BHUBANESWAR: The Comptroller and Auditor General (CAG) has advised the State Government to initiate suitable measures to reduce the non-plan revenue expenditure so that more funds can be made available for creation of durable assets. In its latest report, the CAG said that the State Government may phase out implicit subsidies and resort to need-based borrowings to reduce interest payments and contain the growth of unproductive expenditure. The State Government, in its midterm fiscal policy for 2007-08, aimed to rationalise general subsidy and reduce their overall volume gradually at a rate of 10 per cent per annum. But the expenditure on subsidies increased from Rs 1,008 crore in 2009-10 to Rs 1,310 crore, over 33 per cent in 2010-11 which included food subsidy of Rs 932 crore. This was due to introduction of Rs 2-a-kg rice scheme for the people living below the poverty line and other subsidies under agriculture (Rs 72 crore) and textiles and handloom (` 31 crore). According to the CAG, the 13th Finance Commission has made a normative assessment of Rs 20 per capita for each year for food subsidy. Accordingly, the food subsidy should have been Rs 84 crore taking into consideration the population of the State which is 4.9 crore. CAG sought reasons from the State Government for flouting the recommendations of the 13th Finance Commission. The State Government replied that providing rice at Rs 2 a kg was a safety net designed to protect the poor and vulnerable in a high inflation regime, since the Centre was not providing any such assistance.
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