Atanu Dey On India's Development

Swaminathan Aiyar on What Pranab will not say in his Budget

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Swaminathan S Anklesaria Aiyar, I am pleased to note, has a great column in the Economic Times, What Pranab Will Not Say in his Budget. His points are right on.

Here is an excerpt:

We have for decades been giving huge, open-ended and unwarranted subsidies for petroleum products and fertilisers. This will end forthwith. Oil and fertiliser companies will be freed from price control. There can be no case for subsidising the consumption of petroleum products, given that they are imported; they will rise enormously in price in the coming years, and are major sources of carbon emission (which we have pledged to reduce). Fertilisers too are carbon-intensive.

In future, there will be no subsidy for petroleum products. In place of kerosene subsidy, we will give solar or LED lamps to poor people in areas that don’t get electricity. And those getting LPG cylinders should switch to piped natural gas. Cylinders should be limited to rural areas where piped gas may not be available.

For years, we have had hypocritical talk of inclusive growth while financing schemes that do not reach the needy. Removal of price control on oil and ferilisers will yield bumper profits for public sector companies in oil, gas and fertilisers, which will be transferred to the budget in the form of special dividends.

This revenue bonanza will finance vouchers to families below the poverty line to buy essential items. Additional sums for inclusive programmes will come from rapid economic growth and GST reform.

Armed with this extra revenue, we shall substitute cash transfers for subsidies. We will abolish food subsidy. Instead we will give vouchers to poor people to buy food and fuel items of their choice from regular shops. This will end the current rampant diversion of PDS supplies from traders into the open market.

We shall issue education vouchers to people who wish to send their children to private schools, and not to government schools that are substandard. Similarly, we shall issue health vouchers. The new Unique Identification Number scheme will be harnessed to ensure proper delivery of benefits to beneficiaries.

. . .
Disinvestment of public sector undertakings will fetch Rs 50,000 crore this year. Till now we have refused to privatise profit-making PSUs. That will end, and we will in the next four years privatise all public sector corporations, save a few truly strategic ones such as State Bank of India and Nuclear Power Corporation of India.

Go read it all.