Don't cut food security subsidy: Montek

Last Updated: Sun, Mar 03, 2013 07:26 hrs

Food security subsidy should not be reduced even if the fiscal situation is not good, Planning Commission Deputy Chairman Montek Singh Ahluwalia has said.

He, however, added that this is his personal view and not the government policy.

"I would say food security should be the first charge on subsidy budget. And if it turns out that basically there is a fiscal problem and we can't afford subsidy, we should cut the other subsidy, not the food security subsidy. That will be my view," Ahluwalia told reporters in a post-budget interaction.

"In my view, I am not expressing government policy, but in my view, it is highly distortionary policy," he added.

He said fertiliser subsidy should be cut to half as it damages soil nutrition.

"We are subsidising chemical fertiliser, not subsidising organic fertiliser. Chemical fertiliser has damaged the nutrition of the soil. Within chemical fertiliser, we are over subsidising urea...If you ask me, we should cut the fertiliser subsidy to half of what it is," he said.

Favouring complete elimination of petrol subsidy, he said it is damaging and unjustified since petrol is normally consumed by upper-income people.

"Petroleum subsidy should just be eliminated soon of course. It's damaging, it's unjustified, it doesn't help the poor... Petrol is normally consumed by upper income people."

Ahluwalia also said domestic energy prices should be aligned with global prices.

The government has pegged the oil subsidy bill at Rs 43,580 crore, food subsidy at Rs 75,000 crore and fertiliser subsidy at Rs 60,974 crore, taking the total subsidy bill to 1,79,554 crore in 2012-13.

Finance Minister P Chidambaram in Budget for 2013-14, had proposed to reduce subsidies on fuel, food and fertilisers by 11% to over Rs 2.20 lakh crore compared with revised estimates for the current fiscal so as to bring down the burgeoning fiscal deficit.

Fiscal deficit for 2012-13 has been contained at 5.2%, a tad lower from government estimates of 5.3%.

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