Rectifying uneven distributed subsidies

Economic Survey 2015-16 finds uneven distribution of Rs. 100,000 crore subsidies going to the better-off merely on account of six commodities like gold, LPG, Kerosene, Electricity, railway fares, aviation and turbine fuel (ATF) plus the Small Savings Scheme.

The total amount given as subsidy is no less than Rs. 91,350 crore not to forget that this is an underestimate of the actual subsidy to the better-off because of the underestimation of the consumption by the rich in the NSS. If we add the subsidies inherent in just the PPF schemes, the total subsidy to the well-off amounts to above Rs. 1 lakh crore.

This represents substantial leakage from the Government’s kitty, and an opportunity foregone to help the truly deserving. Addressing the interventions and rectifying these anomalies may be good not only from a fiscal and welfare perspective, but also from a political economy welfare perspective, lending credibility to other market-oriented reforms.