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  3. CACP seeks direct cash transfer to rationalize food, fertiliser subsidies

CACP seeks direct cash transfer to rationalize food, fertiliser subsidies

03 Jan 2013 Evaluate

In order to trim down food and fertilizer subsidies, which could rise to Rs 200,000 crore next fiscal, the government's advisory body on farm prices Commission for Agriculture Costs and Prices (CACP) in its pre-budget consultations with Finance Minister P Chidambaram, has recommended direct cash transfer to beneficiaries in order to rationalize food and fertilizer subsidies. It has also asked for stable export policy for farm commodities and promotion of palm oil to cut vegetable oil imports, which was at a record 10 million tonnes (worth Rs 60,000 crore) in 2011-12.

The advisory body also demanded deregulation of urea sector to attract more investment and improve balanced use of fertilizers. Moreover, CACP added that higher farm exports and reduction in edible oil imports would help centre to curb current account deficit.

After the pre-budget meeting, CACP Chairman Ashok Gulati said 'rising current account deficit is the biggest problem that the government currently facing. So, we have pitched for rationalization of food and fertiliser subsidies in the forthcoming Budget'.By adding further he said, the government can save Rs 50,000 crore by plugging the leakages through conditional cash transfer (CCT) and also save additional Rs 10,000-15,000 crore from storage cost of grains. He also pointed that 40 per cent of food distributed through shops get diverted.

Further, CCT can be implemented initially in 33 cities of more than one million population and then expand to cereal surplus states and finally to cereal deficit states. On fertilizers, CACP chief said that the government can save Rs 20,000 crore if it immediately starts direct cash transfer of subsidy to farmers. For the 2012-13 fiscal, the Budget allocation for food and fertiliser subsidies was 136,000 crore, which is expected to rise in the revised Budget estimate.

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