Govt expects dip in subsidy bill

The government is expecting the total subsidy bill to dip during the next fiscal as it hopes international crude oil prices to hover around the current levels.

Budget data show that total government subsidy will contract 21.8 per cent to Rs 1,00,932 crore in 2009-10, compared with the revised estimates of 1,29,243 crore in the financial year.

Subsidies on this account are given to indigenous urea fertilisers, imported urea fertilisers as well as concessional sale of decontrolled fertilisers.

With subsidy to Oil Marketing Companies (OMCs) kept outside the budget, fertiliser subsidies account for the highest amount. But falling international prices mean that the government will have to spend less on subsidising the key agriculture input.

In 2009-10, fertiliser subsidy is expected to account for half the total subsidy bill, around 8 percentage points less than what was expected in the current fiscal.

The government expects that subsidy on food, which is provided to meet the difference between the economic cost of foodgrain and the prices at which they get sold through the public distribution system, is also expected to come down.

In 2009-10, the bill on food subsidies is expected to contract by 2.6 per cent and stand at Rs 42489.72 crore, compared with Rs 43627.2 crore. Moreover, interest subsidies, which the government provides on various loans, are also expected to dip by about 36 per cent in 2009-10, and stand at Rs 2608 crore. However, petroleum subsidies, which is for government support towards LPG and Kerosene sales through the PDS as well as freight from far flung areas, are expected to increase 8 per cent and stand at Rs 3,109 crore.