Government rejects Kelkar report seeking subsidy cuts

The government has rejected outright the recommendations of the Vijay Kelkar Committee for a sharp reduction in subsidies on petroleum, food and fertilisers, as it runs contrary to its policy of protecting the poor.

''Some recommendations appear contrary to the declared objective of the government of sustained and inclusive growth,'' Department of Economic Affairs (DEA) secretary Arvind Mayaram said today.

"The government is of the view that in a developing country where a significant proportion of the population is poor, a certain level of subsidies is necessary and unavoidable, and measures must be taken to protect the poor and vulnerable sections of the society."

The committee, headed by former finance secretary and Finance Commission chairman Vijay Kelkar, was formed by finance minister P Chidambaram to prepare a fiscal consolidation plan.

Mayaram clarified that the government has not yet taken an official view on the recommendations of the Kelkar committee. The report of the committee has been put up on the finance ministry website, and the government has invited comments of stakeholders on the report.

The committee has suggested phased elimination of subsidy on diesel and LPG in the next four years and reduction in kerosene subsidy by one-third by 2014-15.