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Tuesday, Apr 09, 2002

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Debt commitments

While replying to the discussions on the Budget for 2002-03 in the Lok Sabha, the Finance Minister, Mr Yashwant Sinha, stated that out of the total revenue expenditure, 48 per cent was accounted for by interest payments, 26 per cent by defence and 16 per cent by subsidies. Since nearly half of the revenue expenditure is spent on interest charges, one could presume that the Government's debt commitment is extremely high.

It is, therefore, time to review the advisability of entering into further debt commitments for some time and also to critically examine the utilisation of the amounts already raised, to ensure that they are spent in a most advantageous manner. The situation calls for the institution of a mechanism in every Ministry or Department to undertake such periodic reviews so as to ensure a satisfactory progress vis--vis expenditure and to prevent cost overruns.

The Budget proposed steep upward revision of costs of cooking gas, kerosene and postal stationeries. The intention is to reduce the subsidy element progressively. However two factors appear to have been not considered in the issue. Fundamentally, subsidies are meant to ease the burden of the not-so-well-to-do sections of the society. However, in the case of cooking gas, the price charged is the same, irrespective of the financial status of the consumer. As a result, the subsidy reaches unintended and untargeted destinations among the people.

There is therefore, a case for a graded pricing system. Second, kerosene is now being used as a fuel only by the poorer sections and its price should not have been hiked. In comparison, petrol is mostly used by economically better-placed people.

T. R. Anandan

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