| Subsidies |
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The Finance Minister roll back Rs.700 crores on fertilizers subsidies and the total subsidies for year of 2003-2004 is estimated at about Rs.50,000 as stated below :- Rs.28,000
crore Food - subsidies The following table shows subsidies given by the Union Government in year 1992-93, 2000-2001, 2001-2002, 2002-03 and 2003-04. 1992-93
Rs.10,824 crore Above figures clearly show that within four years ending on 31st March, 2004, subsidies bill has increased from Rs.26,842 crore to Rs.50,000 crore (in four years). Unfortunately, no major corrective steps have been taken for reduction of subsidies. The Annual Economic Survey 2002-03 on page 92,93 has given two charts (1) Table 5,12 - Control food-grains stocks and minimum buffer stock norms and (2) Table 5.13 - Food-grains allocation and off-take Public Distribution System. Table 5.13 which clearly show that the Corporation purchase double than what is needed and so high level Committee had submitted a final report at 31st July, 2002 in which recommendations were made, which are to be implemented and the annual Economic Survey has concluded in para 5.59 (Page No.96) and para 5.60 & 5.61 as follows :- Food Policy : An Outlook : "5.59.. The policy of providing price support by raising the MSP continuously though making the terms of trade for agriculture favourable, has not only distorted domestic market prices but has also eroded our export competitiveness. While developed economies continue to protect their exports through export subsidies, Indian rice (except perhaps basmati rice) and wheat are not export competitive. An exporting country cannot have its grain prices greatly mis-aligned with free-on-board export prices. But, with MSPs of food-grains ruling at the existing high and being totally mis-aligned with the costs of production as also free market prices, India is no longer competitive internationally. 5.60.1 Other consequences of the policy is not of high MSPs during the last five years are :-
5.61 Strong corrective steps aligning the minimum support prices with the cost of production of food grains are called for. Perhaps, the only solution we have at hand is to freeze the current MSP until such time it becomes equal to C2 cost or until annual procurement settles down to earlier levels of 24-30 million tones. Suggestions : The Central Government has implemented recommendations of the Fifth Central Pay Commission and gives revised Pay Scales with dearness allowance of 12% from 1998 and dearness allowance has increased from 12% to 59% which is given to the Central Government employees. The States which have adopted the Fifth Pay Commission also give the same D.A. 59% of basic pay. Unfortunately, for unorganized labor their minimum wages are not revised and increase of dearness allowance is given on different formula and not the formula of revision of D.A., which is given to the Central Government employees. On the basis of pay of Fifth Central Pay Commission, the minimum wages of a laborer in unorganized labor should be Rs.123 (One hundred twenty three) per day, in fact, he gets only Rs.40.00 (Forty rupees) per day. In fact even less than that in some States. If all subsidies are to be reduced only remedy is to increase the rates of minimum wages of all unorganized labor and also strictly enforce the said provisions. The D.A. which is given 59% of basic pay should be reduced to 12% which was given in 1998, while accepting the Fifth Central Pay Commission recommendations. Food Subsidy :- The Governments run Mid-Day-Meals in Primary Schools. The Supreme Court has also recommended Mid-Day-Meals Scheme to all States. The ground realities of the implementation of Mid-Day-Meals Scheme are different. The Primary Schools start at 12:30 noon and it takes about one hour to one & half hour to complete Mid-Day-Meals of 400 to 500 students. There is no enough water to clean utensils and enough toilets in Primary Schools. Only one period is taken and thereafter there is recess. After recess, number of students do not attend the classes having four periods. The quality of teaching has suffered and even after four years, a student is not able to read & write. The suggestion is to give food-grains to the parents of the child proportionate to his presence in the Schools. The above experiment is made, which is successful. The advantage of the scheme is that number of laborers who gather at particular place to get work for the day are looked after by the state, when they do not get work for the day. (3) Food subsidy and kerosene subsidy can be dispensed with only after wages of unorganized labor are revised and implemented. (4) In the budget of 2003, Rs.700.00 crore subsidy given to Fertilizer companies was proposed to be dispensed with. Due to pressure of all political parties, the proposal was rollback and subsidy continued. (5) The attitude and mind-set of Ministers, M.P's MLA's Judges, Government employees and specially agriculturists are required to be changed. They should realize that period of free-lunch is over and the country is facing worst financial position. The Times of India has reported on 30-6-2003 is an article that the Comptroller of Accountants General has reported that deficit for year 2001-2002 is 6.9% of G.D.P. and not 5%. Only political-will is required to reduce subsidy of Rs.49,000 crore to manageable limit. Dr. Raja Chelliah Committee had recommended to levy tax on allowances of M.Ps. in 1991 but the recommendation has not been carried out. The Committee recommended to tax the allowances of M.P.'s M.L.A.'s stated as follows :- "Similarly
there does not seem to be any justification for exempting the allowances
received by legislators i.e. M.P.'s and M.L.A.'s by virtue of their
membership of the Parliament and State Legislatures. There is not
enough justification for even exempting the daily allowance which
is given to the legislators when they attend the Sessions of the
legislatures in the Headquarters. Widening of the tax base can not
carry conviction until the Legislators themselves agree to the inclusion
of such allowances in their tax base. The Committee, therefore recommends
that the allowances paid to the legislators should be fully subjected
to tax." |