India’s budget likely to raise massive subsidies by 8% to $47 billion in next fiscal By Reuters

By Sarita Chaganti Singh and Mayank Bhardwaj

NEW DELHI (Reuters) – India is likely to increase spending on food, fertilizer and cooking gas subsidies to 4.1 trillion rupees ($47.41 billion) in the next fiscal year, government sources said, a modest 8% annual increase to cover higher food and energy costs.

India’s Finance Minister Nirmala Sitharaman will present the national budget on February 1, amid slow growth in Asia’s third-largest economy and rising global uncertainty.

The latest economic slowdown is due to the weakness of urban regions and investments from companies. The rural economy where a large part of major subsidies are deployed shows signs of recovery and continuation of subsidies will be an important support.

The government estimates the food subsidy bill will increase by about 5% for the next fiscal year that begins April 1 to about 2.15 trillion rupees ($24.86 billion), one of the sources said.

Higher rice purchases from farmers and rising storage costs are expected to push up the food subsidy next year, the source said.

The budgeted cost for food subsidies in the current fiscal year ending March 31 is 2.05 trillion rupees ($23.70 billion).

The subsidies, including food, fuel and fertilizers, accounted for about 8% of the country’s total annual spending of $557 billion for the current fiscal year.

The government is also expected to allocate nearly 250 billion rupees ($2.89 billion) for subsidies on cooking gas, the second source said, up from 119 billion rupees ($1.38 billion) in the current fiscal year.

The fertilizer subsidy for the next fiscal year is likely to be maintained at the current year’s level of 1.7 trillion rupees ($19.66 billion), a third source said.