Govt may roll over Rs 33,000-35,000 crore in subsidy payments to FY20

Business Standard Govt may roll over Rs 33,000-35,000 crore in subsidy payments to FY20

Business Standard has learnt from senior government officials that the petroleum subsidy amount rolled over to FY20 will be around Rs 13,000 crore

Economy & Policy: To help meet its revised fiscal deficit target of 3.4 per cent of gross domestic product for 2018-19, the Centre is highly likely to rollover as much as Rs 33,000-35,000 crore in combined food, petroleum and fertiliser subsidies to 2019-20. Additionally, Business Standard has learnt that the 2019-20 interim Budget assumed an average crude oil price of $65 a barrel for the next fiscal year, the same as this year.

If these sums are not rolled over, the fiscal deficit for this year could be as high as 3.55 per cent of gross domestic product (GDP). The combined fertiliser, food and petroleum subsidy budgeted estimate for FY19 is Rs 2.64 trillion, while the revised estimate is Rs 2.66 trillion. If the carrying forward to FY20 does not happen, the revised estimates for the major subsidies could actually cross Rs 3 trillion for the first time ever.

Business Standard has learnt from senior government officials that the petroleum subsidy amount rolled over to FY20 will be around Rs 13,000 crore. Food subsidy could see a rollover of around Rs 10,000 crore, while fertiliser subsidy rolled over to FY20 may be in the region of Rs 10,00012,000 crore. “We are admitting that we will roll over Rs 13,000 crore in petroleum next year. This year we had budgeted the subsidies at $65 a barrel. It went to above $80 and then came down again, and hence the higher subsidy bills. For the next year also we have budgeted $65/barrel. The budgeted estimates for the next year is more than revised estimates this year because of rolled over payments,� said an official.

In the 2018 calendar year, global crude oil prices reached a four-year high of around $86 a barrel in October and averaged around $73.69 a barrel in AprilSeptember. As on Wednesday, Brent Crude was trading at $61.77 a barrel.