Must cut dependence on debt, reduce subsidies: PM

July 24th, 2010 - 4:40 pm ICT by IANS  

Manmohan Singh New Delhi, July 24 (IANS) Prime Minister Manmohan Singh Saturday said the country needed to cut down on its dependence on debt to finance its developmental programmes and find ways to reduce the current level of subsidies.
“The financing of the plan expenditure has depended far too much on debt. This must change,” said Manmohan Singh while addressing a meeting of the National Development Council (NDC), the country’s top policy forum.

To fund its fiscal deficit, projected at 5.5 percent of the gross domestic product in the current fiscal, the government is due to borrow a record Rs.4.57 trillion ($97 billion) in the year.

“We have to reduce our fiscal deficit in the coming years and this means we must find non-debt resources on a much larger scale if we wish to finance a substantial size plan,” the prime minister added.

India’s fiscal deficit is likely to shrink below the budgeted 5.5 percent this fiscal year from a record 6.6 percent last year, helped by a huge $23 billion bonanza from the auctions of spectrum for third generation telephony and broadband wireless access.

Manmohan Singh said for any reduction in fiscal deficit, concerted efforts would be required to curb losses in the public sector and change the way subsidies are provided to the poor.

“This would need reducing large losses in the public sector and also reducing the scale of untargeted subsidies. The operationalisation of the Unique Identification Number scheme, together with developments in information technology, provides an opportunity to target subsidies effectively to those who really need them and deserve them.”

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