FM rules out reduction in food & fertiliser subsidies

NEW DELHI: Finance minister P Chidambaram has said that the government has no intention to reduce food and fertiliser subsidies. “There is no question of whittling down food and fertiliser subsidies,” he told Lok Sabha during the debate on the first batch of supplementary demand for grants on Friday.

The minister’s statement is significant as the current batch of supplementary demands has provided for an additional fertiliser subsidy of Rs 2,100 crore, a Rs 14,150 crore of oil bonds to compensate for subsidies on LPG and kerosene , and the Rs 16,200 crore subsidy for the food sector.

The fertiliser subsidy will involve a net cash outlay of Rs 1,500 crore. Of the total subsidy tab, Rs 1,500 crore is meant for subsidy on imported urea and another Rs 600 crore for subsidy on imported decontrolled fertilisers.

Mr Chidambaram pointed out that in the Budget for 2006-07, the subsidy allocation for the the fertiliser sector was Rs 17,385 crore. “If more money is required for subsidy, the government will certainly come back to the House,” he said.

The demand for grants for an additional expenditure of Rs 47,868.97 crore, that was passed by the House, also includes Rs 16,200 crore towards issue of special securities to the Food Corporation of India.

The amount will be used to clear the outstanding dues, against the release of foodgrains for two centrally sponsored anti-poverty programmes. The net cash outgo for the government in the current batch will be Rs 8,667.95 crore.

For the petroleum sector, Lok Sabha cleared the issue of Rs 14,150 crore worth of oil bonds for the oil marketing companies. The bonds will compensate them for “under recovery in 2006-07 on account of domestic LPG and PDS kerosene”. But it will not involve any additional cash outgo.

On farm credit, he said the UPA government had surpassed the target of doubling agricultural credit. In 2005-06, farm credit was about Rs 1,67,000 crore as against the target of about Rs 1,40,000 crore. This year the target has been fixed at Rs 1,75,000 crore, but the government would far exceed the target and it may touch Rs 2,00,000 crore, he said.

Regarding cheap imports of pepper from Sri Lanka, the finance minister said the commerce ministry was examining the issue, but felt the quantity or value of imports was not very large, to make it a serious concern.