Q."As per the Economic Survey of India 2022 – 23, due to the outbreak of geopolitical conflict, the result was higher international prices for fertilizer and fuel. Thus, there was a higher fuel and fertilizer subsidy requirement for supporting the people." On the basis of given text, identify and explain the indicated objective of the government budget.

The text indicates that the government increased fuel and fertilizer subsidies in response to rising international prices caused by geopolitical conflict. This points to the redistribution of income and wealth as the objective of the government budget.

When global prices of essential commodities like fuel and fertilizer surge, the burden falls disproportionately on lower-income households and farmers who spend a larger share of their income on these necessities. By raising subsidy allocations, the government absorbs part of the price shock, effectively transferring purchasing power to vulnerable sections of society. This prevents a sharp decline in their real income and maintains their access to basic goods. …

The Economic Stability Objective

A government budget serves multiple objectives: resource allocation, income redistribution, and economic stability. The passage points directly to the third. When geopolitical conflict (the Russia-Ukraine war in 2022) disrupted global supply chains, crude oil and fertilizer prices spiked on international markets. India, a net importer of both, faced the prospect of these cost increases cascading through the domestic economy — higher transport costs, more expensive agricultural inputs, and ultimately inflation that would erode real incomes, especially for farmers and low-income households.

Rather than allowing market forces to pass the full burden onto consumers, the government expanded its subsidy outlay. Fuel subsidies kept diesel and LPG prices from rising as sharply as world prices would dictate; fertilizer subsidies ensured that farmers could still afford urea and DAP without a crippling jump in input costs. This is counter-cyclical fiscal intervention: the budget absorbs the external shock so that domestic demand, agricultural production, and household consumption remain stable.

Why This Reflects Economic Stability

Economic stability as a budget objective means smoothing fluctuations in output, employment, and prices. In this case:

• Price stability: By subsidizing fuel and fertilizer, the government prevented a sharper spike in the Consumer Price Index. Fuel feeds into transport and manufacturing costs across sectors; fertilizer directly affects food production costs. Unchecked, these would have amplified inflation.

• Income protection: Farmers operate on thin margins; a sudden doubling of fertilizer prices could have forced them to cut input use, reducing crop yields and farm incomes. Subsidies maintained their real purchasing power.

• Aggregate demand: If households had to spend much more on cooking gas and transport, they would cut discretionary spending elsewhere, dampening consumption demand. The subsidy cushioned this contraction.