Indian Economy - Subsidies

What is the worst form of subsidy in India?  It is the gifting of do-little and do-nothing jobs in the government and in the public sector! I don't think that subsidizing kerosene for the poor is a bad thing. But give a job to a relative of an influential person knowing that the appointment is unnecessary or that the person is not the right choice to be an employee - you have committed theft of public property. It is not a small theft - a job giving Rs 15,000 per month in total benefits at current prices for the next 30 years is theft of millions of rupees. The punishment for such theft should be a minimum of five years of rigorous punishment and a hefty fine proportionate to the stolen amount.

How prevalent are such thefts? Just do a bench-marking of employment in the public sector versus employment in comparable private sector units and you will see the extent of over employment. Yesterday, I saw a number of employees doing redundant work in an airline. One guy scanned the bar code on my boarding card. But, just to make  sure that the scanner works :=!)  he read out some number on my boarding card to another who ticked the number off on a form. See the efficiency? Why make one man do the work when two can be employed?

I walked ten feet farther and my backpack was hand-searched  like every one's hand baggage. Obviously the scanner operated by the police at the previous gate cannot be trusted and a second search has to be made. Yet other men were double checking the stamp on the tag on my back-pack.

Government loans and other hand-outs (including compulsion on government funded entities to buy tickets only on government owned airlines) is the worst form of subsidy. Just file an RTI query asking how many freebie tickets and upgrades were given in the last financial year. Do you think that the government is going to stop subsidizing netas and babus through such practices? After all it is much easier to make the common man and woman pay more for their bus rides! A mere 10,000 bus rides at a higher price can fund an upgrade for a neta or babu!

While the government thinks of many ways of eliminating subsidies, cutting down on redundant employment in the government and public sector is rarely considered. Can you guess why?

Srinivasan Ramani