Cut subsidies, raise tax mop-up to fund priority sector projects: Ahluwalia

Deputy Chairman of the Planning Commission, Montek Singh Ahluwalia, today called for a reduction in government's subsidy programmes alongside an increase in tax mop-up, in order to finance priority sector projects in infrastructure, education, health and skill development in the 12th Plan.

Speaking at a meeting of the National Development Council (NDC) in New Delhi today, Ahluwalia said increased budgetary support is needed for the country's development even as the government ensures a reduction in the gap between expenditure and revenue.

Ahluwalia who only yesterday backed the draft food security bill at the Economic Editors' Conference, saying, "The draft food security bill as being formulated by the food ministry is absolutely feasible, though it will lead to higher costs, but I believe we can bear it," today remarked that Indians are actually not as poor as they think.

He, however, wanted that misdirected subsidies like those on petroleum and fertiliser were targeted better.

Ahluwalia also said that higher resources for the priority areas could be mobilised "only if the centre can raise the ratio of tax revenues to GDP and cut untargeted subsidies."

"The states too must reduce fiscal deficit since the debt position has become very difficult in many states," he said, adding, "The states have to aim at much better revenue performance and exercise progressive control over subsidies."