The correct mode of paying subsidies to the beneficiaries

This editorial advocates for closure of all the different heads of subsidies and pay it to the poor in single installment. Four main programs should be completely done away with. The government from this single step shall save 3.62 lac crores of rupees every year round after these schemes are closed down. This amount should be paid direct to the BPL cardholders.

All hell was let loose in the economic system of the country after the central government in the Lok Sabha and Rajya Sabha passed the food security bill. This is good also. However, whether the 'National Food Security Bill (NFSB)' can end malnutrition and hunger is much in doubt. The government has no revenue to nourish the expenditure at this moment. The government is pressed deep down with the burden of loan. The total expense of the government at present comes down to around 12 lac crores whereas the income is a mere 7 lac crore. About half of the expenditure is being met by borrowings. It looks improper under the situation to bear the brunt of 1.3 lac crore per year of food security. Even then, this step of giving scour to the poor should be appreciated and supported. Jesus Christ had advocated for the poor and declared the rich unfit for heaven. The effort of bringing this law has been made based on this ideology of Christian religion, which is most welcome.

Not the lofty ideas alone but capacity also is required to fulfill dreams

Problem is before taking up good works in hands, resources to carry it out successfully should be gathered. The shopkeeper of a village whose shop is running in loss cannot organize community feast for the entire village. He can succeed for once, but his shop would become empty and later, he will neither be able to run his shop nor can organize 'langar'. Similar is the condition of our government. Government does not have the capacity to implement food security act. An estimated 1.3 lac crore is expected to be spent on this scheme per year. This comes down to above 10 % of the present expenditure of twelve lac crore. To meet the present expenditure, the government has to borrow five lac crore already from before. Now this borrowing will swell up to 6.3 lac crore. International rating agencies are negative on India from early on. India's rating is just above the junk category. A further fall in rating will push India into the junk category turning it into a nation, risky for investments within the country and abroad. The foreign capital flight from India will fast catch up then. Share market and rupee is tumbling out of this fear. Grave crisis lurks before our face. Poor have to be provided relief and scour but for this, we should have the required capacity. The remedy lies in effecting changes in the present sets of spending to bring improvement in their quality.

Schemes being run by the government

Four big projects to assist the poor are on the roll i.e. Agricultural Price Supports, health and education, MANREGA and fertilizer subsidy. The support price for crops is given for this reason that the farmers do not suffer losses. The aim of health and education is to furnish facilities of these services in the villages. The goal of MANREGA is to dole out employment in villages for 100 days a year. Fertilizer subsidy is aimed at minimizing the investment cost of farmers so that they might suffer loss. 292 thousand crore was spent by center on these schemes in 2011 which would jump up by 362 crore in 2013-14.

The aims of these four govt schemes

The goal of the four big schemes is to help poor, but the portion for in it is the least. The subsidies given to Food Corporation mainly reach to its employees and big farmers. The expenditure incurred on health and education nourishes doctors and teachers. From 25 -75 cut of MANREGA fund is stated to be going into the pockets of sarpanch and different government departments. Fertilizer subsidy is going to inefficient producers and big farmers. How MPs abuse their MPLADS funds is no more a secret. We should think of such remedy that the expenses made in the name of poor really reach to them.

What needs to do

Suggestion is to close down these entire four schemes for good. This will save 3.62 lac crore of government fund per year. This sum should directly be paid to the cardholders. Each of the 80 crore poor will get 4500 per year. Supposing the family comprises of five members each, 22500 per year or the poor would receive about 2000 rupees per month. Second benefit is that the 100 days that go wasted in the fake show game of performing work under MANAREGA would be saved to be used in fruitful works. Within these 100 days, he could earn extra income on daily wage at the rate of 125 rupees per day that will come down to an additional 12500 rupees. Adding up it all, 3000 rupees per month would come as income to the family. The center will not need to spend even a penny for this. In addition, state governments are spending an additional 3.6 lac crores under these heads. Adding this expense, each BPL families could be paid 5000 rupees per month. This whopping sum meant for poor is going into the pocket of government employees, inefficient producers, big farmers and the rich and affluent. The problem would be solved if reaches up to the poor. This sum will render help to the poor to manage their health, education and food problems.


The opposition should present some new plan to provide relief to the poor. In place of presenting minor amendments here and there in food security program, Food Corporation, health and education, MANREGA and fertilizer subsidy should be closed down and this sum should be directly paid to its beneficiaries. This will help government in a major way. The market will have no worries of increasing government spending. The government will have no need to borrow money to sustain expenditure. The government budgetary deficit will come under control. The government would not feel the need to tax the industrialists the more. Industrialists will feel relieved. Production will increase. Government would stand to receive more revenue in tax, and lastly fall of rupee would halt too. People would be happy as a whole.


Guest Author: nasiruddin09 Sep 2013

In India though the government formulates whole lots of schemes and benefits to various sections of people through subsidies, but the main problem is that the beneficiaries are not getting the required amount and thus eaten away by the middle man. It was told by the late Prime Minister Rajiv Gandhi that under every one rupee spent by the government on each beneficiary, the actual incidence of help stands at fourteen paisa only. That means a whooping 84 paisa is being eaten by the officers and facilitators of the subsidy and the beneficiaries are losers.

Guest Author: sachin tukaram khot13 Mar 2015

we have not know how to urn subsidy please guide.Also it will not reach towards us please help

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