Outlining its intention of cutting down the ballooning subsidy bill and bringing it under 2 per cent of the GDP in 2012-13, the government on Friday pegged the food, fuel and fertilizer subsidies at over Rs. 1.79 lakh crore, nearly 14 per cent lower than the revised estimates for the current fiscal.
The government has proposed that the subsidy on LPG cylinders and kerosene be directly reimbursed into the bank account of the beneficiaries to improve customer service and plug leakage. A pilot project for direct transfer of LPG subsidy into the bank accounts of the beneficiaries is now being run in Mysore. A similar pilot project for kerosene subsidy has been initiated in Alwar district of Rajasthan. The Aadhaar platform has also been successfully used to validate PDS ration cards in Jharkhand. Such a scheme is likely to be rolled out in 50 districts of the country in the next six months.
According to the budget proposals, the government's subsidy bill on food, petroleum and fertilizers is estimated at Rs 1,79,554 crore for the 2012-13 fiscal as against Rs. 2,08,503 crore in the revised estimates for this fiscal. Of this, Rs. 75,000 crore has been provided for food, Rs. 61,000 crore for fertilizer and around Rs. 40,000 crore for petroleum subsidy.
Interestingly, the revised estimate for this fiscal is higher by 55 per cent than the budget estimate of nearly Rs. 1,34,211 crore. The oil subsidy, which is given to state-run marketing firms such as Indian Oil Corporation, BPCL and HPCL for selling diesel, LPG to households and kerosene through the PDS, below cost, is estimated at Rs. 43,580 crore in 2012-13, lower than Rs. 68,481 crore this fiscal.
The government's food subsidy given to run the PDS is estimated to marginally rise to Rs. 75,000 crore in the next fiscal from Rs. 72,823 crore in 2011-12. The fertilizer subsidy is also pegged lower at Rs. 60,974 crore in the next fiscal, as against Rs. 67,199 crore in the current fiscal. Under the fertilizer subsidy, the government will provide Rs. 13,398 crore for imported urea, Rs. 19,000 crore for indigenous (urea) fertilizers, and Rs. 28,576 crore for sale of decontrolled fertilizers at a subsidised rate to farmers.