Always sacrifice economic sense if it wins a few more votes. That logic drives competitive politics in India, spurring myopic measures that inflict long-term damage. Too many elections are dominated by three issues — subsidies, job reservations and communalism.
Economists Mundle and Sikdar estimate that merit subsidies (for elementary and secondary education, food distribution, water supply and sanitation) are 4.5% of GDP against 5.7% for non-merit subsidies. You may argue that some other subsidies should also qualify for the “merit” list. But considering that the entire revenue of the centre and states is just 18% of GDP, a considerable sum is diverted from social and economic development to unwarranted populism.
Economists Mundle and Sikdar estimate that merit subsidies (for elementary and secondary education, food distribution, water supply and sanitation) are 4.5% of GDP against 5.7% for non-merit subsidies. You may argue that some other subsidies should also qualify for the “merit” list. But considering that the entire revenue of the centre and states is just 18% of GDP, a considerable sum is diverted from social and economic development to unwarranted populism.