Panel for rationalising food subsidy

Panel for rationalising food subsidy
ENS ECONOMIC BUREAU

New Delhi, July 10: The Expenditure Reforms Commission (ERC) has submitted its first report to the Finance Minister Yashwant Sinha suggesting rationalisation of food subsidy.

Talking to newsmen soon after handing over the report to the Finance Minister on Monday, chairman of the commission K P Geethakrishnan said that the report dealt with the issues concerning food ministry.

Geethakrishnana said that, "we have not gone into numbers" but suggested a broad approach to the whole issue of food subsidy which account for more than one per cent of the gross domestic product (GDP).

The government, it may be mentioned, has been trying to rationalise the food subsidy over the years. In his last budget, Finance Minister Yashwant Sinha linked the price of foodgrains under the PDS and TPDS schemes with the economic cost.

The first report of the Expenditure Reforms Commission is believed to have made a case of direct subsidy to the poor, removal of income tax payee from the list of beneficiaries and strengthening efforts to plug the leakage at various points.

Geethakrishnan also told the reporters that the next report, to be presented some time towards the end of the month, would deal with fertiliser subsidy and downsizing of three to five ministries. Fertiliser subsidy also accounts for one per cent of GDP. Both merit and non-merit subsidies together accounted for nearly 14 per cent of GDP resulting in a drain of government resources.

He further said that the contents of the first report would be made public in 10 to 15 days after the finance ministry examines it. The report would also be put on the Commission's website for public debate.

The Expenditure Reforms Commission was constituted in February to find solution to the process of downsizing of government in a systematic way so that its role and administrative structure was reduced.

Geethakrishnan said though the Commission is required to submit its final report within a period of one year, to facilitate quick decision-making, it was directed to send recommendations to the government on a quarterly basis.

He declined to say if downsizing of information and broadcasting ministry would be contained in the next report. "All I could say is it would deal with fertiliser subsidy and downsizing three or five ministries," he added.

Contrary to expectations, the first report did not deal with downsizing of the government. In all, the Commission has been mandated to study the possibility of downsizing 15 to 20 ministries. "We are interacting with the various ministries to study this aspect," he told reporters.