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West Asia Crisis May Double India’s Fertilizer Subsidy Bill, Finance Ministry Under Pressure
The West Asia crisis has increased the financial pressure on the government due to fertilizer subsidies and rising crude oil prices, leading the Fertilizer Ministry to request a 100% increase in the subsidy.
The main financial burden imposed by the crisis in West Asia on the government is higher prices of fertilizers. According to a request made by the Ministry of Chemicals and Fertilizers, the Ministry of Finance has been asked for a hundred percent increase in fertilizer subsidies from the current level of subsidy budgeted at ₹1.77 lakh crore.
Farmers are exempted from bearing any additional fertilizer prices; hence the need to subsidize. Moreover, crude oil prices have risen following the onset of the Iran-US war on February 28. However, during the initial 78 days of the price hike, no action was taken by the government to transfer the increase to consumers since excise duties of ₹1.23 lakh crore were kept by oil marketing companies (OMCs).
According to sources in the Ministry, it will be impossible for the government to further cushion OMCs in an attempt to protect consumers from higher costs of petrol and diesel products. The Petroleum Ministry claims that OMCs have lost between ₹500-600 crore per day due to high crude oil prices.
Gold imports, along with fertilizers and crude oil, have also increased pressure. To discourage gold imports, the government has increased import duties. Ministry sources say that people in India have a special affinity for gold, so the government can only take measures to curb imports to a limited extent.
