Amid fiscal reforms, government on Monday hiked the provision of subsidies by nearly 9 per cent to Rs 47,432 crore (Rs 474.32 b illion) in 2005-06 from the budgeted figure of 2004-05 as part of social welfare measures to provide cheaper food and fuel to the poor and fertilisers to farmers.

Despite the fiscal constraints, Finance Minister P Chidambaram decided to hike the subsidy bill for the next fiscal from the revised estimate of Rs 46,514 crore (Rs 465.14 billion) and the budget estimate of Rs 43,516 crore (Rs 435.16 billion) during 2004-05.

The food subsidy, largely aimed at providing foodgrains to people below poverty line at less than market price, alone accounts for Rs 26,200 crore (Rs 262 billion), more than 50 per cent of the subsidy bill proposed in the budget for 2005-06.

Food subsidy was budgeted at Rs 25,800 crore (Rs 258 billion) in 2004-05 and government expects to keep its spending within the target this fiscal.

Fertiliser subsidy is budgeted substantially higher at Rs 16,254 crore (Rs 162.54 billion) compared to budget estimate of Rs 12,662 crore (Rs 126.62 billion) of 2004-05 and revised estimate of Rs 15,662 crore (Rs 156.62 billion).

Petroleum subsidy has been hiked to Rs 3,644 crore (Rs 36.44 billion) next fiscal from the revised estimate of Rs 3,553 crore (Rs 35.53 billion) and the budget estimate of Rs 3,559 crore (Rs 35.59 billion) this fiscal.