Budget 2021: Food, fertiliser and oil subsidies rise 47% in 2021-22

Government subsidies on food, fertilisers and petroleum for the financial year 2021-22 has been pegged at Rs 3.35 lakh crore, up 47 percent from the 2020-21 Budget Estimate (BE) of Rs 2.28 lakh crore. The revised estimate (RE) for 2020-21 though was 1.6 times higher than the BE at Rs 5.95 lakh crore.

While there was a decline in petroleum subsidy, the rise in food was mainly owing to the sops lined up by the government to tackle the COVID-19 impact on citizens. During the April to November period of the financial year 2020-21, almost 80 crore families benefited as the government distributed free food grains. Besides, the allocation for pre-payment of NSSF loans with FCI to the tune of Rs 1.5 lakh crore also raised food subsidy.

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Food subsidy for 2021-22 jumped 1.1 times to Rs 2.42 lakh crore from Rs 1.15 lakh crore in BE 2020-21. The revised figure for the current financial year was 2.6 times higher compared to BE at Rs 4.23 lakh crore.

Fertiliser subsidy increased 88 percent during 2020-21 to Rs 133,947 crore in a revised estimate from Rs 71,309 crore in the budget estimate. The provision for fertiliser subsidy during 2021-22 was kept at Rs 79,530 crore. A major reason for this is not raising the basic maximum retail price (MRP) of urea since 2010.

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Owing to a decline in international crude oil prices and drop in product prices globally, liquefied petroleum gas and kerosene subsidy for 2021-22 was 68 percent lower than BE of 2020-21 at Rs 12,995 crore. The BE for 2020-21 was Rs 40,915 crore, which was revised to Rs 38,790 crore, a large component of which is contributed by a rollover from 2019-20.