Economy & Nation Exclusive
Subsidies kill, but are less murderous than political intentions

The government's idea to get people to voluntarily forgo their LPG subsidy as an exercise in "nation building" has raised peoples' hackles.  The SMS from oil companies says, "Want to join Nation Building? It's simple - just give up LPG subsidy." Now if only the minister or the prime minister had said, "I am giving up my LPG subsidy. Join me in nation building"


The Union Government wants me to forgo my subsidy of around Rs500 per LPG cylinder. And it thinks that if I ignore the SMS, it will ‘expose’ the ‘rich’ who want to hang on to benefits meant for the poor.  If all of us filthy rich people who save fortunes due to this subsidy on cooking gas decide to give it up, it will add up to a princely sum of Rs3,500 crore. Mr Narendra Modi, thank you. I have no guilt in enjoying this subsidy. In fact, I get a small vicarious pleasure in getting something back from a system that has only taken from me all my life. Why is it that the system favours those who are parasitical to the extreme?

Given the noise about the Gujarat model, I thought that the age of meritocracy had to come. Alas, the Modi government seems to be bent on pushing honest citizens against the wall. Encouraging parasites to thrive through subsidies is surely not the way Gujarat has reached where it has, but the message this time is all wrong. If the Modi government is serious about the “Gujarat model”, we should actually see all subsidies being banished and that there are rewards for honesty and merit.

The government’s estimate of ‘under recoveries' on LPG is around Rs450 per cylinder and a direct contribution by the government of around Rs23 per cylinder. So at worst, the ‘subsidy’ on LPG is around Rs500 per cylinder. (Source of above nos). The government could easily remove the subsidy on LPG cylinders and provide cash subsidy to the poor. In fact, the whole business of ‘under recoveries’ on petroleum products is a sleight of hand, if one takes in to account the taxes on petroleum products imposed by the central and the state governments.
We have read about Members of Parliament (MPs) ordering hundreds of cylinders. Why not have the MPs come forward and forgo a few of their perks first in the interest of 'nation building'? Instead, even while the government wants us to forgo the LPG subsidy, we have television channels reporting how MPs are demanding special perks for themselves at airports.
The fiscal deficit of the government for the current year is Rs5.31 lakh crore. If all the subsidy on LPG to the ‘rich’ were removed, it would perhaps reduce the deficit by Rs3,500 crore. So the government is attempting an emotional blackmail whose impact will be more negative than positive.  Unless of course, the wise Finance Minister, Arun Jaitley, can cook up 35 more social impact schemes of Rs100 crore each.

The other thing I fail to understand is, why successive governments only keep milking honest taxpayers? If someone who pays no taxes, gets free electricity, free food and a subsidised gas cylinder, he is doing it at my expense. I am being penalised not because of my circumstances but because of my efficiency. And I spend more- so I also contribute more by way of indirect taxes. There is no stream of income or expenditure of a salaried tax payer, that escapes taxation.

The exhortation to give up the LPG subsidy is coming from a government in which the parliamentarians earn tax-free salaries and perquisites which are likely to shame a corporate CEO. Further, MPs get a pension for just being voted in once. It is neither fair nor equitable. I am sure that the freebies given to parliamentarians, including spends on their security, families, housing and what not, easily exceed Rs3,500 crore.  During election time, the filing of returns showed eye-popping numbers as income and wealth for so many politicians! When the government does not do anything to limit its own executives, it has no right to tell me to tighten my belt.
As a tax payer, I contribute to the nation building. It is the tax payer who helps build the infrastructure that the subsidy eating citizen enjoys. Yes, I am being bloody minded, but it is the politicians who are coaxing this reaction from me. We all know that the problem of this beloved country is the burden of too many people. Why does the government not link subsidies to the smallness of a family and help solve a problem at its root rather than do something impulsive that only irks the taxpayer?
And there are so many who get away: Agricultural income is tax free. No issues with that, but when politicians and businessmen start claiming crores of rupees under this head, the objective has been lost. Fix these leakages first, before attacking the belaboured and salaried tax payer. As a consumer, I am paying high prices for agriculture produce. Fix the profiteer first, instead of parroting that the farmer does not benefit. When there are so many fires to be doused, why is the government creating a new one?



Ashok Visvanathan

2 years ago

When Sugar was included in the Ration, every millionaire's housewife used to buy it. Which housewife is going to say OK to giving up the LPG subsidy ? Lastly, when the Kargil war broke out, people donated hundreds of crores voluntarily.... The Vajpayee govt a few months later imposed a Kargil Tax. Draw your own conclusions !


2 years ago

good one! this is one reason why i always prefer to travel by garib rath. that is the only way to get back your taxes :)

Mahesh S Bhatt

2 years ago

Crony Capitalism led to USA Financial disaster & total Socialism led to Soviet collapse.

Median is somewhere the truth lies.

India is heading American way of living by splurging on luxuries & cutting on necessities.

High land costs is leading to loads of unwanted Property advertisements expenditures which could have avoided if Politicians/Municipalities were non corrupt.

Now NPA's all are making money.

India cannot afford ads for necessities.

We had Amitabh Bachan advertising for Amby Valley ( Subrata Rai Sahara is in Jail)

Now Amitabh Bachan advertising in Lodha Builders in Palava, Daawat basmati chawaal are this bonafide expenses,where people are suffering from malnutritions.

Big IPL & than match fixing regularly?Smart Politics/ Business/Legal nexus covers the same smartly.CWG Games/Adarsh 2G/ 4G/Oil scams covered up already/vegetable prices terror political+business mix.

Every evening we have Political Attyachar for Arnab Goswami Times Now's national debates which makes our Country look like pack of crooks.

There are 84 types of taxes.

Railways have now started imitating Mumbai Municipality by flooring platforms/bridges poorly done so year on year re-flooring becomes the norm.

Mumbai Municipality had bad roads now we are gifted with regularly uneven footpaths with paver tiles.This is good usage of taxes/productivity.

Check Mahim (WR-Churchgate side)station tiles they are giving way & chances sooner another person might lose his life/body part in broken tile fall in rush/rainy hour.

While building toilets/water stations are not heeded.

Rich are turning a blind eye to reality in name of optimism which shall lead to anarchy.


Sankar Amburkar

2 years ago

An eye for an an eye will make the whole world go blind. Why wait for somebody else to change before you change let alone MPs and MLAs. If you think you can afford LPG at a market cost and don't need subsidy, then be the change you want to see and pay the full amount to get the LPG.

Who knows, people may start following you and eventually the MPs and MLA will give up their perks.

Mahesh Kumar Tennati

2 years ago

All that is said in this article is true, but how to make government aware of the public feeling? I am sure no one from Govt or oil companies would read this article to find out what public thinks.
Are these the "Acchhe Din" we voted for?


2 years ago

While I agree with the article on many things, I disagree with 'a system that has only taken from me all my life'.

Most of us come from families which were poor and undereducated only a generation or two ago. Education, highly subsidized by taxpayers and philanthropists, and our ability to postpone gratification helped 350 million to enter the middle class in just a few decades.

No country has managed this: even with all the west's colonizing, arms/drug trade, loot, slavery and profit generating wars it took centuries.

India's only internal problem is huge over population. Reduce that and the reasons for scarcity, corruption, an infuriated population, filthy cities, etc. are immediately removed. Corruption free, efficient countries always have small populations compared to their resources.


2 years ago

I could not agree more with the views expressed in the article.
While the politicians milk the govt. in various ways, the most irritable is the life pension and they gave themselves, if I remember right, also the right to have a pension even when the parliament does not last the full term of five years!

Davidson D

2 years ago

What about the junkets of the leaders abroad? Nobody is talking about the poll expenses that have been incurred in recent polls. There is no verification by any agency of this expenditure and the authenticity cannot therefore be verified when submitted to EC.

Rajesh Kumar Singh

2 years ago

Subsidies are a notional relief to people paid out of their own money. If this is true, why should there be any hue and cry over this? In fact it's the people who pay for all the follies and failures of the govt. as well as the unproductive loss making corporate sector. It's the people who pay for the follies of Malya and Biyani and Chidambaram and Jaitley. In fact there should be greater transparancy about how the subsidy bill figures are arrived at.

Sucheta Dalal

2 years ago

Consider my experience. Since I use a microwave regularly and we are a family of 2, we dont need a cylinder more than once in 3 months … sometimes, if we are travelling one cylinder last 4 months.
Isn't this a contribution to national interest?

Well, the oil company unilaterally decided that if you dont need a cylinder at least once in 3 months, your connection is frozen. yes frozen!!

I was sent into a complete panic, had to use my connections to call Bharat Petroleum. Then re-submit all my KYC documents to get the connection restored.
BPCL claims to use technology. A simple check would have shown the frequency of my use!
But no, India has such terrific IT prowess that we create checks and balances without providing for outliers or past record.
And if you harass ordinary people … well arent we used to it already??


R Balakrishnan

In Reply to Sucheta Dalal 2 years ago

In India, unless you know someone or have the spunk to fight, the system will destroy you. And the govt/PSUs get vicious only at those they think do not fight back. They say nothing when a MP will use 30 cylinders a year and on top of that eat subsidised meals at the canteen, which also gets subsidised LPG, for sure


In Reply to Sucheta Dalal 2 years ago

Very true. And that refers to the complete lack of public service orientation of these 'authorities'. Maybe if they promised a higher service level for customers renouncing subsidies, it would be a win-win.

However, I hold to my POV that a summary rejection of a voluntary renouncement of an untenable right is hardly a responsible response

Gopalakrishnan T V

2 years ago

Very well expressed. Let the politicians, bureaucrats, industrialists, highly placed professionals, top businessmen, big and bad borrowers of banks set an example that they do not loot the nation in any manner and they also set an example to honest tax payers that they are fair to the government and they are really contributing to the nation building. Let these set of people be a role model for the people to follow by surrendering the free gas / subsidised gas they enjoy either on Government account or at some other account. Let the PSUs run efficiently without allowing any wastage and leakage of income in any manner. Let the banks run their business efficiently,ethically and see that they do not generate Non Performing Assets and add burden to the tax payers and the Government.Let the tax evaders be made to account for their black money hoardings in different forms and come to the rescue of the Government in Nation Building.Middle class is always targetted either forcefully or emotionally and this doesn't seem to be fair. This approach gives only wrong signals that the government cannot be effective in improving governance standards and improve the economy's performance in minimising the subsidies and reducing the fiscal deficit.



In Reply to Gopalakrishnan T V 2 years ago

Are we saying that we want everyone else to be honest before we will contribute to nation building?

Come one. Leadership is not reserved for the top - it can start at any level. Lets be role models of doing what we believe.


2 years ago

I fully agree with the views of the writer.
Let giving up the subsidies on LPG cylinder and other Perks which the MPs MLAs and other Govt. Employees, including Railway, Airlines Retired Officers enjoy. The we can talk about hones Tax Paying Citizens.
P. Chandrasekaran.

MG Warrier

2 years ago

The message being sent out through the SMS via oil companies to LPG consumers is not very clear. The message reads: “Want to join nation building ? It is simple-just give up LPG subsidy. Visit or distributor for details” This is a very crude way of handling subsidy which is hard cash. Tomorrow you may get another SMS through some other agency asking you to give up something else.
Why not make similar ‘appeals’ to those who owe heavy arrears of taxes or those who have ran away with bank loans, and publish the results?


2 years ago

Why this hit job against a well intentioned move?
Yes,our Prime minister Modi had already shown that he leads from the front when it comes to being honest and not looting India.

Sure, we have lot of other bigger issues that need addressing; but that doesn't mean other smaller things can't be done.
A constructive criticism would have been suggesting a priority service for those not using subsidy. I am not filthy rich, but I am not using subsidy on LPG. I buy it from a private supplier. I am sure lot of people would be willing to pay full cost of LPG if they get good service.



In Reply to srinivas 2 years ago

I agree. Shocked at the hypocrisy of the self-righteous people. Quite disgusting, to read the remarks - let everyone do it before you ask us, is the general approach.

Anyway, I've not seen these SMS's yet, maybe its for people taking cylinders - I get piped gas which is anyway cheaper. But I'd give up any subsidies immediately, if I had a choice - subsidised electricity, water, gas are some of the things that I do get as I fall in the least consuming bracket.

Madhur Aggarwal

2 years ago

This article is well written and shows the reality of Govt. attitude towards people.
No govt. in past 20 years has shown sincerity towards General Public - which they are supposed to show.
We r Taxed !! Taxed and Taxed as years goes by and
MPs are getting higher payout every year .

Syndicate Bank CMD SK Jain arrested by CBI

CBI arrested six people including the CMD of Syndicate Bank, SK Jain, for allegedly taking a bribe of Rs50 lakh, say media reports


The Central Bureau of Investigation (CBI) has registered a case of alleged bribery of Rs50 lakh against six people including Sudhir Kumar (SK) Jain, chairman and managing director of Syndicate Bank.


The allegations are related with Jain allegedly asking for a bribe to extend credit facilities to certain companies. According to initial reports, CBI also carried out raids at 20 places in four cities — Bangalore, Bhopal, Mumbai and Delhi. It has recovered a bribe amount of Rs50 lakh.


Searches, so far, have led to recovery of several asset papers and incriminating documents. The agency said further investigation is on.


Jain assumed charge as CMD of Syndicate Bank on 8 July 2013. Before becoming the CMD, he was executive director of Bank of Baroda.


In a statement on behalf of the All India Bank Employees' Association (AIBEA), General Secretary C H Venkatachalam has hit out at corruption among high-ranking officials in banks. “Earlier, way back in the 90s, one CMD of UCO Bank was arrested for his involvement in the Harshad Mehta Scam and he was jailed. There have been cases coming up now and then and many cases get hushed up,” he said.


The statement goes on to note that, cases of high level officials at the State Bank of India and the United Bank of India were either hushed up or buried. This is especially problematic when you consider that ordinary employees of these banks suffer swift action for much less serious misdeeds and misdemeanours.


“It is high time that the Government should frame a set of rules and conduct regulations applicable to the EDs and CMDs of the Banks,” he said. Venkatachalam goes on to add that, “In a context where Banks are facing huge bad loans, the accountability for the same at the top should be ensured.”



Gopalakrishnan T V

2 years ago

How top level Executives become Corrupt? One reason is greed and the other reason is to get back the investment and its return.To get into senior level if merit is the only consideration, many of banks' Executives may not be there today.They have to use all corrupt practices to get into some level.Otherwise one has to mentally and financially sacrifice and remain at low level.This is applicable not only to banks Executives but also to various posts in different Institutions. Banks corruption is not visible and there are umpteen ways to camouflage. Here in this case the Chairman has perhaps acted more greedily than perhaps the safety and bench mark level and might have displeased some in between and he has been exposed and caught. The crux of the matter is that Corruption in India is very deep rooted and literally from cradle to grave corrupt practices are in practice. Some get caught and make news, majority get escaped and make many to practise the majority's clever way of practices.

M S Prabhakar

2 years ago

From Lehman Brothers to Rajat Gupta, it's well known that this world has only two categories of people: Those who are honest (and conscientious) and those who are not. Everybody in the latter category indulges in corruption at some point of time or the other based on a continuous evaluation along three dimensions of opportunity [X, absolute ₹ value], risk [Y, probability of getting caught] and return [Z=X(1-Y)].

So, the only way to end (theoretically you can't end but only minimize) corruption is to skew the risk-return equation to higher deterrence. USA realized this long back and has devised stiff penalties running into billions for offences involving millions. Till that day arrives in India, we have no choice but to keep substituting names in yesterday's scams into scams of tomorrow.


Kiran Bhagwat

In Reply to M S Prabhakar 2 years ago

Interesting comment! But then, since Y can only be between 0 and 1, the return in your equation will never be negative :-). You need to create an equation where the return can be negative too in order to make it a deterrent!

M S Prabhakar

In Reply to Kiran Bhagwat 2 years ago

Thank you for pointing out. The revised formula would be Z=X(1-Y)-P, where P is the total ₹ value of penalty + all associated costs like legal, lost salary associated with job and other legitimate money-making opportunities, if the person was free (using discounted cash flow). Bankers should understand this language!

Mahesh Krishnamurthy

2 years ago

The Persons who have bribed him should also be made public.


2 years ago

Nothing suprising these were long over due. “Never use bankers,” Valeant Pharmaceutical Chief Executive Officer Mike Pearson said. “At McKinsey, we did that for a living.” Pearson said he doesn’t view India as a favorable market because “prices are terrible and they have no respect for intellectual property.”

Pearson grew up the son of a Bell Canada phone company employee in southern Ontario and says he learned the importance of value early.

“I grew up in a middle-class family and every dollar mattered -- a lot.”

He and his family saved up so he could go to Duke University in Durham, North Carolina, to study engineering. He graduated summa cum laude and then stayed in the U.S. to study for an MBA at the University of Virginia. From there he went to work for consulting firm McKinsey & Co., where he stayed for 23 years and advised mining companies, a hotel chain and a chicken producer.

“What it afforded me is a perspective to how other companies are run and what the differences are,” said Pearson, who now takes about 300 flights a year instead of the 400 he took at McKinsey. “You don’t have to gold-plate everything. Spend money where it adds value and be thoughtful.”

Veeresh Malik

2 years ago

The correct term to be used for such activities would probably be "extortion" or "anti-National crimes". Banks have, of late, become tools of oppression and often responsible also for closing down industry by their criminal methods.

Hope the fear of CBI shakes the other corrupt banks up too.

Nifty, Sensex may try to rally midweek: Weekly Market report

Nifty has a strong support around 7,450


We had mentioned in last week’s closing report (25 July 2014) that, if the NSE's CNX Nifty is not able to close above 7,840 by Tuesday, the indices will head towards 7,600.


During the week that ended on 1st August, Nifty closed at 7,603 after hitting a weekly low of 7,594. The S&P BSE 30-share Sensex closed the week at 25,480.84 (down 646 points or 2.47%), while the NSE’s 50-share CNX Nifty closed 188 points  or 2.41% down.


We expect the market to move sideways over the next week. The first support for Nifty is at around 7,535-7,575. The second support is at around 7,450.

On Monday, after a range bound beginning, Nifty suddenly weakened and plunged lower and closed at its lowest close in five days. Nifty closed at 7,749 (down 42 points or 0.54%). India's measures for raising the investment limit for foreign institutional investors in government bonds is a positive for the country's credit profile, since it will help stabilise domestic interest and currency rates, Moody's Investors Service said on Monday. Moody's rates India at a "Baa3" rating, the lowest investment-grade rating, and a "stable" outlook.

India's stock markets remained closed on Tuesday for Ramzan Eid.

Wednesday was the only day during the week when the indices managed to close in the green. Nifty closed at 7,791 (up 43 points or 0.55%). US gave out mixed data on Tuesday. The Conference Board's consumer confidence index rose to 90.9, the highest reading since October 2007. Residential real-estate prices advanced 9.3% in the 12 months ended May, the slowest pace in more than a year, according to the S&P/Case-Shiller index of property values in 20 cities.

Nifty again resumed its downward journey on Thursday, closing at 7,721 (down 70 points or 0.90%). The global rating agency Fitch Ratings, retained the 'BBB-' sovereign rating - the lowest investment grade - for India and also said a revision will depend on the government's efforts to usher in bold reforms. The agency has also retained a 'stable' outlook for the country's ratings.

Weakness in the European market and selling by foreign investors in the domestic market, played negatively on market sentiments on Friday. On Thursday, the foreign investors were net sellers of Rs1,654.86 crore equities, their highest sales since 21 June 2013. Nifty closed at 7,603 (down 119 points or 1.54%), this was the highest percentage loss since 8 July 2014. HSBC India Purchasing Managers' Index reached a 17-month peak of 53 in July, up from 51.5 in June.

India's fiscal deficit target for the current fiscal year is "daunting", finance minister Arun Jaitley said on Friday. The month of June 2014 recorded a fiscal deficit of Rs57,022 crore, against a fiscal deficit of Rs1.27 lakh crore in May 2014.

For this week, among the other indices on the NSE, the top two performers were Consumption (0.16%) and MNC (0.14%), while the worst two performers were Infrastructure (4%) and Energy (4%).

Among the Nifty stocks, the top five stocks for the week were Bharti Airtel (7%); Hindustan Unilever (4%); Bank of Baroda (4%); Punjab National Bank (3%) and Lupin (3%). The top five losers were Larsen & Toubro (11%); Jindal Steel & Power (6%); Tata Power (6%); NTPC (6%) and Coal India  (5%).

Of the 1,438 companies on the NSE, 427 companies closed in the green, 984 companies closed in the red, while 27 companies closed flat.

Out of the 27 main sectors tracked by Moneylife, the top five and the bottom five sectors for this week were:



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