Food subsidy accounts for over 50% of total Govt subsidy so far in FY25

ANI February 15, 2025 264 views

The Indian government has significantly allocated resources towards food subsidies in the current financial year, with spending reaching Rs 1.64 lakh crore in the first nine months. While overall subsidy expenditure has increased compared to last year, it remains below the levels seen in 2022. The Bank of Baroda report highlights a strategic focus on food support amid challenging economic conditions. Alongside rising food subsidies, the government is experiencing challenges in non-debt capital receipts and foreign direct investment inflows.

"Food subsidies remain a critical component of government fiscal strategy" - Bank of Baroda Report
New Delhi, February 15: The food subsidy has been the largest component of the government's total subsidy expenditure so far in the financial year 2024-25, accounting for more than 50 per cent of the total amount disbursed.

Key Points

1

Government subsidy spending reaches Rs 3.07 lakh crore in nine months

2

Food subsidies account for over 50% of total expenditure

3

Fertilizer subsidies show slight decline from previous years

4

Non-debt capital receipts demonstrate weak revenue collection

According to a report by Bank of Baroda, the government spent Rs 3.07 lakh crore on subsidies during the first nine months of the financial year (April-December 2024). This is higher than the Rs 2.77 lakh crore spent in the same period last year but remains lower than the Rs 3.51 lakh crore spent in April-December 2022.

A major reason for this increase is the rise in food subsidy spending. The government allocated Rs 1.64 lakh crore for food subsidies during April-December 2024, which is higher than the Rs 1.34 lakh crore spent in the same period last year. However, it is slightly below the Rs 1.68 lakh crore recorded in April-December 2022.

While food subsidies increased, the expenditure on fertilizer subsidies has declined slightly. Between April and December 2024, the government spent Rs 1.36 lakh crore on fertilizer subsidies, compared to Rs 1.41 lakh crore in the previous year and Rs 1.81 lakh crore in April-December 2022.

The report also highlighted a decline in the government's non-debt capital receipts, which include revenue from asset sales and disinvestments.

These receipts stood at Rs 27,296 crore as of December 2024, lower than Rs 29,650 crore in December 2023 and significantly below Rs 55,107 crore in December 2022. This indicates weaker revenue collection and reduced success in generating funds through non-debt sources.

Additionally, the report also highlighted that the Foreign Direct Investment (FDI) inflows into India have weakened. In November 2024, FDI inflows stood at USD 2.4 billion, a sharp decline from USD 4.3 billion recorded in October 2024. The report also noted an increase in foreign investor outflows from the Indian stock markets, adding pressure on overall inflows into the country.

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Tags:
Food Subsidy Government Spending Bank of Baroda Indian Economy Fiscal Policy Subsidies
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