Centre mulls higher food subsidy outlay for election year

The union government is preparing for a higher food subsidy bill in the fiscal year beginning April 1, 2024, with official sources telling Business Today TV that the overall outlay could be higher by nearly 10 per cent over the current year.

“We are contemplating a higher food subsidy outlay for FY25," a government official said, adding the Department of Expenditure is working on assessing the impact of higher Minimum Support Price (MSP), as well as other incremental expenses including the extension of the free food scheme.

With general elections scheduled for April-May next year, Prime Minister Narendra Modi recently declared the extension of free food grains under the National Food Security Act for another five years.

Officials added the overall food subsidy outlay for FY24 was initially pegged at Rs 4.03 lakh crore, but is likely to be higher at Rs 4.5 lakh crore.

When asked about the fiscal impact of the additional expenditure, the official said the revenue collection situation is comfortable, adding that despite additional expenditures on food, LPG, and fertiliser subsidies, the government is confident in meeting its fiscal deficit target of 5.9 per cent for the current fiscal year.

Although the government had accounted for the expenditure of free food grains for the first nine months, the additional outlay would be covered by savings on other account heads and buoyant revenues.

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