Reform will help Finance Minister Arun Jaitley manage the fiscal deficit target
Unleashing will help finance minister Arun Jaitley to save up to Rs 50,000 crore
New Delhi: Pending the report of the Expenditure Management Commission headed by former Reserve Bank of India governor Bimal Jalan, the government is all set to unleash subsidy reforms in the coming 2015-16 Budget, which may allow finance minister Arun Jaitley to save upto Rs 50,000 crores in the next financial year, and also help him in managing the fiscal deficit target better.
Under the FRBM Act, the government has to keep the fiscal deficit target to 3.6 per cent of GDP in 2015-16.Government sources said the finance ministry, under the active supervision of the PMO, was working on a multi-pronged strategy to keep the subsidy burden under “a manageable level”, and this will be unveiled in next year’s Budget. A senior official claimed the Centre has identified “a few of the low-hanging fruit”, adding: “Petroleum products and fertilisers are the focus area of subsidy reforms, that the government wants to bring in from next year. The total annual subsidy burden on three petroleum products LPG, kerosene and diesel is Rs1,35,000 crores, and has been increasing every year. In case of fertilisers, the government has to shell out over Rs70,000 crores, and this also increases year after year.
“As part of subsidy reforms, the government got an opportunity on account of the dip in prices of crude oil in the international market, and thus decided to deregulate the price of diesel; now it is linked with market forces,” a source said. The source added that the process was on to put a cap on the subsidy outgo on LPG, which currently burdens the government with around Rs92,000 crores.
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