Government bites the bullet - Views on News from Equitymaster

Helping You Build Wealth With Honest Research
Since 1996. Try Now

  • MyStocks

MEMBER'S LOGINX

     
Login Failure
   
     
   
     
 
 
 
(Please do not use this option on a public machine)
 
     
 
 
 
  Sign Up | Forgot Password?  

Government bites the bullet

Mar 30, 2000

The time to take tough decisions has come (actually it has been long overdue, but better late than never) for the present government, which has announced a rise in prices of grains sold through the public distribution system (PDS). This is the second such revision in prices over the last one month. The incumbent National Democratic Alliance (NDA) seems to be finally making the right decisions although they may have difficult political connotations.

A large chunk of the government's Rs 228 bn subsidy bill is accounted for by food subsidies. However, in view of the large fiscal deficit, which is expected to cross Rs 1,110 bn in FY01, sustaining this expenditure has become increasingly difficult for the government. And to put things in perspective, this figure pertains only to the explicit subsidy bill of the government. The actual bill, which includes hidden subsidies, is a multiple of this estimated to be 10% of GDP.

The need for subsidised food for the poor is not disputed by anyone. But in India, a large chunk of the subsidies ultimately benefit the well off leaving little for the poor. In light of this, it is essential that the government rework the method of directing subsidies. Also there is a case that the price at which goods are sold to the poor atleast cover the cost of the same.

The NDA government seems have bitten the bullet. The key test would however lie in its ability to convince its coalition partners regarding the justifications of such a move. If it were to fail, it would not be long before governments start dishing out fresh subsidies to all and sundry.

March 30, 2000

Equitymaster requests your view! Post a comment on "Government bites the bullet". Click here!

  

More Views on News

These Stocks Have Rallied Over 300% In the Last 12 Months. Is the Rally Justified? (Views On News)

Nov 12, 2021

As many as 150 stocks from the BSE 500 index deliver multibagger returns in the past one year.

Ultimate Guide to Hedging Your Portfolio (Fast Profits Daily)

Sep 21, 2021

How can you protect your portfolio in a market crash? Find out in this video.

Ride the Indian Real Estate Revival with this 'Different' Smallcap Stock (Profit Hunter)

Mar 23, 2021

Affordability in the housing segment has never been so good in last one and a half decade. Here's how you could make the most of it...

My Latest Stock Recommendation (Fast Profits Daily)

Oct 9, 2020

How I picked an exciting stock using trends from both the commodity and equity markets.

Data is the New Oil but It's Also the New Sugar. Here's How to Fight it (Profit Hunter)

Jun 1, 2020

Is too much data hurting your quest for market beating returns?

More Views on News

Most Popular

Infosys vs TCS: Which is Better? (Views On News)

Nov 26, 2021

In the post pandemic era, the top two IT companies in India are fighting to capture the growing demand for IT.

This Multibagger Stock Zooms 20% After Dolly Khanna Buys Stake (Views On News)

Nov 24, 2021

Shares of this edible oil company zoomed over 50% in three days after ace investor bought around 1% stake.

6 Popular Stocks that Turned into Penny Stocks (Views On News)

Nov 27, 2021

A look at popular stocks that crashed big time and never recovered, i.e. which went from 'Multibaggers to Multibeggers'.

India's Top 5 Monopoly Stocks to Watch Out for (Views On News)

Nov 30, 2021

These 5 companies dominate their sectors with a huge piece of the pie.

5 Indian Companies Embracing Blockchain Technology (Views On News)

Nov 23, 2021

Blockchain adoption in India was slow in the past. Now, the technology is being well received.

More

Become A Smarter Investor
In Just 5 Minutes

Multibagger Stock Guide 2022
Get our special report Multibagger Stocks Guide (2022 Edition) Now!
We will never sell or rent your email id.
Please read our Terms

MARKET STATS