Nilekani team discusses subsidy model with FM

Unique Identification Database Authority of India chairman Nandan Nilekani headed task force on direct transfer of subsidies for liquefied petroleum gas, fertiliser and kerosene on Thursday discussed the proposed model of cash subsidy regime with Finance Minister Pranab Mukherjee.

According to sources, the task force made a separate presentation on fertiliser, LPG and kerosene, covering issues like existing subsidy regime and the proposed new model.

Besides the UIDAI chairman, the task force members include the secretaries of fertiliser, food, petroleum, agriculture, rural development and expenditure and financial services. Sources said the meeting had special invitees -- Food Minister K V Thomas, Chemicals and Fertilisers Minister M K Azhagiri, Minister of Petroleum and Natural Gas Jaipal Reddy and Rural Development Minister Vilasrao Deshmukh.

Last month, the government had constituted a task force to evolve a model of direct transfer of subsidies on kerosene, LPG and fertiliser.

It will also undertake the designing of appropriate IT systems and aligning them with the issuance of UID numbers, and bringing about changes in the administration and supply chain management.

In the Budget 2011-12,

Mukherjee had announced that the government intends to move to direct transfer of subsidies on kerosene, LPG and fertiliser in phased manner.

The government has budgeted Rs 73,637 crore (Rs 736.37 billion) in subsidies for the three during the 2011-12 fiscal, that begins on Friday.

"To ensure greater cost efficiency and better delivery for both kerosene and fertiliser, the government will move toward direct transfer of cash subsidy for people below poverty line in a phased manner," Mukherjee had said.

The system will be in place by March 2012, he had said.

At present, the government provides kerosene at subsidised rates to families living below the poverty line through the public distribution system.

Furthermore, LPG is provided at a subsidised rate to households.

As regards fertilisers, the government provides subsidy to companies so that farm inputs, which include urea and imported fertilisers, can be provided to farmers at cheaper rates.

Image: Nandan Nilekani