The government on Friday appeared to differ with the Kelkar Committee report on sharp reduction in subsidies on petroleum, food and fertiliser.
“Some recommendations appear contrary to the declared objective of the government of sustained and inclusive growth,” said secretary (department of economic affairs) Arvind Mayaram. He said 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 society”. “It is in this view that the government has reiterated its intention to implement the promise of food security for all,” he added.
The report had said policy objectives should be to eliminate half of the diesel per-unit-subsidy during this year itself, by March 31, 2013, and the remaining half over the next fiscal year. “Similarly, our policy goal should be to eliminate the LPG subsidy by 2014-15 by reducing it by 25 per cent this year, with the remaining 75 per cent reduction over the next two years. For kerosene, the objective should be to reduce the subsidy by one-third by 2014-15,” said the report.
The report also recommended that the Food Security Bill should be appropriately phased taking into account the present difficult fiscal challenges. The report warned that the fiscal deficit will shoot to 6.1 per cent against the Budget target of 5.1 per cent if immediate mid-year corrective actions are not taken.