Price rise is a world phenomenon today and inflation is affecting every section rich and poor of society. About three decades ago we could purchase wheat at thirty rupees a quintal, but today we cannot get it at less than three hundred rupees a quintal in big cities. Everything was within the reach of man until a few years ago. Today there is no limit to the price rise of all kinds of items.
Grants to states and U. However, most of the components of above list are inflexible. Interest payments cannot be reduces unless there is higher growth in the economy. Pensions are ballooning as there is consistent increase in life expectancy across demographic spectrum of India.
In all this, there is significant scope of reduction in subsidies as they are infested rampantly with problem of mis-targeting and leakage. This can be easily grasped from the fact that just shifting to cash transfers in distribution of subsidized LPG is expected to save annually Rs crore for the exchequer.
Some subsidies led distortion in India: Energy- Groundwater nexus — Agriculture sector is perhaps having most justifiable claim on subsidized inputs given the dismal situation of the farmers in the country. On these lines, water and electricity for agricultural use are heavily subsidized by state governments.
Again, politics seeped into this economic cause and most governments have failed to ensure rational and sustainable use of subsidized water and electricity.
Owing to this, in large parts of India, groundwater is being extracted indiscriminately as electric pump consume electricity that is almost free of cost.
This has led to dramatic fall in groundwater levels. Wells have gone dry at numerous places. Water extracted from deep earth often gets contaminated by arsenic mineral.
This, together with erratic monsoon due to climate change, has pushed rural India in deep distress. To remedy this problem, government has plans to separate agriculture feeder network from rest, under Deen Dayal Upadhayay Gram Jyoti Yojna.
This separate agriculture feeder will supply electricity only for a few hours a day. This was first tried by Gujrat and results were encouraging as it had role in making Gujrat a power surplus state, along with arresting continuous decline in groundwater levels.
Subsidized fertilizers — Nutrient Based Subsidy or NBS was introduced in with objective to promote balanced use of fertilizers and to limit fertilizer subsidy of the government. Idea was to fix subsidy as per nutrients in per Kg in the fertilizer and leave the determination of price to suppliers.
Presently Urea is not covered under the scheme due to political compulsions. Consequently subsidized price of Urea remained stagnant even when real costs of production have risen significantly.
On the other hand Potassium and Phosphorous are covered under the scheme and a fixed subsidy as per content of nutrients is given to suppliers and they change Maximum Retail Price as per market signals.
Secondary and Micronutrients are also covered under the scheme. Instead this can degrade soil and harm crop. Productivity and quality of a crop depends upon use of diversified mix of macro and micronutrients, which vary from soil to soil. While urea consumption has increased from 59 per cent to 66 per cent of total consumption in overper hectare consumption of fertilizer has declined from kg to kg over the same period.
Large part of this went to production and consumption of urea that was not needed at all. Apart from Urea, farmer is not even getting benefit due from NBS in case of subsidized potassium and phosphorus. Subsidy is provided to manufacturers, who in turn are responsible to pass this subsidy to farmers in form of reduced retail prices.
Rather, manufacturers have increased their prices forming a cartel and have usurped subsidy meant for farmers. It has plans to penalize and cancel registration wrongdoers. Another mistargeting of fertilizer is that most of this is consumed by rich farmers of Punjab, Haryana and North West Uttar Pradesh.India has billion people living in 25 states, speaking 19 major languages and over a dialects, practicing over about 6 religions and belonging to thousands of .
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