Budget 2024: Subsidies likely to remain same, rural funding may rise

The Budget is anticipated to be unveiled in the third week of July. The NDA 3.0 administration might strengthen specific welfare-oriented schemes, prioritising fiscal prudence

Ahead of the upcoming full Budget 2024, recent reports indicate that the government intends to uphold the Rs 4.1 trillion subsidy allocation for the fiscal year 2024-25, as previously outlined in the interim budget in February 2024. 

This amount represents a 7 per cent decrease from the revised estimate of Rs 4.41 lakh crore for 2023-24. Despite this reduction, senior government officials indicated that the subsidy bill estimate will remain unchanged from the interim budget projections, The Economic Times reported.

However, it is possible that funding for rural schemes might see an increase, the report claimed. Business Standard could not independently verify this report. 

In April this year, media outlets had reported that the government is considering expanding the housing subsidy for the urban poor under the PM Awas Yojana (PMAY).

What fiscal priorities will shape the Budget 2024?

The upcoming Budget, expected in late July, is likely to focus on enhancing certain welfare schemes while adhering to fiscal prudence, the report said. The government aims to maintain a fiscal deficit target of 5.1 per cent of GDP for the current financial year, with a medium-term goal of reducing the deficit below 4.5 per cent of GDP by FY26, the business-daily said, citing government officials.

The Budget 2024 is anticipated to continue emphasising capital expenditure due to its positive economic impact. In the interim budget, the food subsidy was allocated Rs 2.05 trillion, slightly lower than the previous fiscal year's revised estimate, considering food price fluctuations. The food subsidy had peaked at Rs 2.87 trillion in 2022-23.

What initiatives will drive subsidy allocation in FY25?

The fertiliser subsidy for this fiscal year is set at Rs 1.64 trillion, lower than the revised estimates for 2023-24. An official noted improvements in fertiliser subsidy management due to reduced import dependency, lower fertiliser prices, and increased domestic production. 

The government plans to expand the use of nano urea and nano di-ammonium phosphate (Nano DAP) across all agro-climatic zones, as mentioned by Finance Minister Nirmala Sitharaman in her interim budget speech.

The fuel subsidy is set at Rs 11,925 crore, roughly the same as the revised estimate for 2023-24 but higher than the initial estimate for the previous fiscal year. This increase is attributed to the extension of the cooking gas subsidy to Rs 300 per cylinder for approximately 96 million low-income households, leading up to previous Assembly elections in five states, which increased the LPG subsidy bill.