Budget'11: Direct cash subsidy on fuel, fertilisers by 2012

Concerned over the misuse of subsidies provided under various schemes, Finance Minister Pranab Mukherjee today said the government will provide a direct cash subsidy on kerosene and fertilisers to the poor from March next year.

"... To ensure greater cost efficiency and better delivery for both kerosene and fertilizer, the government will move toward direct transfer of cash subsidy for people below poverty line (BPL) in a phased manner," Mukherjee said during his presentation of the Budget 2011-12.

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

A task force headed by Nandan Nilekani is working out the modalities for the proposed system of direct transfer of subsidy for kerosene, LPG and fertilisers, he said.

"The interim report of this task force is expected by June this year," he said.
At present, the government provides kerosene at subsidised rates to families living below the poverty line through the Public Distribution System (PDS). 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.