Page 25 - Plastics News February 2022

FEATURE

Subsidy Levels Tapered, Starting With Food, Fuel, Fertilisers

he Budget projected the Centre’s Higher food and fertiliser subsidy levels India Ratings. According to the World
Ttotal subsidy bill for FY23 at Rs in FY21 and FY22 have been a departure Bank data, in December 2021, the
3.56 lakh crore, down 27.1 per cent from a trend of falling subsidies on both international price of urea had risen to
from Revised Estimates for the current food and fertilisers between FY16 and $890 per tonne, up from an average of
fiscal. The Centre has reduced its subsidy FY20. After the onset of the pandemic, $351 per tonne in the first quarter of the
budget for food, fertiliser and fuel in the government had announced 5 kg fiscal, while the price of di-ammonium
the upcoming fiscal by 26.6 per cent, of free grain per person a month, apart phosphate had risen to $745 per tonne
compared to the Revised Estimates for from the regular 5 kg quota of wheat or from an average price of $574 per tonne
this fiscal. Experts have noted that the rice at Rs 2 and Rs 3/kg, respectively. in the same period. Subsidy on fuels is
move signals a normalisation of subsidy The programme, which was initially restricted to Liquified Petroleum Gas
levels after two fiscals, which saw subsidy announced for the first quarter of FY21, (LPG) since the government ended the
bills soar as the government sought to has been extended till March 2022. subsidy on kerosene in the previous
dampen the impact of the pandemic D K Joshi, chief economist at CRISIL, budget. LPG subsidy for the current
by offering a free food programme and said the reduction in subsidies was part fiscal is estimated at Rs 6,517 crore
bore the brunt of higher international of a process of normalisation as the against a budget estimate of Rs 14,073
fertiliser prices.The Budget projected the pandemic winds down. Fertiliser subsidy crores. The projected subsidy is expected
Centre’s total subsidy bill for FY23 at Rs bill for this fiscal was about 76 per cent to fall further to Rs 5,813 crore for the
3.56 lakh crore, down 27.1 per cent from higher than Budget Estimates due to upcoming fiscal. Despite significant
Revised Estimates for the current fiscal. high international prices, according to increases in the price of LPG since
The food subsidy bill in the upcoming experts. “Fertiliser subsidy is to a large Q3FY20, the government has kept the
fiscal is projected to come down to Rs extent dependent on global prices of LPG subsidy only for consumers who
2.07 lakh crore from Rs 2.86 lakh crore fertilisers. This fiscal global prices were
and the fertiliser one is set to come down very high, that’s why there was a need would otherwise have to bear high
to Rs 1.05 lakh crore from Rs 1.40 lakh to increase fertiliser subsidy during the charges for the cost of transportation
crore in the current fiscal. year,” said D K Pant, chief economist at of LPG due to their homes.

Changes In Import Duty In Budget 2022

inance Minister Nirmala Sitharaman from China, either as complete units units spread across 10-12 districts with
Fhas introduced a slew of higher or as knocked down units which are Kerala being the major manufacturing
custom duties on items of daily use such then assembled in factories in India. state. The government seems to be
as umbrellas, headphones, earphones, For example, the customs duty on offering protection to such industries. It
loudspeakers, smart meters, and imitation umbrellas was doubled to 20 per cent, also falls in line with the other Budget
jewelry. Signalling a move to protect while exemptions provided on import announcement of popularising one
domestic industries which are not of parts of umbrellas were withdrawn. station-one product to popularise local
necessarily capital, technology or labour Similarly, the customs duty on single or businesses and supply chains. One
intensive, Finance Minister Nirmala multiple loudspeakers, whether or not station-one product as a concept aims to
Sitharaman on Tuesday introduced a mounted in their enclosures was hiked promote a local product from each stop
slew of higher custom duties on items of to 20 per cent from 15 per cent. Experts of the Indian Railways by making the
daily use such as umbrellas, headphones, said the hike in import duty for items, railway station of that area a promotional
earphones, loudspeakers, smart meters, such as umbrellas, are in line with the and sales hub for the product.
and imitation jewelry. increase in import duty on toys last year.
“The hike is being done for industries Which items will see the biggest
Who do the duty changes help and which manufacture items that do not change in their import duty struc-
what do they signify? deploy any major technology. Umbrellas, ture next fiscal?
Most of these products are imported for instance, are manufactured in small Apart from umbrellas, the customs duty

24 PLASTICS NEWS FEBRUARY 2022 25 PLASTICS NEWS FEBRUARY 2022