Finance Minister P Chidambaram has advocated for direct cash transfer of fuel, fertiliser and food subsidies that can help in reduction of the subsidies. He said, 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.

The Finance Minister said that the estimated major subsidies in 2012-13 would be around 2.4 per cent of GDP. He said 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.

AIR correspondent reports, the subsidy during the current fiscal was estimated at 1.9 per cent of GDP in the Budget. The major subsidies, include fuel, fertiliser and food.

The government has been proposing direct cash transfer to prevent leakages. 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.