(a) Whether Government have set up any criterion and institutional mechanism to identify the priority sections eligible for subsidies;
(b) If so, the details thereof;
(c) Whether the benefits of subsidies have gone to
non-priority sections;
(d) If so, the extra expenditure incurred on that
account;
(e) Whether Government proposes to rationalise the subsidy regime to reduce the subsidy bill; and
(f) If so, the main elements thereof?
MINISTER OF STATE IN THE MINISTRY OF FINANCE (SHRI PAWAN KUMAR BANSAL)
(a) & (b): The National Common Minimum Programme (NCMP)
mandates the Government to target all subsidies to the
poor and truly needy sections of the society. In pursuance
of this mandate, Government has submitted a report on
subsidies to the Parliament. This Report was discussed in
a meeting of the Consultative Committee of the Ministry
of Finance on February 8, 2005. Based on wider discussions
with stakeholders and after due consultations, a policy
on targeting subsidies, mainly explicit subsides on food,
fertiliser and petroleum, would be evolved.
(c ) & (d): While food subsidies are designed to be targeted
to people below the poverty line, the other two subsidies,
namely, fertiliser and petroleum are universal subsidies
available to all consumers. Many reviews and evaluation
studies have pointed out that even in the case of food
subsidies, benefits have accrued to the non-needy sections
as well, apart from illegal diversion of food grains to the
market. Government has not quantified the extra expenditure
on account of such diversion as much of these are clandestine
activities and any estimate would be somewhat subjective.
(e) & (f): Providing minimum consumption entitlements to the
poor by subsidizing the essential items consumed by them is an
extremely important welfare dimension. Subsidies can correct
the underconsumption of goods with positive externalities.
While the Government is committed to fulfilling its welfare
obligation, the present efforts are directed at ensuring that
the benefits of subsidies are maximized by making them
transparent, well-designed and targeted.