The Central Government has sought Parliament’s approval for fresh expenditure of Rs 2.14 lakh crore towards major subsidies, over and above the Rs 3.17 lakh crore budgeted for 2022-23. This 5.32 lakh crore spending on subsidy in 2022-23 would be the second highest after the Rs 7 lakh crore of 2020-21. However, there’s a difference between 2020-21 and 2022-23.
What are the future prospects of subsidies?
- Some relief can be expected on all the “3F” subsidies – food, fuel and fertilizer.
- In food, the government is unlikely to extend PMGKAY beyond December 2022. This will help reduce the Centre’s food subsidy bill.
- In fuel, international prices of petrol and diesel have eased. There is also a reduction in the prices of imported fertilizers.
- Due to these positive future prospects, there could be subsidy savings of around Rs 150,000 crore assuming no new geopolitical, climate or pandemic shocks.