Subsidies eating into growth, says PM

Prime Minister Manmohan Singh on Thursday called for an urgent need to address the problem of mounting subsidies in food, fertilisers and petroleum and asked his cabinet colleagues to reflect on the implications of the subsidy bill of over Rs 1 lakh crore being spent this year alone.

“I would like my cabinet colleagues and the Planning Commission to reflect what these mean for our development options and what development options these subsidies are shutting out. Do they mean fewer schools, fewer hospitals, fewer scholarships, slower public investment in agriculture and poorer infrastructure? It is important that we restructure subsidies so that only the really needy and the poor benefit from them and all leakages are plugged,” Singh said during his opening remarks at the full Planning Commission meeting here.

The meeting was convened to approve the 11th Five Year Plan (2007-2012).

The Prime Minister underlined the need for central focus on agriculture, given the importance of the rural population and felt India could come under food security stress in the next decade.

“Global trends in food production and prices, and our own patterns of consumption are going to put increasing pressure on both the availability and prices of basic food stuffs. If we have to manage these pressures, we need to ensure that the agriculture sector not only performs as per our expectations but also that our food planning adjusts to the emerging market realities,” he said.

He said the recently launched Rashtriya Krishi Vikas Yojana and the Food Security Mission were major initiatives that were attempting to change the approach to agricultural development.

Singh said by focusing on district-level planning and emphasising flexibility and local relevance, the government hoped to sustain the desired growth rate in agriculture and also ensure that it was regionally more balanced.

Singh said the farm sector, which grew by about 4 per cent in the last two years, is likely to remain at the same level in the current fiscal year. Of the total 11th Plan size (Rs 36,44,000 crore), the central gross budgetary support will be Rs 14,00,000 crore.