In India various problems inherent in the public distribution system has raised a debate whether do we really need subsidies? Critically discuss the arguments in favour of and against.

Published: March 17, 2016

Subsidies play an important role in the economy of the country as they ensure equitable utilization of the resources for the people therefore India cannot totally eliminate or phase out subsidies until and unless we have another mechanism to meet the economic needs of the disadvantaged. The process of disbursal of subsidies should be transparent, targeted and temporary. However these three Ts are missing from most subsidies in India.
There are pros and cons with respect to subsidies.
The cons being: It is plagued by corruption, inefficiency, lack of transparency, having a regressive nature wherein the rich benefit rather than the intended, distorts the market ultimately leading to misallocation of resources, they are being used as vote banks by the politicians, beneficiaries become dependent on subsidies thereby making them lethargic and lastly there is the major issue of leakage wherein the real beneficiaries are not identified.
There are certain advantages which make it necessary for having subsidies. It is an enabler for the disadvantaged. If they are dismantled, the disadvantaged would be at the edge. When the government gives subsidy it is not only benefitting the individual but its benefits trickle down to the whole country.
What we need is an ‘enabling Government’ and not a spoon feeding government. (209 words)

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