Budget 2022: Government Lowers FY23 Subsidy Spending By 26.6%

The government has cut spends on food, fertiliser and fuel subsidies for 2022-23.

While fertiliser and petroleum subsidies are also likely to moderate in FY23, high global commodity prices in 2022 is the key risk, Goldman Sachs had said in a pre-budget note. Assuming no further significant disruptions due to Covid waves, spending on the Pradhan Mantri Garib Kalyan Anna Yojana, too, is likely to decline, the note had said.

Still, social and welfare spending needs remain high. There are vulnerabilities at the bottom of the pyramid which could keep demand and growth weak, Pranjul Bhandari, chief India economist at HSBC, said. As such, it may be a good idea to keep social welfare spending elevated for longer.