Finance Minister Arun Jaitley today said the ballooning subsidy bill needs to be lowered by rationalising the dole-outs. Stating the government should not be doling out pre-poll populist measures that increases the subsidy bill, Jaitley said, "If we waive off loans, empty the government treasury, and destroy economic discipline, then I feel this would not help the economy or the country."
Admitting he too gets subsidies, Jaitley said, "But I firmly believe that I have no right to avail of those subsidies." However, the Minister, who was speaking at a BJP-organised function in the city, did not elaborate on the issue. It can be noted that after touching a low of under 2.5 per cent of GDP in FY07, the government borrowings have been on a continuous upward spiral. This pushed up the subsidy bill to over 2 per cent of the GDP as of FY14.
The subsidy bill, which began when the economy was clipping past 9 per cent, did not show a decline during the slowdown period. The rising subsidy bill has pushed the fiscal deficit to 4.5 per cent last fiscal and this year the government has pegged it at 4.1 per cent of the GDP or at Rs 5.97 trillion in net market borrowing, which is more than Rs 34,000 crore during FY14 fiscal.
However, after hitting 56.1 per cent of the full fiscal target right in the first quarter of the fiscal, the government had said it would borrow Rs 16,000 crore less in the second quarter. This is because its finances got an unexpected push from the Reserve Bank which transferred a record over Rs 53,300 crore of its surplus to the government earlier this week. Thereby the borrowing plan for first half has been reduced to Rs 3.52 trillion from Rs 3.68 trillion. However, net the borrowing for this fiscal is expected to touch Rs 4.57 trillion, which will be around 3 per cent lower than last fiscal. During the last financial year, the government had borrowed Rs 5.63 trillion.