constituted - of Planning Commission
constituted - of Planning Commission constituted - of Planning Commission
not yet having been taken, the Group’s projections assume 50 per cent of underrecoveriesas cash assistance. The Group’s projection has been based on thisand on the other assumptions of Ministry of Petroleum that:(i) Sales volume will be as per the preliminary estimates prepared byTwelfth Five Year Plan Group. (However these figures might undergoa change when the report will be finalized by the Group handling thematter)(ii) In 2010-11, the share of PSU OMCs in sale of Diesel was 97.5 percent. For Twelfth Five Year Plan, the share will decrease by 1 per centevery year on account of increased sale by private oil marketingcompanies.(iii) PSU OMCs share in sale of PDS Kerosene & Domestic LPG will be at100 per cent.Apart from the above, the Group has retained the subsidy figures pertainingto PDS kerosene and domestic LPG at 2013-14 levels since the scheme itselfhas been continued only upto 2013-14 at present. Based on the above, ascompared to Ministry of Petroleum’s projections, the total Petroleum Subsidyduring the Twelfth Plan period works out to be as follows:Table 4.3:Subsidy Outgo for the 12 th Plan(` crore)Item/Year 2012-13 2013-14 2014-15 2015-16 2016-17 Total XIIPlanSUBSIDIESPDS Kerosene and 3200 3400 3400 3400 3400 16800domestic LPGFreight Subsidy for 26 28 28 28 28 138Far Flung AreasCash Subsidy from 36494 37585 38651 39661 40540 192930GovernmentSubsidy for560 560 560 560 560 2800Natural Gas in NERegionGRAND TOTAL 40280 41572.5 42639 43648.5 44528 212668Working Group Report on Centre’s Financial ResourcesPage-42
Other Subsidies: For each of their projection years, the Thirteenth FinanceCommission had kept constant in nominal terms the number equivalent to thefigure in the base year, reflecting the need for some real reduction in thesesubsidies. They stated that such reduction in subsidies was important toimprove equity as well as growth in the economy. As per a study undertaken byNational Institute of Public Finance and Policy (NIPFP), these subsidies areregressive, in the sense that in per capita terms, they are relatively higher for thehigher income States. Further, large subsidies, such as in fertilizers and LPG,are likely to be regressive on an inter-personal basis also, as fertilizer subsidiesare higher in per capita terms in irrigated areas and LPG subsidies are higher inper capita terms in urban areas. The reduction of these subsidies, by freeing upfiscal space, will facilitate increase in the supply of public goods such asschools, village roads and irrigation, which will lead to higher growth byinducing greater private investment.Following the rationale adopted by the Thirteenth Finance Commission, theGroup has retained the BE 2011-12 figures for these subsidies during theTwelfth Plan period.Pay and Allowances: Expenditure on Pay and Allowances (excluding Police &Defence personnel) increased during the Eleventh Plan period by 143.22 percent from `16,448 crore in 2007-08 to `40,005 crore in 2011-12. A sharpincrease is on account of the implementation of the recommendations of theSixth Central Pay Commission. During the Twelfth Plan period, however, payand allowances have been assumed to grow at 6.5 per cent per annum, takinginto account increases on account of dearness allowance and normalincrements.Pensions: Expenditure on Pensions increased during the Eleventh Plan by124.73 per cent from `24261 crore in 2007-08 to `54521 crore in 2011-12. AWorking Group Report on Centre’s Financial ResourcesPage-43
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not yet having been taken, the Group’s projections assume 50 per cent <strong>of</strong> underrecoveriesas cash assistance. The Group’s projection has been based on thisand on the other assumptions <strong>of</strong> Ministry <strong>of</strong> Petroleum that:(i) Sales volume will be as per the preliminary estimates prepared byTwelfth Five Year Plan Group. (However these figures might undergoa change when the report will be finalized by the Group handling thematter)(ii) In 2010-11, the share <strong>of</strong> PSU OMCs in sale <strong>of</strong> Diesel was 97.5 percent. For Twelfth Five Year Plan, the share will decrease by 1 per centevery year on account <strong>of</strong> increased sale by private oil marketingcompanies.(iii) PSU OMCs share in sale <strong>of</strong> PDS Kerosene & Domestic LPG will be at100 per cent.Apart from the above, the Group has retained the subsidy figures pertainingto PDS kerosene and domestic LPG at 2013-14 levels since the scheme itselfhas been continued only upto 2013-14 at present. Based on the above, ascompared to Ministry <strong>of</strong> Petroleum’s projections, the total Petroleum Subsidyduring the Twelfth Plan period works out to be as follows:Table 4.3:Subsidy Outgo for the 12 th Plan(` crore)Item/Year 2012-13 2013-14 2014-15 2015-16 2016-17 Total XIIPlanSUBSIDIESPDS Kerosene and 3200 3400 3400 3400 3400 16800domestic LPGFreight Subsidy for 26 28 28 28 28 138Far Flung AreasCash Subsidy from 36494 37585 38651 39661 40540 192930GovernmentSubsidy for560 560 560 560 560 2800Natural Gas in NERegionGRAND TOTAL 40280 41572.5 42639 43648.5 44528 212668Working Group Report on Centre’s Financial ResourcesPage-42
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