Subsidy enjoyed by rich, never reaches poor: Parliamentary panel

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New Delhi: Pitching for a new mechanism for subsidy distribution, a Parliamentary panel today said the government benefits are being mostly enjoyed by the rich and affluent and “never reach” the intended target.

“…subsidies in India never reach their intended target i.e. the poor and deserving, which contrarily is mostly enjoyed by the rich and affluent.

People in real need of subsidy for their sheer survival are being forced out of the system,” said a report of the Standing Committee on Finance tabled in Parliament.

The panel chaired by senior Congress leader Veerappa Moily said the Government to “introspect upon” whether the right good/service is being subsidised or there is an “urgent need to re target” the subsidies.

Recently Finance Ministry Arun Jaitley had said the government was considering doing away with the LPG subsidy for the well-off people.

Ill targeted subsidies constrain the fiscal space for public investment and distort allocation of resources.

The subsidy bill on food, petroleum and fertilisers for 2014-15 has been pegged at Rs 2.51 lakh crore, up 2.47 per cent over the previous year.

“Government should not be averse towards new mechanisms to facilitate subsidies to reach people as focus should not be towards removing subsidies but about how to make them effectively reach the targeted populace and ensure that people are benefited from it,” it said.

The panel also stressed that efficient subsidies must be transparent, targeted and in many cases temporary.

Subsidies play a vital role in the economy as it is provided to ensure equitable distribution of essential resources to the people particularly the vulnerable section.

Members of the panel, include former Prime Minister Manmohan Singh, Digvijaya Singh, S S Ahluwalia, Saugata Roy, Kirit Somaiya and Jyotiraditya M Scindia.

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