PMEAC suggests government to dismantle farm subsidies without causing disarray

NEW DELHI: Stating agriculture subsidies are losing their relevance and becoming unbearable fiscal burden, Prime Minister's Economic Advisory Council (PMEAC) today suggested the government make a determined move to dismantle the system without causing disarray.

"A determined move needs to be made to dismantle the subsidy regime in agriculture. It should be recognised, however, that the system has become addicted to subsidies and therefore, actions in this regard should be a retreat without disarray," said ' The Economic Outlook for 2012-13' brought out by the PMAEC, headed by C Rangarajan.

"These subsidies are progressively losing their relevance and are becoming an unbearable fiscal burden. Their role in contribution to productivity enhancement is fast disappearing." the report said.

As a vehicle for increasing income of the producers, subsidies have proved to be an inefficient and inequitable instrument, it said.

As a result, the PMEAC stressed that "a beginning can be made in dismantling fertiliser subsidy".

The panel observed that the issue has been complicated and that fertiliser production in the country was not based on the comparative advantages.

Among various suggestions for reforming fertiliser sector, those offered by the Expenditure Reforms Commission and reiterated by the PMEAC need to be examined for implementation, it added.

Of Rs 65,592 crore budget estimates for fertiliser subsidies during the current fiscal, about Rs 35,000 crore have already been disbursed.