Subsidies Help Nobody – They Hurt

We have a lot of subsidies out here – in India. Almost everything we get is subsidized. Once a subsidy is started there is vehement opposition to its removal. There are demonstrations on streets, and public property is invariably destroyed to make a point though I dont know know how that makes government jittery.

Politicians are always introducing new sops, a couple of months prior to elections. Of course, nothing leaves from their personal funds. Nobody bothers to identify how many people really need that subsidy. And is it necessary to give it across the board? There are ample middlemen who pocket the funds. Taxpayers continue to pay taxes, and inspite of that, they are forced to pay bribes because Income Tax officials barge in at their whim to collect some dues like rowdy sheeters. If a taxpayer refuses to pay bribes, such tax officials (include central excise officials in the list), he’s had it. Books will be ceased, and the person or firm would have to run from pillar to post till bribe is paid. In other words, the person cant escape paying bribe even if he is honest and law abiding citizen.

But then, I am straying from what I wanted to say. Politicians and their sops leave little money to start those institutions so that people can be educated. Such sops leave little money for infrastructure, hospitals, old age homes, orphanages, and public transport. We have one of the worst form of public transport. Railway bridges are in dilapidated stage. One fine day, such bridges can collapse and many would die. But there is no money to repair them simply because money has been misappropriated. Our leaders spread hands in front of others highlighting the plight of the poor, but this is certainly not the way to remove poverty! If those educational institutions were started, then poor would be educated and earn. Now, education is subsidized, but the rich who can afford to pay the fees are the beneficiaries. What is the use of subsidizing such education if the person is not going to stay in the country? This rich person, after using the resources, leaves for other countries like the US, or Australia. That is brain drain plus resource drain!

And you’d think Americans or Australians would be happy to have such qualified person around. But you are wrong. These rich and qualified individuals usurp the jobs of local folks. They offer their services at lower rates because they know how to adjust in less thanks to the experience back home. It is not always their superior intellect. It is their cheaper service that gets them those jobs. Why then do the rich nations bend over their backs to give aid? People can live without that much. The more they are given, the more they would want. And the more middlemen and rich folks will pocket.

There would be pain for a while. People have got accustomed to FDI, and IMF loans. But once they realize that nothing is possible, they will start using the resources more sensibly. Politicians would become answerable. Taxpayers money would be saved instead of being used for serving any loans.

Not at all happy with the subsidy thing. Today a child became sick because food served at mid day in the school was unfit for consumption. Made me realize who made the money.