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PM wants cut in subsidies

New reforms agenda to reduce subsidies and increase funding for education,health and infrastructure sectors would soon be on the government’s table.

delhi Updated: Mar 23, 2010 23:56 IST
Chetan Chauhan

New reforms agenda to reduce subsidies and increase funding for education, health and infrastructure sectors would soon be on the government’s table.

It could mean higher prices for food, fertiliser and petroleum products.

Prime Minister Manmohan Singh on Tuesday asked the Planning Commission on Tuesday to submit specific policy recommendations on reducing subsidies on fertiliser, food and railway passenger tariff that would cost government around Rs 1,15,000 crore in 2010-11 and for achieving nine pc economic growth by 2011-12.

“Subsidies cannot be open ended to benefit black marketers,” panel’s Deputy chairperson Montek Singh Ahluwalia said and added it should be controlled at providing the intended beneficiaries.

It could mean the panel asking the government for higher passenger tariff in railways, where annual subsidy burden is Rs 19,000 crore, linking increase in fertiliser prices with that of the minimum support price for 35 food grains such as wheat and rice, de-controlling petroleum prices as they are fundamentally unviable.

Ahluwalia said the money saved from subsidies could be invested for opening new “schools and hospitals”, which had received less funds as projected in the plan. “Time is right for higher public expenditure in these crucial social sectors”.

The panel suggested 100 specific policy recommendations in its mid-term review of the 11th plan discussed by PM with key Cabinet ministers at a full Planning Commission meeting. In his concluding remarks, PM Singh wanted them to be brought for the Cabinet’s consideration to incorporate policy corrections in the remaining two years of the plan.

The PM expressed hope that India can return to nine pc growth trajectory by 2011-12 and the plan should aim at 9-10 pc target for the 12th plan.

With the West showing very little signs of coming out of recession, Singh said the exports are likely to grow “more slowly” than they did before the crises. “We need another source of demand…that can ideally come from expansion in
investment in infrastructure”.

Except telecom, no other infrastructure sector would be able to meet the 11th plan targets. PM asked the plan to prepare a blueprint for fast-track clearance for investment and quarterly monitoring of infrastructure targets. The PM was hopeful that agriculture growth could be close to four pc in the remaining two years of the plan, if plans for expanding irrigation and rural infrastructure are properly implemented. He asked the commission to come up with a paper in Integrated Water Policy.