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Govt looking to rejig subsidies

The government is looking to rejig its subsidy mechanism with a view to achieving a high growth rate on a sustainable basis while bringing down the fiscal deficit, Cabinet Secretary K.M. Chandrasekhar said on Tuesday. HT reports.

business Updated: Jul 21, 2010 00:58 IST
HT Correspondent

The government is looking to rejig its subsidy mechanism with a view to achieving a high growth rate on a sustainable basis while bringing down the fiscal deficit, Cabinet Secretary K.M. Chandrasekhar said on Tuesday.

"We are looking at subsidies, how the subsidy system can be re-jigged to ensure it reaches the poorest of the poor on one hand, and at the same time it incentivises production," he said at a Confederation of Indian Industry (CII) function.

The economy is set to register a growth rate of 8.5 per cent in the current fiscal, he said, adding, a good monsoon would help in easing prices and the double-digit inflation would ease in the next few months.

"With a good monsoon and good crop, inflation will certainly fall. Experts are saying that inflation will be 5-6 per cent by year end, I don't have any reason to disbelieve it," he said.

He said though the Reserve Bank of India could take further monetary steps to address the issue, no measure on the fiscal side is likely to be taken.

He said that tax and financial sector reforms would be critical in achieving a double-digit growth. "We need to look into deepening the bond market."

Chandrasekhar has also said that the fiscal deficit could drop below the budget estimate of 5.5 per cent because of high non-tax revenue receipts.