Food Ministry against Kelkar panel’s recommendation to prune the Subsidy Bill

NEW DELHI: The Union food ministry has indicated that it will oppose Kelkar Commission’s recommendation to prune the subsidy bill. Ministry sources said it will soon convey its opposition to the report to the finance ministry.

The Kelkar report, which painted a grim picture on the fiscal front, has said unless immediate correctives — such as a drastic cut in the subsidy bill — are effected, the fiscal deficit would mount to an unmanageable 6.1 per cent of GDP in 2012-13.

It has also argued for a phased implementation of the food guarantee scheme as it is the only way to contain the large fiscal deficit bill.

But the ministry sources said Congress leadership was keen on an early rollout of the scheme. It considers the scheme critical for improving its image, which has taken a beating following the failure to contain prices and breakout of financial scandals. The food ministry, however, is of the view that a hard fiscal view cannot be taken on issues that concern the poor. The ministry’s opposition had recently forced the government to abandon a move to hike the price of PDS sugar for BPL families from Rs 13.50 to Rs 24.

The price of Rs 13.50 per kg of sugar was fixed 10 years ago.

Food minister KV Thomas, it be recalled, had come out against the cap of six LPG cylinders. In a letter to the prime minister, Thomas had sought hiking of the cap.

There appears to be larger support for the ministry’s opposition to pruning the food subsidy bill. Arvind Mayaram, secretary in the department of economic affairs, had said the proposal was unacceptable.

"The government is of the view that in a developing country where a significant proportion of the population is poor, a certain level of subsidies is necessary and unavoidable, and measures must be taken to protect the poor and vulnerable sections of the society," Mayaram had said.