New Delhi: Energy subsidy should be eliminated and the total subsidy burden on the government should be brought down to 1.4 percent of the GDP, Planning Commission Deputy Chairman Montek Singh Ahluwalia said Friday.
"...Of all the subsidies, probably the food subsidy most people regard as the most justified. Issue is not food subsidy, issue is total subsidy. We are not asking for abolition of subsidy, we are saying you keep subsidy at 1.4 percent of GDP, just eliminate all energy subsidy," Ahulwalia said on the sidelines of a function here.
Diesel and kerosene prices are highly subsidised and are sold at sub-market prices in the country, adding to the government's mounting subsidy bill.
In order to check the increasing subsidy burden, the government had recently partially deregulated diesel prices allowed oil marketing companies to raise diesel prices in small measures periodically. It had also capped the number of subsidised cylinders in September, 2012.
The government had earlier enhanced the fiscal deficit target from 5.1 percent to 5.3 percent in view of higher expenditure for meeting additional outgo towards subsidies.
Aiming to bring down the fiscal deficit, Finance Minister P Chidambaram in Budget proposals had sought to reduce major subsidies on fuel, food and fertilisers by 11 percent to over Rs 2.20 lakh crore in 2013-14 fiscal compared to the revised estimates for the current fiscal.