India working to rejig its subsidy system: government

The government is reworking the subsidy regime to address the twin issues of meeting social obligation and lowering of fiscal deficit, Cabinet Secretary K.M. Chandrasekhar said on Tuesday.

The government is reworking the subsidy regime to address the twin issues of meeting social obligation and lowering of fiscal deficit, Cabinet Secretary K.M. Chandrasekhar said on Tuesday.

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"We are looking at subsidies, how the subsidy system can be rejigged to ensure it reaches the poorest of the poor on one hand and at the same time it incentivises production," Chandrasekhar said.

Chandrasekhar, however, ruled out freeing diesel, cooking gas prices from the government control in the immediate future on the lines of what it did for petrol.

"As of now there is no plan of decontrolling diesel or LPG prices. A call will be taken at the issue from time to time, but as of now we have no specific roadmap," he said.

The government last month freed petrol prices from government control and raised the prices of other fuels in a move to reduce its fuel subsidy burden, which along with that on food and fertiliser cost the exchequer a whooping $26 billion last fiscal.

Reforming taxation system, increasing agricultural growth, optimizing the use of fertilizer and water resources are some of the major challenges facing the country, Chandrasekhar said, adding that various expert bodies and committee of secretaries are looking into these.

Hoping that a good monsoon this year will cool the food prices, the cabinet secretary said, "We also have to target (streamline) public distribution system (PDS) and infrastructure development."

"Forty six percent of the total plan allocation this year is for infrastructure," he added.