The subsidy bill is expected to be below 2 per cent of GDP in the current fiscal due to fall in global crude oil prices, the Economic Survey said today.
It also asked for rationalisation of subsidies, saying that it will play a vital role in fiscal consolidation.
The deregulation of petrol and diesel prices and direct benefit transfer of subsidy for domestic LPG, along with a decline in global crude oil prices, helped contain the petroleum subsidy bill to Rs 30,000 crore in BE 2015-16 as against Rs 57,769 crore in 2014-15.
"The 1.7 per cent decline in major subsidies was due to a near 44.7 per cent decline in petroleum subsidy (April- December) that occurred due to a steep decline in international crude oil prices," the survey said.
However, the other major subsidies - food and fertiliser - increased by 10.4 per cent and 13.7 per cent respectively during the same period.
The subsidy bill BE 2015-16 was placed at Rs 2.44 lakh crore or 1.7 per cent of GDP.
"The total subsidy bill as a proportion of GDP has been declining since 2012-13 and is expected to be below 2 per cent of GDP as per BE 2015-16," the survey said.
The rationalisation and re-prioritisation of subsidies through better targeting would play a vital role in fiscal consolidation and in targeting expenditure more towards inclusive development, it added.
Pitching for direct transfer of subsidies to beneficiaries, the survey said the provision of subsidies to the poor has large welfare dimensions, but fiscal prudence considerations required to containing subsidies to sustainable levels.
"These seemingly conflicting objectives can be reconciled by making subsidies transparent, efficient and targeted through initiatives like direct benefits transfer wherever feasible," it added.
