sparklingway
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IFIs and all major donors have always enforced that we removed subsidies from major areas. This has been the understanding of the neo-liberal school of thought and there are definitely well thought reasons behind this policy.
Providing enormous subsidies is not only is a strain on the government but it does not make the consumer realize the actual cost of the commodity. For example, electricity subsidy paid out last year stood at a colossal Rs. 179.526 Billion. Subsidies stood at 1.5% of GDP last year, after being revised from an earlier figure of 0.9% of GDP, the reason being that the proposed removals of subsidies are delayed/canceled owing to public pressure.
A major problem with removing subsidies is the actual perception of their removal. Rather than being portrayed as "removal" of an "assistance", it is always portrayed as an "increase". Will in actuality, it is an increased burden on the consumer's wallet but the perception is that somehow the government has added to the price while in actuality it only removes its assistance. The media's portrayal of removal of subsidies is a very big factor and can be used to eliminate the largely negative public opinion in the wake of the removal of subsidies.
While we can most definitely argue that removal of subsidies on electricity effect the poor and lower income groups adversely, for we do not provide subsidies according to usage rather it is provided uniformly (through GENCOs). This uniform subsidy allocation is itself a very serious problem but the larger question is whether we can continue to dole out subsidies to reduce economic pressure on the consumers. Subsidies, if they exist, should be non-uniform and be given to low income groups but sadly this has never happened and perhaps cannot happen in a largely informal and unreported economy.
If we remove, in due steps, even half of the energy subsidies provided last year, then the 90 Billion thus generated can be used to a much more effective cause. Relief to lower income groups can be provided by social protection under programs such as BISP and food stamps. Food stamps have been largely unsuccessful in the previous two decades, but they were successful in the formative years of our country and work fine across the world as well.
Besides voting in the poll, please do share your views.
Providing enormous subsidies is not only is a strain on the government but it does not make the consumer realize the actual cost of the commodity. For example, electricity subsidy paid out last year stood at a colossal Rs. 179.526 Billion. Subsidies stood at 1.5% of GDP last year, after being revised from an earlier figure of 0.9% of GDP, the reason being that the proposed removals of subsidies are delayed/canceled owing to public pressure.
A major problem with removing subsidies is the actual perception of their removal. Rather than being portrayed as "removal" of an "assistance", it is always portrayed as an "increase". Will in actuality, it is an increased burden on the consumer's wallet but the perception is that somehow the government has added to the price while in actuality it only removes its assistance. The media's portrayal of removal of subsidies is a very big factor and can be used to eliminate the largely negative public opinion in the wake of the removal of subsidies.
While we can most definitely argue that removal of subsidies on electricity effect the poor and lower income groups adversely, for we do not provide subsidies according to usage rather it is provided uniformly (through GENCOs). This uniform subsidy allocation is itself a very serious problem but the larger question is whether we can continue to dole out subsidies to reduce economic pressure on the consumers. Subsidies, if they exist, should be non-uniform and be given to low income groups but sadly this has never happened and perhaps cannot happen in a largely informal and unreported economy.
If we remove, in due steps, even half of the energy subsidies provided last year, then the 90 Billion thus generated can be used to a much more effective cause. Relief to lower income groups can be provided by social protection under programs such as BISP and food stamps. Food stamps have been largely unsuccessful in the previous two decades, but they were successful in the formative years of our country and work fine across the world as well.
Besides voting in the poll, please do share your views.