" Politics of subsidy is not marketable"

Politics of subsidy is not marketable

Political parties in India are trying to win the trust of the general public,
especially those in the lower income groups, by promising subsidies
for electricity, water and food.

It is true that there is a huge income disparity between the rich and the
poor and that steps must be taken by the government to reduce this
inequality; however, this does not mean that the government starts
giving subsidies indiscriminately without any concern for the revenue it
is earning.

Subsidies can only be given if there is sufficient revenue and this is

something that Indian politicians should take note of before they start
making promises to the public.

In January 2014, Power Minister Jyotiraditya Madhavrao Scindia

made it clear that every politician has the right to give subsidies to
certain groups of consumers but he also mentioned that politicians
should be able to foot the bill for such subsidies. Else, government
funds will be depleted.

Minister Jyotiraditya Madhavrao Scindia made this remark after the

Aam Aadmi Party (AAP) government decided to reduce power tariffs
by half for consumers using up to 400 units a month. Politicians
should not use subsidies as a way to win trust or garner votes; if they
succumb to such measures, Indias debt will keep increasing and
middle and high income groups would have to bear the brunt of higher
taxes. Hence, politicians should give out subsidies after considering
the financial health of the government.

Last year, the National Food Security Act 2013 was signed into law in
an attempt to free Indians in lower classes from the shackles of
poverty. By providing food grains at subsidized rates to approximately
two-thirds of the population in India, the Congress hoped to win votes
for the coming elections.

The ironic thing about the National Food Security Act was that it was
signed into law around the same time that India was facing low
economic growth and a high current account deficit. As such, the
Congress could not implement the Food Security Bill successfully.
This is exactly what politics of subsidy refers to.

Politics of subsidy, where people race to provide as many subsidies as

possible at the extent of the countrys financial health, needs to stop.
However, providing subsidies to people in lower classes should not
stop completely.

In fact, the government should work out a plan to provide subsidies to

those in lower classes to help them come out of the vicious cycle of
poverty. However, they should provide subsidies without hurting the
pockets of the government and the taxpayers.