No question of cutting down subsidies meant for poor says Chidambaram
Parliamentary Consultative Committee of Finance Ministry meets
The Parliamentary Consultative Committee attached to Finance Ministry in its meeting held here today, urged the Government to ensure that the subsidies provided in the Union Budget are effectively and efficiently targetted so that the benefits ultimately reach the people for whom it is intended. Almost all the members of the Committee voiced their concern about the state of the delivery mechanism which they said should be revamped and improved. The members complimented the Finance Minister on adhering to the commitment made in the Common Minimum Programme and in the Budget Speech by tabling the paper on subsidies in the Parliament in December, 2004 thereby throwing open the issue for a wider public debate. They praised the comprehensive and useful background note on the subject.
Initiating the discussions, the Finance Minister Shri P. Chidambaram said that providing minimum consumption entitlements to the poor by subsidising the essential items consumed by them is an extremely important welfare dimension of government expenditure. Subsidies can correct for the under-consumption of goods with positive externalities. He reiterated that Government is committed to fulfilling its responsibility towards the welfare of the poor and the downtrodden. There is absolutely no question of diluting this responsibility and cutting down the subsidies intended for the poor. The efforts of the Government are directed towards ensuring that the benefits of subsidies are maximised by making them transparent, well designed and targeted, he added.
Shri Chidambaram said that National Common Minimum Programme of the Government makes a commitment to target Government subsidies at the poor and the truly needy like small and marginal farmers, farm labour and urban poor. In pursuance of this, the Ministry of Finance commissioned a study by the National Institute of Public Finance and Policy, New Delhi. Based on this study, a report outlining some policy issues was presented to Parliament on December 23, 2004 for generating an informed debate on the subject, he said.
There were wide ranging discussions especially on subsidies for food, fertilizers and petroleum products. Members advanced many suggestions like effective identification of BPL families, reduction in costs of production, storage and distribution, introduction of food coupons, conversion of fertilizer 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 fertilizer subsidy cultivator oriented, inclusion of more backward areas for subsidy eligibility etc.
Concluding the discussion, the Finance Minister emphasised that the best way to ensure the benefits of the subsidy reach the intended beneficiaries is to pay out the subsidy at the retail point to the ultimate beneficiary. He shared the view of many members that there are some shortcomings in the procurement, storage and distribution of food-grains and underlined the need for eliminating the inefficiency and wastage at all levels of the Public Distribution System.
Among the members who attended the meeting include S/Shri R. Prabhu, K.V. Thangka Balu, Prahlad Joshi, Vijaya Kumar Khandelwal, M. Ramadass, D.K. Adikesavulu, Tarit Baran Topdar of Lok Sabha and S/Shri Ashwani Kumar, Gireesh Kumar Sanghi, M. Rajasekara Murthy, B.J. Panda, S.M. Laljan Basha, Lalit Suri, Amar Singh and Dinesh Trivedi of Rajya Sabha. Minister of State for Finance, Shri S.S. Palanimanickam and senior officials from the Finance Ministry were also present at the meeting.
BSC/BY/DN-38/5
(Release ID :6977)