India’s food subsidy expenditure for FY27 could reach over Rs 2.5 trillion, surpassing the Budget Estimate of Rs 2.28 trillion due to increased minimum support prices (MSPs) and stronger-than-expected crop procurement, according to media reports.
At the same time, the government is developing policies to increase budgetary restraint and boost the efficiency of distribution and procurement processes.
Subsidy spending rises in tandem with MSP. To maintain fiscal discipline, the government is attempting to implement a stricter framework, it stated.
The remarks are made at a time when there is already pressure on subsidy spending. The Centre said earlier this week that if the current West Asia crisis persists and keeps global energy prices high, the fertiliser subsidy expenditure might almost double to roughly Rs 3.4 trillion in FY27 from the Budget Estimate of Rs 1.7 trillion.
In contrast to the Budget Estimate of Rs 3.98 trillion, overall spending on food and fertiliser subsidies might reach approximately Rs 5.9 trillion in FY27 if both estimates come into effect.
According to the reports, wheat procurement is also expected to be higher than previously projected, possibly reaching 35 million tonnes in FY27 as opposed to an earlier forecast of 30 million tonnes.
In states where market prices dropped below the support price, MSP operations have supported higher procurement, in part because of bonus announcements made by state governments.
The government has increased the digitisation of procurement procedures in order to increase transparency and ensure that benefits reach legitimate farmers. Land records have been incorporated into the system to enhance verification, and farmers must now complete online registration prior to the start of procurement.
Earlier in January this year, the central government estimated a tentative fertiliser requirement of Rs 37,952 crore for the Rabi 2025-26 season, which is about Rs 736 crore higher than the outlay for the Kharif 2025 season, reflecting higher support for key soil nutrients amid volatile global prices.
To prevent these costs from being passed on to farmers, the government sharply enhanced subsidies under the Nutrient-Based Subsidy (NBS) scheme, especially for Di-Ammonium Phosphate (DAP), whose subsidy jumped to Rs 29,805 per tonne, up from Rs 21,911 in 2025.
