After a vitriolic general election fought amongst other things on uncontrolled subsidy bill racked up by the previous govt, Finance Minister Arun Jaitley himself today raised the subsidy bill, albeit marginally, by 2.47 per cent to over Rs 2.51 lakh crore for 2014-15, but promised to overhaul the grants for food, fuel and fertiliser to "make it more targetted".
The subsidy bill on food, petroleum and fertilisers is estimated at Rs 2,51,397.25 crore for 2014-15, according to the Budget proposals presented by the Finance Minister in Parliament. The bill was Rs 2,45,451.50 crore in the revised estimates for 2013-14.
"I also propose to overhaul the subsidy regime, including food and petroleum subsidies, and make it more targeted while providing full protection to the marginalised, poor and SC/STs. A new urea policy would also be formulated," Jaitley said in his maiden Budget speech.
The allocation for subsidy in the full Budget for 2014-15 is even higher than Rs 2.46 crore proposed by then Finance Minister P Chidambaram in the interim budget in February.
The increase in overall subsidy bill, though marginal, is bound to have impact on fiscal deficit for this fiscal.
The higher subsidy bill in 2014-15 is on account of increased allocation for fertiliser sector. The government has pegged total fertiliser subsidy higher at Rs 72,970.30 crore for full fiscal than Rs 67,970 crore proposed in the interim budget.
Subsidy for imported urea is pegged at Rs 12,300 crore, domestic urea is Rs 36,000 crore and sale of de-controlled fertilisers (like phosphatic & potassic fertilisers) is Rs 24,670.30 crore.
Jaitley announced Budget estimates with non-plan expenditure for the fiscal at Rs 12,19,892 crore with additional provision for fertiliser subsidy and capital expenditure for the armed forces.
For food subsidy, the government has allocated Rs 1,15,000 crore, which include a provision of Rs 88,500 crore for implementation of National Food Security Act. The food subsidy bill has been kept unchanged from interim budget proposal of Rs 1.15 lakh crore.
The previous government had increased the bill by a whopping Rs 23,000 crore mainly for implementation of the National Food Security law, whose deadline has been now been extended by three months till September 2014.
The petroleum subsidy, given to state-run oil companies for selling fuel, LPG and kerosene below cost, has been pegged lower Rs 63,426.95 crore for 2014-15 against revised estimate (RE) of Rs 85,480 crore in 2013-14.