Finance Minister Arun Jaitley today held a meeting with secretaries and the CEA to discuss ways to streamline the Direct Benefit Transfer scheme for ensuring that only the needy get the subsidies.
The government transfers subsidy to LPG users as well as to beneficiaries of scholarships and pension schemes directly to their bank accounts under the DBT.
From April 1, kerosene subsidy too will be transferred directly to beneficiary accounts. DBT for kerosene will help curtail subsidy outgo for the cooking fuel which in 2014-15 was about Rs 24,799 crore.
"Today's meeting discussed social sector programme and the implementation of the DBT scheme. Some of the inputs will definitely be used to streamline and modify the DBT," an official said.
Held against the backdrop of preparation for the Budget 2016-17, the meeting was attended, among others, by Finance Secretary Ratan Watal, DEA Secretary Shaktikanta Das, Revenue Secretary Hasmukh Adhia and Chief Economic Advisor Arvind Subramanian.
They looked at ways to improve the JAM (JanDhan-Aadhar- Mobile) trinity which aims at using technology to promote social sector schemes.
"This will also help in reducing budget deficit and ensuring that public funds benefit only the poorer section," the official added.
The focus, the official said, is to remove the last mile bottlenecks with regard to implementation of the DBT scheme.
The meeting comes ahead of the Budget, to be unveiled by Jaitley on February 29.
Streamlining of DBT would help reduce government expenditure on subsidies and contain fiscal deficit without sacrificing the interest of poor, officials said.
The government is looking to bring down the fiscal deficit to 3.5 per cent of GDP in the next fiscal from 3.9 per cent estimated in 2014-15.
With regard to the conduct of monetary policy, Watal said,
transmission cannot be left entirely to the RBI.
"While this is important, equally important is the monetary policy transmission, which cannot be left entirely to the Central Bank. Our policy interventions can often interfere with the transmission of monetary policy actions," he said.
From April 1, a new system of marginal setting of lending rates are being followed.
"This cannot succeed unless we remove the marginal distortions that have crept into our system over the years. Our decision to rationalize small savings rates should be seen as a positive development in this light. Small savers and ordinary households are also needy creditors who deserve a better deal than they have been getting in the past," he said.
On the management of liquidity, the Secretary said having learnt from past experience, it has been better coordinated and more evenly spaced borrowing schedule over 2016-17.
"While the RBI has announced a number of path-breaking measures to systemically improve liquidity conditions in our markets, I must also mention to all of you that post October 2015, one important cause of tight liquidity was too much government securities simultaneously off-loaded by the State Governments to meet their normal borrowing requirements," he said.
On the fiscal front, he said there is need to stop looking at the Centre and the States separately.
"We need to take a national view of the problem, and start looking at the general government deficits and the impact they have on the savings-investment equilibrium in our economy, as also its internal and external balances."
To grow in a sustainable manner, he said, there is need to maintain a fine balance between crowding-in and crowding-out.
"Our experience since liberalisation has been that growth has accelerated whenever crowding-out of the private sector has been moderated with gradual fiscal consolidation at both the Central and the State levels," he said.
On the fiscal consolidation roadmap it was discussed that as advised by 14th Finance Commission for its award period that states remain in surplus and within a fiscal deficit target of 3-3.5 per cent.
Implications of the 7th Pay Commission and liquidity management were also discussed.
With regard to Goods and Services Tax (GST), IT preparedness of state tax authorities was discussed.
