You are here: Home » Economy & Policy » News
Business Standard

'Bad' subsidies should go, says PM

The PM noted that subsidies are also given to industries and businesses, but named differently

BS Reporter  |  New Delhi 

Narendra Modi

Prime Minister Narendra Modi on Friday batted for rationalising subsidies, by weeding out the bad ones and making those that really help the poor more efficient.

Speaking at the Global Business Summit here on Friday, he, however, did not spell out what the 'bad' subsidies were.

The PM noted that subsidies are also given to industries and businesses, but named differently. "When a benefit is given to farmers or the poor, experts and government officers normally call it a 'subsidy'. However, if a benefit is given to industry or commerce, it is usually called an 'incentive' or a 'subvention'."

While the PM referred to the government's policy in curbing cooking gas, fertilizer and kerosene subsidies, he also highlighted the issue of revenue loss from incentives to corporate tax payers. The figure, around Rs 62,000 crore, did not take into account dividends and long-term capital gains on shares traded on the stock exchanges which are exempt from tax, he said.

Modi also said double-taxation avoidance treaties have in some cases resulted in double non-taxation.

The PM's observations came at a time when the Budget is widely expected to prune wasteful subsidies in line with the recommendations of the Bimal Jalan panel, while targeting the necessary ones.

The PM said pragmatism was required while classifying such forms of government assistance and bad subsidies should be eliminated irrespective of what it is called. However, he said his aim is not to eliminate subsidies altogether but to rationalise and target them. He added Chandigarh, which had 68,000 beneficiaries of subsidised kerosene in 2014, would be declared free of kerosene subsidy by March 2016.

Listing out his government's achievements in the past 19 months, Modi said its policies might be popular but not populist. He responded to detractors of the Jan Dhan Yojana who derided the large numbers of zero balance accounts in the initial days, saying it has become the world's largest financial inclusion programme having accumulated a total of $4 billion in these accounts.

He also referred to the Congress' tactic of stalling reforms in the Rajya Sabha. He noted the Rajya Sabha was sitting on 827 Central laws, which had been marked by the government as 'obsolete'.

Noting that quality of life rested not only on economic growth but on good governance as well, Modi said corruption and poor governance affect the poor the most. He said his government has managed to bring down corruption drastically, a feat he said "was not easy".

On the international stage, Modi hinted at India's growing aspiration in taking a more visible global presence by saying the country's policies must positively impact the rest of the world.

Modi also highlighted a large number of achievements made by the country in 2015 such as software exports, record production of urea-based fertilizer, coal, power generation, and transferring a record number of cooking gas units to rural households, among others.

First Published: Sat, January 30 2016. 00:56 IST