Context:
The government will for the first time use some of the money in its Oil Industry Development Fund (OIDF) for conducting partial financing of its fertilizer subsidy program for FY 2025-26, official sources said. This is a novel way of using reserve funds that can provide critical sectoral support.
Key Highlights:
Use of Reserve Funds for Fiscal Management
- The Finance Ministry has provided ₹23,000 crore in the FY26 Budget as net additional resources from reserve funds, which include: OIDF (Oil Industry Development Fund) Agriculture Infrastructure and Development Fund Universal Service Obligation Fund.
- This approach aims to maintain fiscal transparency while marginally reducing the fiscal deficit by leveraging available reserves.
Legality & Strategic Utilization of OIDF
- The Oil Industry Development Act allows OIDF funds to be used for fertilizer subsidies, but this has not been previously exercised for such purposes.
- The fund is still fungible, according to an official, but is now being strategically targeted for fertilizer subsidy support.
Fiscal Impact & Policy Justification
- The FY26 Budget stresses reserve utilization as yet another wise fiscal management procedure to create more fiscal transparency at accounting levels, while ensuring an optimal use of funds.
- Oil cess revenues are sent to the OIDF, thus becoming one of the potential sources of funding strategic national initiatives.
