Is India creating an economy productive enough to pay for a welfare system?

With manufacturing, merchandise exports and employment all lagging despite govt efforts, politicians have re-discovered the old idea of fiscal transfers through subsidies and payouts, writes T N Ninan

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T N Ninan

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With half-done economic reforms not delivering the East Asian growth rates of old, and with manufacturing, merchandise exports, and employment all lagging despite government efforts, the big idea that politicians have re-discovered with a vengeance is the old one of fiscal transfers through price subsidies and cash payouts. They are encouraged in this because they have seen, over and over again, that it works at election time.

Perhaps the first electoral triumph built on this approach was by the Dravida Munnetra Kazhagam (DMK), in what was then Madras state in 1967, when it promised rice at a rupee a measure — a promise not delivered beyond the state’s capital, because it was unaffordable. M G Ramachandran, after he broke away
Disclaimer: These are personal views of the writer. They do not necessarily reflect the opinion of or the Business Standard newspaper

First Published: Jun 16 2023 | 7:15 PM IST

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