Bold Steps

The white paper on subsidies reflects upon our economy which is facing a crisis due to unwanted subsidies and their misuse. The real benefits from Mr Chidambarams dream budget can be achieved only when corrective steps like reducing subsidies and checking black money are taken. Unpopular steps like these can be taken only if there is the required political will to do so. And for a coalition the task is even more difficult. One hopes the UF government is able to resist pressure from Left parties while taking such bold steps, including a hike in petroleum prices.

In fact, a system should be evolved to announce all hikes in prices of goods and services along with the annual budget. This will be convenient for the consumers also, who will not have to face the trauma of gradual hikes. Likewise, the loss to the exchequer due to subsidies can be met by increased taxes. To make the VDS more successful, the government must take firm steps to minimise currency circulation. Cash withdrawal from a bank on a single day should be restricted to Rs 10,000, and all sales and purchases made of an amount exceeding Rs 10,000 should be done through cheques.