Finance Minister P Chidambaram has advocated for direct cash transfer of fuel, fertiliser and food subsidies to prevent leakages. He said the major subsidies are projected to decline from 1.9 per cent of GDP as per the Budget Estimates for 2012-13 to 1.2 per cent in 2016-17.

Mr Chidambaram said that direct cash transfer of subsidies will also help in reduction in subsidies' percentage of GDP. He said the estimated major subsidies in 2012-13 would be around 2.4 per cent of GDP.

The Finance Minister said that by the end of the 12th Plan, these three major subsidies may be rolled out across the country through direct cash transfers to the beneficiaries. He informed that Pilot projects are already under implementation for LPG and kerosene and in the first phase government is considering to extend the direct transfer mechanism to the Union Territories.

AIR correspondent reports that in order to check fuel subsidy bill, the government has raised the price of diesel by 5 rupees a litre and capped supply of subsidised LPG cylinders to six per family in a year.