PM worried at subsidy bill but mum on road map
Prime Minister Manmohan Singh on Thursday once again repeated what is well-known - that the government’s subsidy burden petroleum, food and fertiliser sectors is going to exceed Rs 1,00,000 crore this year - but without providing any road map to t...
By TNN |
NEW DELHI: Prime Minister Manmohan Singh on Thursday once again repeated what is well-known — that the government’s subsidy burden petroleum, food and fertiliser sectors is going to exceed Rs 1,00,000 crore this year — but without providing any road map to tackle the issue.
“We need to address the problem of mounting subsidies in food, fertilisers and now, in petroleum which is a recent phenomenon. Over Rs 1,00,000 crore are going to be spent this year alone on these three items,” Mr Singh said at the Full Planning Commission meeting to approve the draft 11th Five Year Plan.
While the government sells foodgrains and fertilisers way below cost price, it has also not allowed oil companies to raise fuel prices despite rising cost of production and has been compensating them for their losses through issue of oil bonds.
Although the regime has been maintaining that the beneficial potential of subsidies is at its best only when they are transparent, well-targeted and suitably designed for practical implementation, the government has so far not been able to make any meaningful step in containing the wasterful expenditure.
That the prime minister does not have much elbow room in addressing the issue was acknowledged by the prime minister when he as his Cabinet colleagues to reflect on the problems. “The Planning Commission and Cabinet colleagues should reflect what these mean for our development options and what development options these subsidies are shutting out.”
In his address, Mr Singh said such large outgo on subsidies mean “fewer schools, fewer hospitals, fewer scholarships, lower public investment in agriculture and poor infrastructure”. He said it was important to restructure subsidies so that only the needy and the poor benefit from them and all leakages are stopped.
But his own party does not have the stomach or stamina to address the issue is evident from the hurdles that it’s placing before the government’s efforts to pass on at least a part of the burden of petroleum subsidy to the consumer. At a press conference here last week, the Congress spokesman had said that the party was against any hike in the prices of petro goods. Indian Oil, Bharat Petroleum and Hindustan Petroleum are currently losing over Rs 240 crore per day on sale of petrol, diesel, domestic LPG and PDS kerosene. They make a loss of Rs 4.94 on sale of every litre of petrol, Rs 6.50 per litre on diesel, Rs 16.42 a litre on kerosene and Rs 207 per cylinder of LPG.
But these strong economic rationale for a cut in the subsidy will not impress the Congress, the components of the UPA or the Left parties. The Congress, which is swamped in election in Gujarat, is already displaying a marked rush to appease the “voter sentiment”. Given this context, the prime minister’s speech can be described as yet another feeble appeal from a quarter that just does not have the political clout to act.
“We need to address the problem of mounting subsidies in food, fertilisers and now, in petroleum which is a recent phenomenon. Over Rs 1,00,000 crore are going to be spent this year alone on these three items,” Mr Singh said at the Full Planning Commission meeting to approve the draft 11th Five Year Plan.
While the government sells foodgrains and fertilisers way below cost price, it has also not allowed oil companies to raise fuel prices despite rising cost of production and has been compensating them for their losses through issue of oil bonds.
Although the regime has been maintaining that the beneficial potential of subsidies is at its best only when they are transparent, well-targeted and suitably designed for practical implementation, the government has so far not been able to make any meaningful step in containing the wasterful expenditure.
That the prime minister does not have much elbow room in addressing the issue was acknowledged by the prime minister when he as his Cabinet colleagues to reflect on the problems. “The Planning Commission and Cabinet colleagues should reflect what these mean for our development options and what development options these subsidies are shutting out.”
In his address, Mr Singh said such large outgo on subsidies mean “fewer schools, fewer hospitals, fewer scholarships, lower public investment in agriculture and poor infrastructure”. He said it was important to restructure subsidies so that only the needy and the poor benefit from them and all leakages are stopped.
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But his own party does not have the stomach or stamina to address the issue is evident from the hurdles that it’s placing before the government’s efforts to pass on at least a part of the burden of petroleum subsidy to the consumer. At a press conference here last week, the Congress spokesman had said that the party was against any hike in the prices of petro goods. Indian Oil, Bharat Petroleum and Hindustan Petroleum are currently losing over Rs 240 crore per day on sale of petrol, diesel, domestic LPG and PDS kerosene. They make a loss of Rs 4.94 on sale of every litre of petrol, Rs 6.50 per litre on diesel, Rs 16.42 a litre on kerosene and Rs 207 per cylinder of LPG.
But these strong economic rationale for a cut in the subsidy will not impress the Congress, the components of the UPA or the Left parties. The Congress, which is swamped in election in Gujarat, is already displaying a marked rush to appease the “voter sentiment”. Given this context, the prime minister’s speech can be described as yet another feeble appeal from a quarter that just does not have the political clout to act.
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