Chidambaram rules out cut in subsidies for poor

NEW DELHI: Finance minister P Chidambaram on Tuesday said there was no possibility of the government cutting any subsidies intended for the poor. “There is absolutely no question of diluting this responsibility of the government,� he said.

The FM added that he is working to ensure that the benefits of subsidies are maximised by making them transparent, well designed and targeted at the rural poor. His comments come just a couple of weeks ahead of the presentation of the Budget. The subsidy bill, projected at Rs 43,516 crore in Budget ’04-05, has been a major stumbling blocks for the government in clipping expenditure.

Addressing the meeting of the consultative committee of the finance ministry, Mr Chidambaram said that the best way to ensure that the subsidy reached the intended beneficiaries is to pay it out at the retail point.

The FM also said the government is working to eliminate inefficiency and wastage at all levels of the Public Distribution System. He agreed that there are some shortcomings in the procurement, storage and distribution of foodgrains. He said subsidies provide the minimum consumption entitlements to the poor, which is an extremely important welfare dimension of government expenditure. Referring to a paper on subsidies prepared by the National Institute of Public Finance and Policy, he said the government is examining it.

The members of Parliament asked the Centr to ensure that the subsidies provided in the Budget are effectively targeted. Almost all the members of the Committee voiced their concern about the state of the delivery mechanism.

The members also discussed the position on subsidies for food, fertilisers and petroleum products. Members advanced many suggestions, like effective identification of below poverty line (BPL) families, reduction in costs of production, storage and distribution, introduction of food coupons, conversion of fertiliser plants into gas-based plants, phasing out of non-merit subsidies, separate rates for commercial and domestic use of LPG, incentive subsidy for employment oriented production techniques, making fertiliser subsidies cultivator-oriented and inclusion of more backward areas for subsidy eligibility.