Letter to BS: Subsidies disturb fiscal health is a fact. Or myth?

This refers to “A blueprint for fiscal management & development” (January 1). Managing fiscal prudence at the Centre is much more difficult than doing so at the state level. Nevertheless, turning fiscal deficit to surplus in span of four years is commendable for any state. It is a fact that subsidy increases government expenses and disturbs the fiscal health of the state/country, but the Comptroller and Auditor General report of Delhi made this fact a myth.

Investing in building human capital has both short- and long-term multiplier effects on the economy. The short-term advantage comes in the form of enhanced revenue collection for the government (like doorstep delivery of various government programmes), reduction in the unnecessary expenditure of the state — the Delhi government saved costs by early completion of road projects — and reduced dissatisfaction among bureaucrats, leading to efficient functioning of the state and in turn higher revenue. The long-term investment in building human capital will benefit the state in the form of reduced “import” cost of intelligentsia and sustained economic growth. There should not be any problem for other states to follow the Delhi government’s fiscal prudence and management.

Ravi Kant  Mumbai

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