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Misguided subsidy
By D-Sector Team


Without doubt, Rs 10.78 trillion is a mammoth amount to be spent by any country on various kind of subsidies over a period of nine years. Since 2004, India has spent a little over one trillion rupee on subsidies each year which neither helped the genuinely poor nor created lasting capital assets. The political economy of subsidies draws its strength from myopic goals which the society, fractured along caste and religion, prefers squandering as public good. Even Rs 1.66 trillion spent on the flagship MGNREGA has proved to be a temporary income support for the poor; poverty has nonetheless persisted.

The core question before our political system would be to compare the opportunity costs of giving poor the fish or providing poor the rod to catch the fish. Doling out subsidies (fish) helps the distribution channel grab money and promote sectoral interests, thereby ensuring perpetuation of poverty to ensure that the political economy of subsidies persists. Unless the society at large presses for creation of assets that help income growth on a sustained basis, the national mood would not only remain sombre but will harbor restlessness with potential to flare up on slightest provocation. It is time subsidy is slenderized!



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Corruption Watch

The bad news is that corruption has not only sustained but has grown in size and stature in the country. With scams being a regular feature, seventy per cent respondents in a survey have rightfully opined that corruption has continued to increase in India. One in every two interviewed admit having paid a bribe for availing public services during last one year. Transparency International's latest survey reveals that the political parties top the chart for the most corrupt public institutions, followed by police force and legislatures. No wonder, India continues to make new records on the global corruption arena!

The shocking revelation is that the health and education sectors haven't remained untouched by this phenomenon. With 5th and 6th positions respectively for these sectors on the public perception chart on corruption, corruption has crept insidiously into these sectors of hope for the masses. With bureaucracy being fourth in the list of corrupt institutions in the country, corruption seems to have been non-formally institutionalized with little hope if public services would ever be effective in the country. With economic growth having literally institutionalized corruption, are we now expecting corrupt to be socially responsible - a different CSR.

Poor. Who?

Not giving 'aid' to India is one thing but calling it 'rich' is quite another. If one in three of the world's malnourished children live in India, what does average daily income of $3 indicate? It perhaps means that there is a relative decline in poverty - people are 'less poor' than what they used to be in the past. But having crossed the World Bank arbitrary threshold of $2 a day does not absolve the 'developed' countries of their obligation to part with 0.7 per cent of their Gross National Income in development aid. Should this three-decade old figure not be revised?  

An interesting debate in UK's House of Commons delved on future of development assistance by the British Government. While prioritizing limited resources has been a concern, there has been no denying the fact that development aid must be guided towards tangible gains over a short period of time to start with. There are difficult choices for elected governments to make - should they invest in long-term primary education or in short-term university scholarships? Which of these will bring gains and trigger long-term transformation in the society. As politicians continue to be divided on the matter, poverty persists!!   

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