'Subsidies to stay for poor'

Finance Minister P Chidambaram today said there would be no dilution of subisides for the poor and that the government was making efforts to ensure that benefits of subsidies were maximised by making them transparent, well designed and targeted.

"Government is committed to fulfilling its responsibility towards the welfare of the poor and the downtrodden. There is absolutely no question of diluting this responsibility and cutting down the subsidies intended for the poor," Chidambaram told the Parliamentary Consultative Committee.

Stating that subsidies can correct for the under-consumption of goods with positive externalities, the Finance Minister emphasised that the best way to ensure that the benefits of the subsidy reach the intended beneficiaries is to pay out the subsidy at the retail point to the ultimate beneficiary.

He shared the view of many members that there are some shortcomings in the procurement, storage and distribution of food-grains and underlined the need for eliminating the inefficiency and wastage at all levels of the Public Distribution System, an official release said.

Chidambaram said that providing minimum consumption entitlements to the poor by subsidising the essential items consumed by them is an important welfare dimension of government expenditure.

He reiterated that the National Common Minimum Programme makes a commitment to target Government subsidies at the poor and the truly needy like small and marginal farmers, farm labour and urban poor.

Nearly all the members of the Committee voiced their concern about the state of the delivery mechanism which they said should be revamped and improved.

Several suggestions including effective identification of BPL families, reduction in costs of production, introduction of food coupons, conversion of fertilizer plants into gas based plants, phasing out of non-merit subsidies, separate rates for commercial and domestic use of LPG, incentive subsidy for employment oriented production techniques, making fertilizer subsidy cultivator oriented, inclusion of more backward areas for subsidy eligibility were made during the meeting.