A decade later, PDS prices are still lower

This is Finance Minister Yashwant Sinha’s real challenge. While he, as well as party colleagues such as the BJP’s vice-president Jana Krishnamurthy, have been talking of a really tough budget over the past fortnight, unless he ruthlessly cuts subsidies, the budget is a non-starter even before it is presented.

Also, while the government has been acting on this over the past couple of years, the progress is so slow that it may as well not be happening. In the case of LPG and kerosene subsidies, for instance, the United Front government had committed to reducing these by around a third each year for the last couple of years, but this never really happened — the last hike in LPG prices took place over 13 months ago. Similarly, last year in January, prices of wheat and rice sold through ration shops for both the population above the poverty line (APL) and that below the poverty line (BPL) was raised, but a week later the BPL prices were rolled back completely. This has led to a situation, as pointed out earlier, where the BPL ration prices for rice and wheat are lower, even in nominal terms, than they were a decade ago. Needless to say, prices haven’t been hiked since last January, even though the prices paid to farmers has kept rising.

And, even in the case of diesel, where the United Front government had agreed to revise the prices each month, to compensate for any changes in global prices, the government has delayed hiking prices.

This is Sinha’s real challenge. Watch this space to see if he can live up to it.