Press Information Bureau

Government of India

Ministry of Finance

16-March-2012 13:27 IST

GENERAL BUDGET 2012-13

Unviable, Ineffective Subsidies may be Revisited; Central Subsidies to be Brought Down to 1.75 Per Cent of GDP in three Years

Fertilizer Management System to Roll Out this Year

Aadhaar- Enabled Payments in Over 50 Districts in Six Months

The Union Finance MinisterShriPranab Mukherjeetoday announced the Government’s commitment to fully provide for subsidies relating to the Food Security Act, but cautioned that some other subsidies which were incompatible with macroeconomic fundamentals of the economy, and were not reaching the intended beneficiaries, could be revisited.

Presenting the General Budget 2012-13 in the LokSabha here , the Finance Minister said efforts would be made to keep Central subsidies under 2 per cent of GDP, and that over the next three years it would be further brought down to 1.75 per cent of GDP. He said the focus would now be on better targetting and leakage-proof delivery of subsidies.Shri Mukherjee said, based on recommendation of task force headed by ShriNandanNilekani regarding direct transfer of subsidy, a mobile-based Fertilizer Management System has been designed to provide end-to-end information on movement of fertilizers and subsidies. This system would have anation-wide roll outthis year.Direct transfer of subsidy to the retailer, and eventually to the farmer, will be implemented in subsequent phases. He also announced an escalation in efforts to roll out Aadhaar- enabled payments for various Government schemes in at least 50 district within the next six months.

The Finance Minister Shri Mukherjee informed that the Public Sector Oil Marketing Companies have launched LPG transparency portals to improve customer service and reduce leakage. A pilot project for selling LPG at market price and reimbursement of subsidy directly into the beneficiary’s bank account is being conducted in Mysore. A similar pilot project on direct transfer of subsidy for kerosene into the bank accounts of beneficiaries has been initiated in Alwar district of Rajasthan. The Aadhaar platform has also been successfully used to validate PDS ration cards in Jharkhand.

DSM/BK/ska/23

Central subsidies reoriented for better targeting, with direct transfers and Aadhaar-enabled delivery piloted to reduce leakage. The Budget pledges full provision for Food Security Act subsidies while proposing revision of other subsidies that are unviable or poorly targeted, and sets a medium term objective to reduce central subsidy burden. Implementation measures include a mobile Fertilizer Management System for end to end tracking, phased direct transfer of subsidies to retailers and farmers, accelerated Aadhaar enabled payments rollout for scheme disbursements, and pilot projects for direct bank reimbursement of LPG and kerosene subsidies alongside Aadhaar validation of PDS ration cards.