NEW DELHI: India has proposed to cut fertiliser subsidy spending in the next financial year starting in April, a move that could help reduce the fiscal deficit but may raise cultivation costs for farmers in the world’s most populous nation.
The South Asian country will allocate 1.71 trillion rupees (US$18.6bil) in 2026-27 to support the sector, Finance Minister Nirmala Sitharaman said in her annual budget speech in Parliament. That compares with a revised amount of 1.86 trillion rupees for the current fiscal year.
The subsidies compensate producers for selling crop nutrients to farmers at below-market rates. Any increase in costs borne by cultivators could curb their consumption, potentially undermining the country’s food security.
The decision to slash subsidy spending comes at a time when chief economic adviser V Anantha Nageswaran has recommended a modest increase in the retail price of urea, the most-used soil nutrient in the world’s biggest grower of rice.
The announcement may help the government, which is seeking to slash its fiscal deficit target to 4.3% of gross domestic product next year, from a goal of 4.4% in 2025-26. — Bloomberg
