The Economic Survey presented in the Parliament on Thursday prescribed reform in oil, food and fertiliser subsidies and asked the government to review the possibility of direct cash transfer to the targeted group, rather than the indirect transfer that is the current norm.
The Survey said the government should reform petroleum, fertiliser and food subsidies to reduce leakages and ensure targeting in order to provide benefit to the needy. ?Limit LPG subsidy to a maximum of 6-8 cylinders per annum per household. Phase out kerosene-supply subsidy by ensuring that every rural household has a solar cooker and solar lantern,? the survey stated.
As regard fertiliser subsidy, it said it should be converted from a part-producer subsidy to wholly farmer-user nutrient related subsidy. In the fiscal 2008-09, the food subsidy bill alone of the government swelled by 40% because of higher cost of procurement and stable central issue price.
In case of fertilisers, at present the government fixes the minimum retail price of major fertilizers, while giving subsidy to producers for making up the loss due to high cost of production.