NEW DELHI: On the eve of the Left-UPA Coordination Committee meeting, Finance Minister P. Chidambaram on Thursday said a decision on reduction in food subsidy would be taken after discussions with the coalition partners.

Reacting to a query during an interaction with the Forum of Financial Writers on the subsidy cut, Mr. Chidambaram said, "the decision [to cut food subsidy] is on hold, pending further discussions with the Congress party, other parties in the Government and the Left. At the end of discussions, the Government will take a decision."

While increasing the issue prices of wheat and rice under the public distribution system (PDS) last week, the Government also decided to reduce the quantity of foodgrains supplied under the scheme to 20 kg for families `above poverty line' (ABL) and to 30 kg for those `below poverty line' (BPL). The decision, if implemented, would have cut the food subsidy by about Rs. 4,524 crores in a full year.However, the decision had to be held in abeyance as, apart from vehement opposition by the Left, the Congress also asked the Government to put the issue on hold.

Mr. Chidambaram refuted the allegation that the Government, owing to "compulsions" of coalition politics, was putting the Cabinet decisions on hold. "I do not recall more than two decisions which are temporarily put on hold since 2005," he said, and went on to explain the characteristics of the "rainbow" coalition.

To a query on oil sector subsidies, he said that the burden was shared partly by the Budget and partly by the oil companies and noted that any tinkering may be good for the companies but bad for the Budget.

Examining issue

As for the tax structure on oil companies, the Finance Minister said the C. Rangarajan Committee was looking into the issue and the Government would take a view on submission of its report. He said the Administered Price Mechanism (APM) in the oil sector could be dismantled only "under normal circumstances" and not when global prices are witnessing a surge.

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