Centre likely to roll over part of food, urea subsidy burden to next fiscal

NEW DELHI: The government may resort to rolling over part of the subsidy burden for the current financial year to the next year as its subsidy bill for food and urea have both increased beyond what was planned for. 

The extra rations distributed because of the Covid pandemic has seen the food subsidy bill for the first six months climb to 72 per cent of the budget estimate as against 67 per cent in the same period last year. Urea subsidy, that was also doled out with an open hand to try and pacify farmers who have been agitating over a variety of issues, has mounted to 92 per cent of the budgeted amount as against 70 per cent in the same period last year.

“Both these subsidies will top our estimates. Obviously, we did not plan for extra free rations to be disbursed. Similarly, we had thought this year we would be able to shift more farmers to nutrient-based fertilisers, but urea remains popular and its subsidy bill has been mounting,” said expenditure department officials. 

Urea subsidies have cost the government Rs 4.38 lakh crore as against a budget for Rs 4.78 lakh crore in the first six months.

Officials expect the budget to be topped by another Rs 80,000 crore in urea subsidy pay-outs. “That would also be at a conservative estimate, if urea prices were to go up, because of any reason, then the bill could go up further,” officials added. 

The food subsidy bill has also shot up as the Centre had announced the Garib Kalyan Yojana to take care of poor families hit by the pandemic. The scheme seeks to provide five kg of free wheat or rice per person every month  to about 800 million people along with a kg of free lentils to each family per month during the period April - November 2020. 

“There is every likelihood that the scheme will be extended, so the final bill will certainly cross the budgeted Rs 1.15 lakh crore by at least 25-30 per cent,” according to officials. The government had stopped roll-overs of subsidies in 2020. Though analysts say there are still hidden subsidy bills which remain on the books of state-run PSUs.