The Narendra Modi government has cut the subsidy bill on food, fuel and fertilisers by about 8 per cent lower than the estimated outgo in the current fiscal at Rs 3.69 lakh crore for 2024-25 on the assumption that the drop in global prices would continue and push for bio, organic fertiliser and use of nano urea would go up.

According to the Budget 2024-25, presented in the Lok Sabha by finance minister Nirmala Sitharaman, an amount of Rs 2,05,250 crore has been earmarked for food subsidy in the next fiscal. This is lower than the revised estimates of Rs 2,12,322 crore for the fiscal ending on March 31, 2024. The food subsidy bill was Rs 2.72 lakh crore in 2022-23.

The allocation for fertiliser subsidy is at Rs 1.64 lakh crore for 2024-25 as against the revised estimates of Rs 1.89 lakh crore for the ongoing financial year. The government had given Rs 2.51 lakh crore towards fertiliser subsidy in the previous year.

The government provides nutrient-based subsidy on fertilisers and subsidy on urea. The cut in the subsidy in FY25 is being seen because of a drop in international prices, government push towards schemes for the use of bio and organic fertilisers, and increased use of nano urea.

The urea subsidy scheme ensures constant availability of urea to farmers at the same price of Rs 242 per 45kg bag, excluding taxes and neem coating charges. The actual cost of the bag is around Rs 2,200.