OMG! Rich and non-poor exploit 3.8 lakh crore subsidy bag

Subsidies, thy name is corruption. Very little of the 3.8 lakh crore subsidy bag in the country reach the targeted beneficiary. How much they cost, whom they really go to, and how leaky they are has been the focus of the pre-budget economic survey which shows that hardly 30% reach the targeted poor and 70% are enjoyed by the upper classes.

Main areas of subsidies are Rice, Wheat, Electricity, Water, Sugar, Pulses, LPG, Railways and Fertilizer. Chief Economic Advisor Arvind Subramanian devoted considerable space in the Economic Survey released on Friday to subsidies. In terms of cost, the combined subsidy for rice and wheat clearly accounts for the largest share, a third of India’s total subsidy bill.

Two of the worst performing subsidies – the fertilizer subsidy and the water subsidy respectively. The Survey says that the fertiliser manufacturers derive the maximum benefit from the fertiliser subsidy since farmers have elastic demand, and the water subsidy goes to private taps, while 60% of the poor get their water from public taps.

Over half of all the wheat allocated through the PDS, and over 40 per cent of kerosene and sugar never reached the consumer. The Economic Survey recommends using technology-led solutions including mobile phone technology and Aaadhar cards in order to better target subsidies, and a shift to cash transfers.

Share of the non-poor in Electricity (85%) and LPG (70%) is highest ..Kerosene is enjoyed by nearly 60% non poor.

For railways, ‘poorest’ refers to bottom 80%

For LPG, poorest 50%

For electricity, poorest 20%