New Delhi: The UPA government has finally taken steps in the direction of withdrawing subsidy on diesel. It has also initiated Direct Cash Transfer (DCT) scheme to ensure that subsidy should reach the needy. Now, the government has decided to reduce subsidy burden. But at the same time, the government is going to provide huge subsidy under food security.

Therefore, it will be a challenge for the Finance Minister P Chidambaram to strike a balance in the coming budget. The sluggish revenue collection remains a concern for the government. Despite, the government made provisions for subsidies amounting Rs 1.80 lakh crore in the current fiscal.

Huge subsidy will be given on food security and petroleum. The fall of rupee against dollar has made thing worse and petroleum subsidy burden is increasing day by day.

According to an estimate of Prime Minister Economic Advisory Council (PMEAC), with constant fall in the rupee the petroleum subsidy burden may go up to Rs 1.6 lakh crore. But, the government has allocated only Rs 43,580 crore in the budget for this.

A big part of petroleum subsidy is being spent on paying subsidy on diesel. The Finance Minister has started taking decisions to tackle subsidy burden. With the announcement of DCT, the government is trying to address subsidy leakages. Though, the subsidies given on fertilizer, kerosene, LPG etc are yet to be included into it. The Finance Minister also needs to take decision in this direction.

Chidambaram is under pressure to present a popular budget this year because it will be the last one for the UPA before the 2014 general elections.

Nitin Pradhan/JPN

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