New Delhi, Sep 29 (PTI): Already battling opposition to its reforms measures, the Government has been asked by the Kelkar committee to eliminate various subsidies in phases by hiking prices of LPG, kerosene, diesel and foodgrains in ration shops to deal with the deteriorating fiscal situation.

The Committee headed by former Finance Secretary Vijay Kelkar has also suggested a slew of bold measures to cut the subsidy bill, which did not find favour with the government.

Government, which had only recently hiked diesel price and capped subsidised LPG cylinders, said the suggestions were contrary to its established policy of protecting the poor.
The final view on the recommendations of the committee, set up by Finance Minister P Chidambaram to suggest fiscal consolidation road map, will be taken by the government after receiving feedback from stake holders.
Observing that Indian economy may be encountering a "perfect storm" on account of various domestic and global problems, the Committee suggested tough measures to bring down fiscal deficit to 3.9 per cent of the Gross Domestic Product (GDP) in 2014-15 from 5.2 per cent expected in the current financial year.

Its recommendations include selling of surplus PSU land, fast tracking disinvestment and expanding the service tax net to raise revenue.

It suggested phased implementation of the much-touted Food Security Bill to provide cheap foodgrains to families below poverty line (BPL) in view of the current fiscal situation and pitched for hiking urea prices.

Reacting to the committee's suggestion of eliminating major subsidies, Arvind Mayaram, Secretary in the Department of Economic Affairs said, "the government is of the view that in a developing country where a significant proportion of the population is poor, a certain level of subsidies is necessary and unavoidable, and measures must be taken to protect the poor and vulnerable sections of the society".