Yet another bottleneck for the new government- Ambiguous subsidy regime

The UPA 2 government might have concealed the failures of many years by coming up with a Bill that assures food to all. The actual picture, however, is quite distinct. In case this had been such an easy and advantageous scheme, the administrators would not have delayed this for decades. Plus, what else could a human expect? Food is now almost guaranteed. However, producing, procuring, distributing, and managing foodgrains call in for labors and outlays. Thus, the scheme might look too lucrative; execution of this would demand sweats. Remember, procuring food for two third population of India at excessively cheap rates, and that too when the upcoming monsoon does not promise proper yields would be one of the most threatening tasks for the new government at the center. Though, the implementation of the scheme would call in for elevated pains, the new government now cannot even back out.

This isn’t all. Ever since the democracy witnessed government elected by the people, products and industries have been subsidized. Ranging from fuel to food and education to health, subsidies are a part of every other domain. The motive is to ensure that the general public can procure basic necessities at manageable rates. On the contrary, the World Bank criticized the subsidy culture of India and commented that this has enhanced the incompetence of the Indian economy. The union government of India funds almost USD 60 billion from the revenue generated to the subsidy programmes. Realizing the adverse impact of subsidies, the chairman of PM’s Advisory Council advocated trimming down of fuel and fertilizers subsidies so as to maintain fiscal deficit within the budgeted level. The new government post the 16th will have to consider all the pros and cons of the ever-high and vague subsidy system.

Considerable to note, subsidies on non-merit goods are five times more than subsidies on merit goods, which depicts the wrong measures and directions of the subsidy regime. Amongst the merit goods are the construction of bridges and roads, followed by scientific research and education. Agriculture is the main constituent of the non-merit subsidy rule. The element to note is that in case of electricity, the per capita subsidy in richer states is substantially higher as compared to poorer states. Let us now notice what is eating up the state’s money. The most vital explicit subsidies that form a part of union government’s budget are the food and fertilizers subsidies. During 1974-75 subsidies on food accounted for almost 70 percent of the total expenditure on subsidies, which fell to 20 percent during 1990-91; however elevated to 40 percent during 1995-96. Export subsidies too are another key component.

Next, let us also take a sneak peak at the much highlighted programme, MGNREGA, with more than USD 25 billion spent as wage payments until now. Promising earning prospects for the residents of the rural areas, the scheme was devised with a view to promoting labor work. While the world is talking about technological advancements, this scheme is a reverse model. Above all, the projects are charged with severe misappropriation of funds. Plus, the outlays on this scheme have contributed towards the hike in the labor cost for private and agricultural projects. Inflation, too has mounted owing to the fact that the spending capacity has multiplied. Rather than improving the productivity, the scheme feeds people with ready food. The new government will have to rethink this project and come up with some control measures to curb deviations from the anticipated outcomes. Comprehensive streamlining of MGNREGA is much-needed for the real betterment of economy.

Are the state welfare schemes and subsidy programmes beneficial in real terms? A clear distinction is necessary between subsidies that are unsoundly eating up the government’s money (for instance excessive food subsidy) and those which are assisting the economy (for instance export subsidy). Plus, it must to be comprehended that state welfare programmes move money into the hands of those who are unproductive, rather than encouraging the entrepreneurs. This creates a gap between production that lessens due to unavailability of funds and consumption that upsurges due to grants. The gap becomes wider when the unemployed are assured of supply of necessities, which in turn demotivates them to work. Also, what can be expected out of direct money transfer? Rather than utilizing, the beneficiaries are vulnerable to spend the cash received on immoral activities. Restructuring of the subsidy regime is therefore the urgent need of the hour. Surely, the anticipated disaster of the UPA is backed by extensive mismanagement that resulted in unjustifiable rise of prices and wages.

85 thoughts on “Yet another bottleneck for the new government- Ambiguous subsidy regime

  1. boot camp workout

    Hello! Someone in my Facebook group shared this site with us so I came to give it a look.
    I’m definitely loving the information. I’m book-marking and
    will be tweeting this to my followers! Exceptional blog
    and brilliant design and style.

    Reply
  2. bingo 100 kr gratis

    Hey there I am so happy I found your webpage,
    I really found you by error, while I was searching on Yahoo for something else, Nonetheless I
    am here now and would just like to say cheers for a incredible post and a all round exciting blog (I also love the theme/design),
    I don’t have time to read through it all at the minute but I have book-marked it and also added in your RSS feeds, so when I have time I will be back to read much more, Please
    do keep up the superb work.

    Reply
  3. Angel

    Hello i am kavin, its my first occasion to commenting anywhere, when i read this paragraph i thought i could also create comment due to this brilliant article.

    Reply
  4. dobra nowina

    Whats up very cool blog!! Man .. Excellent .. Wonderful .. I’ll bookmark your site and take the feeds also…I’m happy to seek out so many helpful info right here within the put up, we need develop extra techniques in this regard, thanks for sharing.

    Reply
  5. Shrikant

    I just want to say I am just all new to blogging and site-building and absolutely enjoyed this web site.
    Likely I want to bookmark your site .
    You actually come with amazing writings.
    Bless you for sharing your web page.

    Reply
  6. John

    I just want to mention I am all new to weblog and truly savored this blog site.
    Likely I’m want to bookmark your blog .
    You actually have terrific articles.
    With thanks for sharing with us your web site.

    Reply
  7. Marc

    Great blog you’ve got here.. It’s difficult to find high quality writing like yours these days.
    I truly appreciate people like you! Take care!!

    Reply
  8. Ulhas

    Good day! I just would like to give you a big thumbs up for your excellent information you have right here on this post.
    I will be coming back to your blog for more soon.

    Reply
  9. Ujjwal

    Congratulations Dr Gupta in the setting up of your attractive, informative and very professional website.
    Well done! Very descriptive article. I enjoyed it a lot. Waiting to see next article soon.

    Reply
  10. Neeta

    Hello my friend! I wish to say that this article is amazing,
    nice written and come with approximately all important infos. I would like to see more posts like this .

    Reply
  11. George

    Hello thеrе! I could have sworn I’ve been to your blog befoгe but after browsing through a few of the posts I realized it’ѕ neѡ to me.
    Regardless, I’m certainly haƿpy I ѕtumbled upon it anԀ I’ll be book-marking it and checking back rеgularly!

    Reply
  12. Amresh

    I really like what you’ve acquired here, really like what you’
    re saying and the way in which you say it.
    You make it enjoyable and you still care for to keep it smart.

    Reply
  13. Alok

    I recently had a good fortune of reading your article it is really well written with updated information. I will be returning here often now.

    Reply
  14. Pingback: Priyanshu

  15. Pranjal

    Thank you for the introduction to the new website.
    I’ll be re-visiting it many times, but on a fast run-through it looks really great.

    Reply
  16. Harshdeep

    The website is bright, clean, quick, easily navigable and all the links seem to work well.
    Moreover, the contents here in blog shape is really wonderful.

    Reply
  17. Nino

    Just spent a few very enjoyable minutes looking at the site.
    Excellent! Well done. Overall very good: clean, easy to navigate, informative and, importantly, interesting.

    Reply
  18. Satvinder

    I like the valuable information you provide in your articles.
    I will bookmark your blog and check again here frequently.
    I am quite certain I will learn lots of new stuff right here! Best of luck for the next!

    Reply
  19. Madhur

    Just wanted to say how much we appreciate the tremendous amount of hard work and effort you all put in to producing this website.
    It is a great credit to everyone and I am sure will be a great success.

    Reply
  20. Akash

    I don’t even know how I ended up here, however I assumed this publish was great.
    I do not recognize who you are however certainly you are going to a well-known blogger in the event you are not already. Cheers!

    Reply
  21. Milap

    After looking into a handful of the blog articles on your website,
    I seriously like your technique of writing a blog.
    I added it to my bookmark site list and will be checking back in the near future.

    Reply

Leave a Reply

Your email address will not be published. Required fields are marked *