Government to Streamline Subsidies, Cheap LPG for Rich May Go: Finance Minister


arun jetli 3New Delhi: A reduction of the scope of subsidies currently being provided to well-off people appears to be on the anvil with Finance Minister Arun Jaitley questioning the justification of “unquantified” subsidy amounts to “unidentifiable” sections.

However, he maintained that some element of subsidy will have to remain for a large section who are entitled to it since the country has lot of poor people who need state support.

“Yesterday I had said why should people like you and me get an LPG subsidy and look at the kind of burden it is having on the budget. We have started living with the deficit budget. We just make sure that our fiscal deficit is not beyond a particular point,” he said at an interaction with PTI journalists at the agency’s headquarters here.

He said that some element of subsidy would always be required because there were lot of poor people who need support. “But then you cannot have such sections enjoying the benefit who are not entitled to,” he added.

Under the current dispensation, the minister said the government targets a specific number for deficit and in turn borrows from the market to fund current expenditure.

“You cannot have a subsidy, an unquantified amount given to an unidentified section of people. So subsidy must be a quantified amount given to an identifiable section. It cannot be made for unidentifiable section of people,” he said, adding that duplication of subsidy benefits results in losses to the exchequer to the tune of “thousands of crores”.

“We will leave the next generation in debt so that they (next generation) levy higher taxes to pay back the loan of subsidising me, when I am not entitled to the subsidy. So this kind of an economy will keep the country in a trap,” he said.

To bring these changes, Mr Jaitley said, “I am quite aware, that we will face resistance but at least I have started creating some opinion in their favour.”

After coming to power, the Narendra Modi-led government deregulated diesel prices and linked them to the market rate. Earlier, the government used to provide subsidy on diesel. Petrol prices were deregulated by the UPA government.

Currently, 12 LPG cylinders are available to consumers at the subsidised rate of Rs 414 each (in Delhi). Any requirement beyond this will have to be purchased at the market price of Rs 880 per 14.2-kg cylinder.

On whether the government is looking at doing away with the Public Distribution System, Mr Jaitley said the Expenditure Management Commission would suggest ways to streamline them.

Following the Budget announcement, the Finance Ministry set up the Expenditure Management Commission, headed by Bimal Jalan, to suggest ways to reduce food, fertiliser and oil subsidies and narrow the fiscal deficit.

In the current fiscal year, the deficit is expected to be 4.1 per cent of GDP, down from 4.5 per cent a year ago.