(Bloomberg) -- India will cut its spending on subsidizing food and fertilizers, signaling fading food-price inflation concerns will allow the government to focus on other priorities.

The nation will spend 1.97 trillion rupees ($24 billion) to subsidize food in the new fiscal year starting on April 1, compared with an estimated 2.87 trillion rupees this year, according to Finance Minister Nirmala Sitharaman’s budget presentation on Wednesday. The incentive on fertilizers will be reduced to 1.75 trillion rupees from 2.25 trillion. 

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The lower subsidy allocation will help India cut its budget deficit. The government’s spending on food, fertilizer and fuel is set to significantly exceed its budget estimate this year. However, the move could challenge efforts to rein in inflation. 

The government uses the fertilizer subsidy to reimburse companies for selling their products to farmers at below-market prices, while the food program ensures nutritional security for more than 800 million people. 

More from the budget: 

  • India sets farm credit target at 20 trillion rupees, with focus on animal husbandry, dairy and fisheries
  • The government will set up an Agriculture Accelerator Fund to encourage farm-related startups in rural areas
  • To boost productivity of extra-long staple cotton, the nation will facilitate collaboration between farmers, states and the industry for farm inputs, extension services, and market linkages
  • The government will invest 22 billion rupees on a clean plant program to boost availability of disease-free and high-quality planting materials for horticultural crops
  • To make India a global hub for millets, the Indian Institute of Millet Research will be supported for sharing best practices, research and technologies at the international level
  • The government will facilitate 10 million farmers to adopt natural farming over the next three years
  • Import duty on compounded rubber is increased to 25% from 10%

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