Food Subsidy

India’s urea subsidy has distorted prices and favoured practices that hurt soil health in large parts of the country. But the West Asia war offers New Delhi the political alibi it needs to end such distortions and serve farmers better.

Food subsidy, the largest component, stood at ₹1.92 trillion, or 85% of the revised estimate of ₹2.28 trillion. However, the urea subsidy has already breached its annual target, reaching ₹1.28 trillion, or 101% of the revised estimates, and higher than the ₹1.16 trillion recorded a year ago.

The 16th Finance Commission has echoed its predecessors in warning about the harsh fiscal fallout of unchecked freebies. But subsidies and cash transfers have a way of veering out of control. It’s a lesson that an emperor of olden times learnt a little too late.

India’s apex court has done well to caution political parties against splurging on indiscriminate freebies. We can only guess what electoral gains such pre-poll declarations deliver, but they clearly strain public finances. Bad economics can eventually be bad politics too.

Unemployment, poverty and inflation numbers make headlines and stir political commentary, but are we deploying data as a credible tracker of India’s progress? Unless we tell our statistical story with clarity, candour and confidence, others could steal the narrative.

Finance minister counters opposition leader Rahul Gandhi's charge that budget acknowledges challenges faced by India, but fails to tackle them

India’s central government has worked at fiscal transparency, but its states have a long way to go. Address problems of definitional ambiguity, off-budget financing and deferred payments for better governance.

Employment incentive schemes in 10 labour-intensive sectors should be launched, even as public investment is enlarged in fresh-water supply and cutting-edge technologies. This can deliver a big-band transformation. Resources could be raised by getting rid of flab in the fiscal system.