Subsidies Misdirected

convincing and detailed explanation of how these numbers have been arrived at and the methodology used. If it turns out that the ministry has only worked backwards from a figure already derived that too one which was surrounded by a dense forest of qualifications on methodology there could develop a credibility gap which could be exploited by politicians wishing to embarrass the government.

That said, only a blind dogmatist would suggest that subsidies need not be rolled back. What is missing is a sufficiently broad consensus. The fact is that subsidies are, in the final analysis, not about economics but politics. It could be that the finance minister is trying to kick-start the debate on subsidies. Perhaps that is why he may have chosen to dramatise it by putting the subsidy level so high. But he has also, sensibly, taken the precaution of distinguishing between subsidies that seem justified (1.31 per cent) and those that dont (10.31 per cent). This way he can argue strongly that not only are the wrong things being subsidised, the right things arent being subsidised enough. In fact, this is the real importance of the white paper, which makes a good beginning in focussing attention on the subject. Even if there are quibbles about numbers and methodology, the fact that subsidies have been misdirected comes out clearly and unambiguously. If Mr Chidambaram succeeds in doing no more than convincing

 

his political colleagues in Parliament about this, he would have performed a major service to the nation.