DBT is being used to transfer subsidy on LPG and other welfare schemes into bank accounts of beneficiaries
New Delhi : A government-appointed panel to suggest ways to prune subsidies is in favour of extending the cash transfer scheme to kerosene and food in three years for directly helping beneficiaries.
“We are trying to see what way we can use DBT (direct benefit transfer) and apply it to other entitlements and other things. I won’t name the products because what we will do will take some more time.
The whole idea is to make it easy because it saves expenditure,” Expenditure Management Commission Chairman Bimal Jalan told reporters here after meeting Finance Minister Arun Jaitley.
According to sources, the Commission is making a case for including food and kerosene in the DBT scheme over the next three years. DBT is being used to transfer subsidy on LPG cylinders and other welfare schemes into bank accounts of beneficiaries.
Jalan said the fiscal deficit target set in Fiscal Responsibility and Budget Management (FRBM) Act is substantive and to achieve that subsidy transfer should be management- oriented with an aim to reduce the cost of transfer.
The former RBI Governor, who is in favour of linking the Payments banks outreach in transferring DBT, said that long term initiatives were needed to ensure smooth transfer of subsidies into bank accounts.
“Long term initiatives (are needed) to bring large number of states (for) transfer major subsidies and we have made tremendous progress in spreading banking network,” Jalan said, adding achieving the fiscal deficit target of 3 per cent is “challenging”.
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FinMin says hot money can desert
Making a case for rate cut by the RBI, a senior Finance Ministry official cautioned that hot money can “desert” the country in response to events like devaluation of Chinese currency yuan which can impact stock markets as well as exports.
“I would not like to say whether the rate should be cut or not cut, but I would like to nonetheless say that in a global environment where rates are almost negligible in the US, Europe and Japan, having a rate here, which is attractive, may end up attracting hot money which will desert us if developments like the devaluation of Yuan take place,” Finance Secretary Rajiv Mehrishi told private news channel.
When asked whether the time is ripe for a rate cut, he said it would promote credit growth.
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