Subsidy bill remains below pandemic peaks as government balances welfare support with fiscal discipline
The government is expected to keep the combined food and fertiliser subsidy at around ₹ 3.98 lakh crore in FY27, signalling continued fiscal discipline while maintaining support for vulnerable households and farmers.
In FY24 (Actuals), the combined food and fertiliser subsidy stood at ₹4.00 lakh crore, reflecting elevated support during a period of high global commodity prices. This was reduced to ₹3.69 lakh crore in FY25 (Budget Estimates) and ₹3.69 lakh crore in FY25 (Revised Estimates) as global prices eased and subsidy rationalisation measures took effect.
For FY26 (Budget Estimates), the government pegged the combined subsidy at ₹3.71 lakh crore, indicating a stabilisation of welfare spending below pandemic-era highs. However, the revised estimate of food and fertiliser subsidy combined together stood at ₹4.15 lakh crore.
Breaking it down, food subsidy amounted to ₹2.12 lakh crore in FY24, ₹2.05 lakh crore in FY25 (BE), ₹1.97 lakh crore in FY25 (RE) and ₹2.03 lakh crore in FY26 (BE), largely reflecting allocations under the public distribution system.
Fertiliser subsidy, meanwhile, stood at ₹1.88 lakh crore in FY24, declined to ₹1.64 lakh crore in FY25 (BE), rose marginally to ₹1.71 lakh crore in FY25 (RE), and eased to ₹1.68 lakh crore in FY26 (BE), tracking movements in global input prices.
For FY27, the combined food and fertiliser subsidy has been budgeted at ₹3.98 lakh crore, with food subsidy at ₹2.28 lakh crore and fertiliser subsidy at ₹ 1.71 lakh crore, according to Budget documents.
Economists note that while subsidy spending remains substantial, the government has managed to bring it down significantly from pandemic-era levels, helping improve the quality of expenditure and support fiscal consolidation.
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