Finance Minister has announced that steps would be taken to rationalise subsidies which presently dominate the economy of the nation.
What is the economic value of this statement?
Finance Minister has announced that steps would be taken to rationalise subsidies which presently dominate the economy of the nation.
What is the economic value of this statement?
The statement comes in the wake of consistently high fiscal deficit arising out of high expenditure of the government on subsidies. Expenditure on subsidies is mostly unproductive. Because, it just focuses on lowering the market price of certain goods (like oil and LPG). To the extent money is spent on subsidies, it is not available for investment in strategic sectors of economy like infrastructure. Rationalising the subsidies means the provision of subsidies only for below poverty line population. The government has already initiated this porcess by withdrawing subsidy on petrol and diesel.
The statement comes in the wake of consistently high fiscal deficit arising out of high expenditure of the government on subsidies. Expenditure on subsidies is mostly unproductive. Because, it just focuses on lowering the market price of certain goods (like oil and LPG). To the extent money is spent on subsidies, it is not available for investment in strategic sectors of economy like infrastructure. Rationalising the subsidies means the provision of subsidies only for below poverty line population. The government has already initiated this porcess by withdrawing subsidy on petrol and diesel.
