Increasing subsidies and especially the cross-subsidisation of food, petroleum, fertilisers, interest rates, agriculture etc are wreaking havoc, and will lead to a big problem in future. Subsidies lack economic sense and will show their fall-out in a huge inflationary pressure in future. They have become a populist tool in the hands of politicians. The true story is that out of Rs 30,000 crore, only 15 per cent reaches the targeted people. This defeats the basic purpose.
In a country like India which has regional, sectoral disparities and a huge population below the poverty line, it is beyond doubt that subsidies are a need.
Only a few months ago, Ms Bhattal, former chief minister of Punjab, indulged in this `subsidising act by giving heavy sops to farmers. Post-election, Mr Badal went two steps further to make agriculture almost a `no-cost affair with free water, almost free power, subsidised fertilisers seeds and a ritualistic increase in procurement prices every year. Agriculture has become the best business to indulge in. The fact is that farmers of states like Punjab, Haryana etc. who are a rich lot as compared to those in Bihar, West Bengal, Orissa and Madhya Pradesh, are getting more and more benefits.
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This disparity needs to be curbed as soon as possible. This can be avoided or stopped by:
Close monitoring so that they reach the targeted segment. This will lead to equal distribution of income and wealth;
No more subsidies, barring exceptional cases;
Taking back subsidies in sectors and phases as soon as it achieves the aim of equal distribution of income and makes needy people stand on their feet.