Finance Minister Jaitley for Rationalising Subsidies
Mumbai: Finance Minister Arun Jaitley has said India's ballooning subsidy bill needs to be lowered by rationalising the dole-outs.
Stating the government should not be doling out pre-poll populist measures that increase the subsidy bill, Mr Jaitley on Saturday said, "If we waive off loans, empty the government treasury, and destroy economic discipline, then I feel this would not help the economy or the country."
Admitting that he too gets subsidies, he said, "But I firmly believe that I have no right to avail of those subsidies."
However, the minister, who was speaking at a BJP-organised event in the city, did not elaborate on the issue.
It can be noted that after touching a low of under 2.5 per cent of GDP in FY07, government borrowings have been on a continuous upward spiral. This pushed up the subsidy bill to over 2 per cent of GDP, as of FY14.
The subsidy bill, which began when the economy was clipping past 9 per cent, did not show a decline during the slowdown period.
The rising subsidy bill has pushed the fiscal deficit to 4.5 per cent in 2013-14 and this year, the government has pegged it at 4.1 per cent of GDP, or Rs 5.97 lakh crore in net market borrowing, which is more than Rs 34,000 crore during FY14.
However, after hitting 56.1 per cent of the full fiscal target in the first quarter, the government had said it would borrow Rs 16,000 crore less in the second quarter.
This is because its finances got an unexpected push from the Reserve Bank of India (RBI) which transferred a record over Rs 53,300 crore of its surplus to the government earlier this week.
Thereby the borrowing plan for first half has been reduced to Rs 3.52 lakh crore from Rs 3.68 lakh crore.
However, net the borrowing this fiscal year is expected to touch Rs 4.57 lakh crore, which will be around 3 per cent lower than last fiscal year.
During the last financial year, the government had borrowed Rs 5.63 lakh crore.