BS Number Wise: Indian states are living dangerously on subsidies

Their tax revenues can't keep up with their largesse: it's a policy that risks putting them in economic peril

Subsidies were ample in the mercantilist period before the industrial revolution. The British paid bounties to increase corn exports in the late 17th century. During the First World War, the US government subsidised oil producers to drum up production, and in the late 1920s, it subsidised farmers to keep demand and supply in check.

In India, subsidies protect industry and help the poor. While subsidies are a tool of emancipation for economists, politicians use them to win support.

Pakistan and Sri Lanka are in crisis partly because of the burden of subsidies. Two weeks ago, Indian civil servants advised the