The Finance Ministry’s report on Central Government Subsidies in India tabled in Parliament on Thursday detailed yet another road map for cutting subsidies, which stand at a whopping Rs 1,16,000 crore.The suggestions are not new but if the government can find the will to implement it, it could be the first step. The report has suggested cutting subsidies on fertilisers and LPG to begin with and then target cutting food subsidies. On kerosene, the report is still uncertain whether it is time yet to cut subsidies.The report, tabled by Finance Minister P. Chidambaram, states reforms should aim at eliminating non-merit subsidies and introducing a uniform price policy with a system of food coupons for families living below the poverty line (BPL). It said the present system of dual pricing under the Public Distribution System (PDS) encouraged leakages. A first has already been made on an experimental basis of distributing food stamps in three districts in the country as envisaged in the Budget earlier this year.But if you thought that subsidies would comprise mainly social heads, the report shows that the relative share of social services in subsidies, which was 19.36 per cent in 2002-03, fell to 18.56 per cent by 2003-04. The share of economic services like subsidies for industry and minerals, energy, agriculture and irrigation accounted for 80.64 per cent in 2002-03 rising to 81.44 per cent in the following year.The report stresses the need for fertiliser subsidy in its present form be done away with, urea imports should be decanalised, flat-rate subsidy system be introduced and a mechanism to increase farm-gate price of urea at regular intervals be considered.The report also states that domestic LPG and PDS kerosene subsidies seem to be ineffective in serving the desired objective and hence suggests that domestic LPG subsidy may be gradually reduced and a cautious approach pursued in the reduction of kerosene subsidies. What the report says
