy.

Finally, the petroleum subsidy bill has been estimated at Rs 11,925 crore.

While domestic fuel prices are determined on the basis of market prices, the government subsidises certain items such as kerosene for the Public Distribution System and domestic LPG.