Food subsidy is important in a country like India and there is no use fighting it, C. Rangarajan , Chairman of the Prime Minister’s Economic Advisory Council, said.
Admitting that fiscal consolidation, a necessary pre-requisite for sustained growth, was an area of macro economic concern, he said that subsidies needed to be pruned, well -focussed and prioritised.
“What is relevant is the total amount of subsidy. We can provide for food subsidy while reducing other subsidies. There is no good fighting it. In our country, it is important. Government thinks this is of paramount importance. But we need to be courageous to cut other subsidies. It is in this context that one must understand the action of the central government to raise the price of diesel,” Dr. Rangarajan said.
He was participating in an interactive session on ``Indian Economy-Vision 2020’’ organised by the Merchants Chamber of Commerce and Industry.
To a question on foreign direct investment (FDI) in retail and fears of Chinese goods swamping the Indian markets, Dr Rangarajan said that entry of Chinese goods was not banned even now and Indian industry would have to enhance its efficiency. “If there is any reason to believe that it is dumping then there are forums like the WTO (World Trade Organisation) to take it up with,” he said.
To another question on LIC “having to pick up shares of Hindustan Copper Ltd.”, he said they did so due to business consideration. He also said that the government’s disinvestment would get back on track very soon.
It would be difficult to forecast how the current year would turn out, he said. However, he expected the investment sentiment to change in the wake of decisions on FDI and petro-product pricing. “On the whole, the growth rate this fiscal may be between 5.5 and 6 per cent,” he said.