Surojit Gupta, TNN | Jan 12, 2015, 12.59AM IST
The recommendations of the Expenditure Management Commission are expected to be incorporated in the 2015-16 Budget. In an interview to TOI, chairman of the panel Bimal Jalan says tackling food subsidies is tough and backs the idea of using technology to reduce cost of delivering government services. Excerpts:Former RBI governor Bimal Jalan
What is your approach to spending reforms?
This is the Expenditure Management Commission, not Expenditure Reforms Commission as we had previously. That's an advantage from the point of view of execution of whatever the committee is able to recommend. Because what you are looking at is not the policy framework but management of whatever policies we are executing. According to a Planning Commission study, the expenditure to deliver one rupee of food to the people below the poverty line through the PDS system was Rs 2.65. That is after all administrative expenditure. So here we have to look at what can be done to deliver public services at lesser cost.
The big change that has taken place in the current environment is the Direct Benefit Transfer. Technology has made it simpler to transfer cash, to transfer benefits. Two other major changes have occurred in the past few years which make it possible for our country to use technology to manage expenditure. One is the availability of Aadhaar numbers, and mobile phones. These are great advantages to reduce administrative expenditure in the delivery of services to the people. Now what we have to examine is where is the subsidy going? It has to be targeted in a way that the major part of subsidies is available to those who deserve it.
Do you think the sharp slide in oil prices should be used as an opportunity to repair government finances?
You have to try and take a view which is consistent with fluctuations in oil prices. But don't take it for granted. Whatever we do should be such that we can do over a long term.
Which of the two subsidies — food and fertilizer — is easier to tackle?
The more difficult is the food part because a billion people are involved of which 500-600 million people would be deserving food subsidy. Both are also related. It is not that you can do one and not the other. We can move on both fronts.
How do you tackle the problem of kerosene subsidies?
From a policy point of view, some of the difficult decisions are always difficult to execute, particularly if it is not causing macro problems. In principle, better-off people should not be subsidized. But to execute it at the ground level is always difficult because of what economists call established interests.
Do you see political will to tackle subsidies problem?
The great advantage that India today has is that we have a majority government in Lok Sabha. We have to be patient. We have to make basic changes.
What are your views on increasing public spending to boost growth? Do you favour relaxing fiscal targets?
It is important to realize where the public is spending. I am for increase in investments. But the problem in increasing investment is not money alone because you have large unutilized balances in the capital investment sector. So many projects are stalled. Money is not the issue there, it is the implementation. We should push for investment and I can see our savings are potentially 30-35% of GDP while the investment figure would be much lower. You need modalities for the government to raise funds from the saving community.
