Bimal Jalan, former RBI Governor, will head Expenditure Management Commission which will suggest ways to reduce food, fertiliser and oil subsidies to contain the fiscal deficit.
"Terms for reference would be shortly issued," Jalan told PTI.
The EMC is being set up following the announcement made by Finance Minister Arun Jaitley in the Budget 2014-15.
"The Government will constitute an Expenditure Management Commission, which will look into various aspects of expenditure reforms to be undertaken by the Government," Jaitley had announced in the Budget.
There is a need to review the allocative and operational efficiencies of the government expenditure to achieve maximum output, he had said.
"I also propose to overhaul the subsidy regime, including food and petroleum subsidies, and make it more targeted while providing full protection to the marginalised, poor and SC/STs. A new urea policy would also be formulated," Jaitley had said.
The subsidy bill on food, petroleum and fertilisers is estimated at Rs 2,51,397.25 crore for 2014-15, up 2.47 per cent over the previous fiscal. It was Rs 2,45,451.50 crore in the revised estimates for 2013-14.
The higher subsidy bill in 2014-15 is on account of increased allocation for fertiliser sector. The government has pegged total fertiliser subsidy higher at Rs 72,970.30 crore for full fiscal than Rs 67,970 crore proposed in the interim budget.
Subsidy for imported urea is pegged at Rs 12,300 crore, domestic urea is Rs 36,000 crore and sale of de-controlled fertilisers (like phosphatic & potassic fertilisers) is Rs 24,670.30 crore.
For food subsidy, the government has allocated Rs 1,15,000 crore, which include a provision of Rs 88,500 crore for implementation of National Food Security Act.
