Rs 1 lakh crore worth subsidies going to the well-off, people who really don’t need them

Believe it or not, subsidies worth more than Rs 1 lakh crore are going to the well-off. The Economic Survey 2016 vouched that subsidies for the well-off should be cut.

The Economic Survey 2016 stated that Indian state's generosity is not restricted to its poorest citizens. In fact, in many cases, the beneficiaries are disproportionately the well-off.

The survey stated the well-off were enjoying benefits on small savings schemes and tax or subsidy policies on six commodities -- cooking gas, railways, power, aviation turbine fuel, gold and kerosene.

"We find that together these schemes and policies provide a bounty to the well-off of about Rs 1 lakh crore," the survey said, adding that these incentives benefit not the middle class but also the very top end of the income distribution.

Modi had last month compared subsidies for the poor with tax breaks for the rich, saying "When a benefit is given to farmers or to the poor, experts and government officers normally call it a subsidy. However, I find that if a benefit is given to industry or commerce, it is usually called an 'incentive' or 'subvention'. We must ask ourselves whether this difference in language also reflects a difference in our attitude? Why is it that subsidies going to the well-off are portrayed in a positive manner?"

The Economic Survey today said the Rs 1 lakh crore of subsidy going to the better-off merely on account of 6 commodities plus the small savings schemes represent a substantial leakage from the government's kitty, and an opportunity foregone to help the truly deserving.

Among six commodities, the maximum subsidy to the rich is for LPG at Rs 40,151 crore followed by electricity Rs 37,170 crore, Kerosene Rs 5,501 crore, Gold Rs 4,093 crore, Railways Rs 3,671 crore and ATF Rs 762 crore.

While subsidy on account of Public Provident Fund is Rs 11,900 crore taking the total to Rs 1,03,249 crore.