States are increasingly borrowing to finance subsidies. This reduces fiscal space for capital and other developmental expenditure, compromising long-term growth.
State govt provides an annual average subsidy of Rs 52,000 per pump set. And while rising subsidy costs are straining state finances, cutting back on these carries political risks.
Most Indians are spending more on essential items than last year while earning either less or the same amount. No wonder they turn to 'buy now, pay later' schemes.
Subsidies are here to stay. Worryingly, subsidy expenditure will likely increase as Indian politicians try to meet a wider set of aspirations through more diverse freebies.
According to govt data, the average all-India retail price of tomatoes was Rs 116.86/kg Saturday, with the maximum touching Rs 250/kg. In Delhi, tomatoes were prices Rs 178/kg.
The Narendra Modi government is looking at ways to check states’ spending on handouts like free electricity and rations. The first step is to tighten the noose on state borrowings.
Budget deficit target is doable, increased capex is a positive & it takes a realistic, if political, view of disinvestment. But protectionism, rising debts, slashed subsidies are problems.
The recent resignations of its seniormost judges are among the most pointed institutional protests Pakistan has witnessed since the lawyers’ movement of the late 2000s.
Without a Congress revival, there can be no challenge to the BJP pan-nationally. Modi’s party is growing, and almost entirely at the cost of the Congress.
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