Difficult situation for Indian economy: fuel, fertiliser and the food subsidy, will rise further in the remaining months of this fiscal yr-Pranab

Difficult situation for Indian economy: Pranab

Sapna Das, 07 Dec 2011 | 09:05 PM


There is no respite in sight for the government's subsidy bill. Acknowledging this hard fact, finance minister Pranab Mukherjee has admitted, that fuel, fertiliser and the food subsidy, will rise further in the remaining months of this fiscal. This means more worries for the government finances.


There is no respite in sight for the government's subsidy bill. Acknowledging this hard fact, finance minister Pranab Mukherjee has admitted, that fuel, fertiliser and the food subsidy, will rise further in the remaining months of this fiscal. This means more worries for the government finances.



“There is no carpet under which you can keep under recoveries of Rs 1.32 lakh crore. Fertiliser subsidy is going to be 90,000cr against projected 40,000cr. Similarly, food subsidy will also increase. And net increment will not be less than about Rs 80,000 crore. It maybe even Rs 1 lakh crore,” said the FM.



The additional tab of Rs 1 lakh crore will push the annual subsidy bill to close to Rs 2.5 lakh crore. That would be a whopping 40 per cent above the Rs 1.43 lakh crore that had been set aside in the budget for fuel, fertiliser and food subsidy, which has already been exhausted.



The sustained weakness in the global economy is not helping India's cause, as it has slowed down India's growth. The uncertainty on growth is making planning difficult.



“Budget projection of GDP was not unrealistic. But euro zone went unpredicted so too North America. I can say I was shortsighted. But then FMs the world over failed,” the finance minister said.



So while, the Finance Minister is willing to eat humble pie, the question still remains: will all the problems for the economy and the government's fiscal show up during the next fiscal.