Government to go ahead with kerosene subsidy reforms

Finance Minister Arun Jaitley Thursday said that the government is planning to reform kerosene subsidy under its moves to control expenditure.

Speaking at the World Economic Forum (WEF) Davos, Jaitley said that after petrol, diesel and partial reforms in cooking gas subsidy, the government intends to go ahead and stem misuse of subsidised kerosene.

"We plan to go ahead with the kerosene (subsidy) reform. The subsidies will not be rolled back, they will only be rationalised so that the intended masses will benefit out of it," Jaitley said.

"We have a target to bring down the capital expenditure to 4.1 percent (of the gross domestic product) and below 3 percent in subsequent years."

The finance minister said that diesel prices are now market linked and that 150 million families across India will now get direct cooking gas subsidy benefit in their accounts.

"Our next step in cooking gas subsidy reform is to carve out the intended beneficiaries, so that they can receive direct benefit of subsidies," Jaitley said.

According to the finance minister, there is a need to rationalize subsidies as the government cannot perpetually borrow to fund its schemes.

The finance minister said this perpetual borrowing will burden the future generations, who will then have to pay back the debt incurred to fund subsidy schemes.