Archive for December, 2015

The Attack on ‘Subsidies’ Part Three

 

Failure as an alibi

Strangely, as part of his argument Subramanian points to certain deprivations suffered by large sections of the masses. Such deprivations are in fact evidence of the failure of the Government to extend the most basic services to the people; properly, that fact should spur the more rapid extension of these services to the deprived sections. Instead, Subramanian uses these deprivations as evidence that price subsidies on essential services are regressive, since rich, electrified households benefit more than poor, unelectrified households.

For example, he says that price subsidies in electricity “can only benefit the (relatively wealthy) 67.2 per cent of households that are electrified.” Miraculously, everyone who uses electricity is now considered “relatively wealthy”.[1] (more…)

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The Attack on ‘Subsidies’

Part Two

Propagating the helplessness of society

An essential leg of Subramanian’s argument against subsidies is a standard neoliberal line: that when a good or service is distributed by the State, leakage and mismanagement are inevitable. It is curious that nowadays spokespersons of the State itself propagate the notion that the State is corrupt and incompetent, indeed inevitably corrupt and incompetent. Such a notion allows the State to wash its hands of social responsibilities (“don’t expect us to supply essential goods and services, we’ll make a mess of it”). It also allows it to create various opportunities for the private sector to make a profit. (That privatisation process has in fact multiplied scope for corruption manifold in recent years, as borne out by the CAG’s reports on the 2G, coal, KG-D6, airport privatisation, and other scandals.)

The broader message of the ‘inevitability of corruption’ is that it is impossible for society to allocate resources as part of a conscious social plan; it is best to let the market do its magic unhindered, though we may fling a few pennies to the stragglers left behind in the march of development. As Engels remarked, “Darwin did not know what a bitter satire he wrote on mankind, and especially on his countrymen, when he showed that free competition, the struggle for existence, which the economists celebrate as the highest historical achievement, is the normal state of the animal kingdom.”[1]

(more…)

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The Attack on ‘Subsidies’

Part One

It is hard to recall a seminar as high-powered as the recent Delhi Economics Conclave (November 6-7). Held behind closed doors, it was graced by the Prime Minister, the Reserve Bank Governor, the vice-chairman of the Niti Aayog, the Finance Minister, the Minister of State for Finance, the Petroleum Minister, the Chief Economic Adviser, three chief ministers, the former chairman of the Unique Identification Authority of India (UIDAI), four US-based academics, a representative of the Bill and Melinda Gates Foundation, and several Secretary-level officials. Something big is afoot. (more…)

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