Direct fertiliser subsidy transfer very much on table: Expenditure secy

On Agri Stack, Expenditure Secy V Vualnam says it's progressing well; using IT, farmers will be able to choose exact fertiliser quantities needed, reducing crowding at fertiliser outlets

Expenditure Secretary V Vualnam, in a post-Budget interaction with Ruchika Chitravanshi and Asit Ranjan Mishra in New Delhi, speaks about the 2026–27 (FY27) Budget’s focus on fiscal prudence, quality expenditure, and other priorities. Edited excerpts:

 

What was the philosophy behind this Budget? 

Fiscal prudence was the overarching principle, both during the Budget preparation and throughout the year. Macroeconomic stability is a key source of strength in uncertain global conditions. The second focus was the quality of expenditure, particularly 

capital expenditure, and the third was ensuring support for different segments of society that require assistance. 

Many departments have not been able to spend the money allocated to them in 2025–26 (FY26) but have been given higher allocations in FY27. Why do you think departments could not utilise the funds? 

We undertake a detailed and intensive review of Budget provisions in October and November each year. Take the Jal Jeevan Mission, for instance. While ₹67,000 crore was allocated, it could not be fully spent because the Department of Water Resources initiated a review exercise. This was a specific case of ensuring that budgets flow only to activities that are actually being taken up. We have provided for FY27 based on a clear understanding of why the FY26 allocation was not fully utilised. Overall, there is no major divergence from the Budget provisions. 

You have targeted a reduction in the fertiliser subsidy in FY27. How do you plan to achieve this? 

The starting point is the government’s commitment to ensure that farmers get the fertiliser they require. At the same time, the Agri Stack created by the Ministry of Agriculture is making good progress. Going forward, by using the power of information technology, we believe farmers will be able to choose and use exactly the quantity of fertiliser they need, reducing crowding at fertiliser outlets. Providing fertiliser to farmers remains a clear commitment. 

But there was a plan to directly subsidise fertiliser consumers rather than producers. Is that also on the anvil? 

Those ideas are there. At this point, nothing is ruled out. Ours is a large country, with farmers spread across regions, but this option is very much on the table. 

The 16th Finance Commission has recommended doing away with revenue deficit grants. How will this affect fiscally weaker states? 

These are post-devolution revenue deficit grants. By definition, after devolution, states are expected to mobilise their own tax and non-tax revenues. We believe that, with the recommendations and the efforts states are making, this should be manageable. 

On fiscal deficit, the 16th Finance Commission has recommended a limit of 3 per cent of gross state domestic product for states and 3.5 per cent of gross domestic product (GDP) for the Centre by 2030–31. While the Centre has accepted the former, it has said it will examine the latter. Is 3.5 per cent a steep target for the Centre? 

For states, this is not a new norm, and it has served them well. It is already embedded in their budgeting and resource planning processes. For the Centre, we have a well-calibrated debt management framework. The fiscal deficit is no longer the primary indicator; the focus is now on the debt-to-GDP ratio. At the same time, the capacity to respond to national requirements is essential. We are cognisant of the Commission’s recommendations, but the finance minister has outlined the path we intend to follow. 

Is that effectively a rejection? 

I would not use the word “rejection”. In fact, some experts argue the government should be more liberal on this front. An optimal path has been chosen. 

While many schemes have been added in FY27, there was an expectation that some schemes would be discontinued at the end of the 15th Finance Commission award period, but that has not happened. Why? 

Ministries evaluate their schemes. Based on those evaluations, they may decide to merge schemes or close them altogether. 

This process is currently underway. We believe it is better to have robust evaluations and properly framed new schemes.  February, March, and possibly April are when departments will finalise their decisions. Wherever schemes are proposed to continue, they will come to us for the usual Expenditure Finance Committee appraisal. This is very much a work in progress. 

There has been a sharp increase in allocations for Special Assistance to States for Capital Investment (SASCI) loans in FY27, even though about ₹43,000 crore remains unspent in FY26. Is there a particular component that states find difficult to utilise? 

It is a scheme with a very clear structure. SASCI allocations were enhanced because it was felt that the scheme serves a useful purpose — providing flexibility to states while keeping spending within desirable parameters. 

There is a reform-linked component. States are given time until November-December to report the reform measures they have undertaken. Once proposals are submitted, the ministry verifies them and submits its report, after which disbursement takes place. This is  by design.