Petrol subsidy cut will add to inflation, says CM

Petrol subsidy cut will add to inflation, says CM

“People had lots of hopes on the Budget, especially on containing inflation. But it has hardly envisaged any such move. Monetary policy measures by the RBI alone cannot address the inflation,” he told reporters.

Subsidies on fertilisers, food and petroleum products have been cut, that may lead to an increase in their prices, he said.

Mere increase in the overall Central plan by 12.4 per cent would not be sufficient to cover the high inflation, he added.

He said the Budget was big on announcements, but not supported by financial allocations. For instance, allocation for the Agriculture Ministry has gone down by three per cent, compared to last year. A new fiscal indicator of the Effective Revenue Deficit has been introduced to show better fiscal health by excluding grants for capital expenditure. There is no clarity whether similar flexibility would be allowed to the States also, Yeddyurappa added.

The Budget has proposed to increase export duty on iron ore to 20 per cent. Instead, royalty accruing to the states should have been increased, he said.

However, he welcomed the Budget proposal to extend crop loans at three per cent interest rate, expansion of social security pensions, higher allocation of Rs 12,522 crore for JnNURM and Rs 710 crore for Bangalore Metro.