Direct transfers to slash subsidies by up to 60%: FM
“I have drawn the red lines. The red lines are that the fiscal deficit for the current year will be no more than 5.3% (of the GDP) and the fiscal deficit for the next year will be no more than 4.8%. That’s a red line and I will not breach that red line,” he said in an interview to Financial Times.
Asked whether the government would be strong enough to cut fuel subsidies, he said he would not make any “declarations from the pulpit”. The government has already corrected diesel prices and allowed oil companies to make small corrections periodically over a period of time.
Maintaining that the government has to still correct about Rs 10 a litre on diesel, Chidambaram said a beginning has been made this month and the government should be judged by the steps it took.
Asked whether the government would like to abandon fuel subsidies as a long-term goal, he said not all subsidies can be abandoned. Citing the example of kerosene, Chidambaram said if the subsidy on it is removed completely, it would make the fuel unaffordable to the rural poor and they would demand wood for cooking purpose that could lead to destruction of forest.
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