Budget 2012: Pranab Mukherjee 'losing sleep' over rising subsidy burden

NEW DELHI: Pranab Mukherjee has said he is losing sleep over the government's ballooning subsidy bill, a rare expression of candour on a sensitive economic subject from an otherwise restrained finance minister triggering talk the upcoming budget could be harsh on subsidies.

"As the finance minister when I think of enormity of the subsidies to be provided, I lose my sleep. There is no doubt," Mukherjee said on Wednesday in his address to a conference on Public Distribution System and Storage.

The underlying message in his comment was clear. "He is becoming more candid and is kind of preparing the ground that nothing dramatic (in the form of giveaways) should be expected from the budget," said Sunil Sinha, senior economist with CRISIL.

It was Mukherjee's second broad hint in recent weeks that the budget for 2012-13 on March 16 will be less about tax giveaways and more about fiscal consolidation, an area considered as a major blemish on his ministry's performance and about which it has been facing much criticism.

On Monday, Mukherjee told a gathering in Kolkata that industry needs to brace for higher taxes, which has been interpreted to mean that the government could roll back remnants of the 2008-09 fiscal stimulus by raising excise duty and service taxes.

The government is in a tight fiscal spot, with subsidies overshooting target, tax collections undershooting it and with little to show from other revenue sources.

In the winter session of Parliament that ended in December, Mukherjee had said he expected the subsidy bill, pegged at 1.4 lakh crore in the budget, to overshoot the target by 1 lakh crore.