A renewal of concern about fiscal management in India is partly due to the resurgence of populism even in a post-election year. Instead of working to reduce the subsidy bill, various political elements seem to be pushing for even higher subsidies. The recent decision of a group of ministers to absorb higher import and production costs of fertilisers by raising subsidy, rather than increasing prices, is just one example. Some...

The government has taken the first concrete step to start disbursing subsidies for things like kerosene, cooking gas and fertilisers to individuals, families and farmers by direct cash transfer. A task force under the leadership of Nandan Nilekani, who heads the Unique Identification Authority of India, has been given the target of getting a pilot going by the end of the year. The transfer system will piggyback on the solution...

Marie Antoinette, the liberal and concerned queen of France, on seeing the poor and hungry masses demanding bread, said in a fit of charity — “let them eat cake”. Member of the prestigious National Advisory Council (NAC) Jean Dreze surveyed the performance of the existing National Food For Work Programme (NFFWP) in July 2005 and concluded that the performance was “alarming”. The work guidelines were not being enforced, and the...

The Empowered Group of Ministers (EGoM) on fertilisers today approved the prices of complex fertilisers for the upcoming financial year 2011-2012. The EGoM, headed by Finance Minister Pranab Mukherjee, approved the prices of di-ammonium phosphate (DAP), muriate of potash (MOP), sulphur and urea for the purposes of its nitrogen component at $580, $390, $180 and $350 per tonne, respectively. These are the prices at which contracting by the industry would be...

This budget season, Finance Minister Pranab Mukherjee is stuck juggling multiple imperatives. Big social-sector schemes are soaking up money; yes, the economy is rebounding, but growth needs careful watching; the fiscal deficit is widening, feeding inflationary fears; and, as usual, every ministry wants more money. It doesn’t surprise much, therefore, that the finance ministry is looking for ways in which government expenditure can be managed better. One giant hole has...