You are here: Home » Budget » Economic Survey » Top Stories
Business Standard

Subsidies aren't best weapon to tackle poverty: Economic Survey

Dwelling upon various subsidies to the poor, the survey even stated that these are often regressive

IANS  |  New Delhi 

Arun Jaitley
Finance Minister Arun Jaitley speaks in the Lok Sabha in New Delhi.

Price subsidies did not have a transformative effect on the living standards of the poor, though they helped poor households to weather inflation and price volatility, the Economic Survey for 2014-15 revealed here Friday.

"A close look at price subsidies, which are estimated to be about Rs.378,000 crore, about 4.24% of GDP (gross domestic product), reveal that they may not be the government's best weapon for fighting poverty," the survey, which was tabled by Finance Minister Arun Jaitley in parliament, said.
Read our full coverage on Union Budget

Dwelling upon various subsidies to the poor, the survey even stated that these are often regressive.

"An analysis of the current subsidy scheme indicates that rich households benefit more from the subsidy than a poor household," it said.

Among various examples that it had dwelt upon, the survey said subsidy on electricity can only benefit the relatively rich.

The survey, however, concluded that eliminating or phasing down subsidies is neither feasible nor desirable. "By adopting what it called the JAM Number Trinity - Jan Dhan Yojana, Aadhaar and mobile numbers - would allow the state to deliver the subsidies to poor in a targeted and less distorted manner," it added.

"Rationalisation of subsidies, better targeting of beneficiaries will release funds for public investment in agriculture," the survey said.

"Converting all subsidies into direct benefit transfers is a laudable goal of government policy," it added.

Dear Reader,

Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.
We, however, have a request.

As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.

Support quality journalism and subscribe to Business Standard.

Digital Editor

First Published: Fri, February 27 2015. 13:50 IST