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Losing Sleep Over Rising Subsidy Bill: Pranab

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Worried over the impact of rising expenditure on the fiscal deficit, finance minister Pranab Mukherjee on Wednesday said he is "losing sleep" over skyrocketing subsidy bill which could exceed budget estimates by over Rs 1 lakh crore in 2011-12.

"As finance minister when I think of enormity of the subsidies to be provided, I lose my sleep. There is no doubt," he said at a conference on ‘Targeted Public Distribution System and Storage'  in New Delhi.

He would be presenting the Budget for 2012-13 on 16 March in the backdrop of falling growth rate and widening gap between revenue and expenditure.

The subsidy bill of the government including all three categories (food, oil and fertiliser) crossed Rs 1 lakh crore, or $19.2 billion last year. That messes up the calculations of the fiscal deficit presented in the annual budget in February — at 4.6 per cent of GDP — last year by a huge margin. Now, most economists peg the fiscal deficit at close to 5.7 per cent of GDP.

The lower economic growth of 6.9 per cent, as against the original estimate of 9 per cent, will further aggravate the fiscal deficit situation. The economy grew by 8.4 per cent during 2010-11.

Meanwhile, Indian industrial production (IIP) likely grew at a weaker annual rate of 3.4 per cent in December, down from November's 5.9 per cent, on slowing infrastructure output and domestic demand, according to a Reuters poll.

Forecasts from a poll of 26 economists on the volatile index taken this week ranged from a fall of 4.3 per cent to an increase of 5.1 per cent, although all but one forecast was for the index to rise.

Factory output grew at 2.5 per cent in December 2010, revised government data showed.

The government had earlier said that its subsidy bill is likely to increase by over Rs 1 lakh crore, over and above the original estimate of Rs 1.34 lakh crore, mainly on account of higher outlay towards fertilizer, food and oil.

On the issue of food security, Mukherjee said, "We shall have to work out an implementable work programme for meeting the requirement of the people despite problems and constraints".

"Today (after 65 years of independence) people are not ready to wait any longer ... today they are eager to have their empowerment ... not in the documents of the Planning Commission or the assurance of policy makers, but entitlement backed by legal enactment. That is the rational of having the Food Security Bill," Mukherjee said.

Stressing on the importance of an efficient public distribution system, the Finance Minister said a section of the society could be insulated from the adverse impact of inflation by supplying them essential commodities through PDS.

There are about 18 crore ration card holders in the country who are entitled to subsidised commodities under PDS.

Mukherjee said huge investments are required in the agriculture sector, including on farm technology, to meet the food requirement of over 1.2 billion Indians.

Mukherjee also said despite all criticisms, the flagship employment guarantee scheme -- MNREGA -- has set a benchmark in rural wages.

(With Agencies)