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April 04, 2017 @ 01:15 PM

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April 04, 2017 @ 01:15 PM

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K. J. Somaiya Institute of Management Studies and Research, Mumbai

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Politics of subsidy is not marketable

After having cleared cutoff percentile at B school, you will be invited for Group Discussion and now it is must for you to practice with variety of GD topics.
 
Read and develop points for discussion on GD Burning topic:
Politics of subsidy is not marketable 
 
Political parties in India are trying to win the trust of the general public, especially those in the lower income groups, by promising subsidies for electricity, water and food. 
 
It is true that there is a huge income disparity between the rich and the poor and that steps must be taken by the government to reduce this inequality; however, this does not mean that the government starts giving subsidies indiscriminately without any concern for the revenue it is earning. 
 
Subsidies can only be given if there is sufficient revenue and this is something that Indian politicians should take note of before they start making promises to the public.
 
In January 2014, Power Minister Jyotiraditya Madhavrao Scindia made it clear that every politician has the right to give subsidies to certain groups of consumers but he also mentioned that politicians should be able to foot the bill for such subsidies. Else, government funds will be depleted.
 
Minister Jyotiraditya Madhavrao Scindia made this remark after the Aam Aadmi Party (AAP) government decided to reduce power tariffs by half for consumers using up to 400 units a month. Politicians should not use subsidies as a way to win trust or garner votes; if they succumb to such measures, India’s debt will keep increasing and middle and high income groups would have to bear the brunt of higher taxes. Hence, politicians should give out subsidies after considering the financial health of the government. 
 
Last year, the National Food Security Act 2013 was signed into law in an attempt to free Indians in lower classes from the shackles of poverty. By providing food grains at subsidized rates to approximately two-thirds of the population in India, the Congress hoped to win votes for the coming elections. 
 
The ironic thing about the National Food Security Act was that it was signed into law around the same time that India was facing low economic growth and a high current account deficit. As such, the Congress could not implement the Food Security Bill successfully. This is exactly what politics of subsidy refers to.
 
Politics of subsidy, where people race to provide as many subsidies as possible at the extent of the country’s financial health, needs to stop. However, providing subsidies to people in lower classes should not stop completely. 
 
In fact, the government should work out a plan to provide subsidies to those in lower classes to help them come out of the vicious cycle of poverty. However, they should provide subsidies without hurting the pockets of the government and the taxpayers.
 
 
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