The government should further expand the scope of direct transfer of benefits through Jan-Dhan Yojna, Aadhar and Mobiles (JAM) to include fertilizer subsidies and inter-government transfers as so far there has been an uneven distribution of subsidies worth Rs 1 lakh crore going to those who are relatively well-off compared instead of those citizens for whom it was intended says the Economic Survey 2015-16, presented in the Lok Sabha on Friday (February 26).
As per the survey all sections of the administrated economy, from poor households to state and local governments and their employees receive funds from the same Sarkari financial pipe that delivers subsidies - and which JAM can improve by reducing delays, leakages, and administrative burden.
"The policy areas that appear most conducive to JAM are those where the central government has significant control and where leakages - and hence fiscal savings due to JAM - are high. This combination is met for fertiliser and within-government fund transfers," it said.
According to the survey the relatively well-off sections of society have been receiving subsidies on account of cooking gas, kerosene, electricity, railway fares, aviation and turbine fuel (ATF) plus the small savings scheme.
"The total amount given as subsidy is no less than Rs 91,350 crore not to forget that this is an underestimate of the actual subsidy to the better-off because of the underestimation of the consumption by the rich in the NSS," the survey said. "If we add the subsidies inherent in just the PPF schemes, the total subsidy to the well-off amounts to above Rs 1 lakh crore. This represents substantial leakage from the Government's kitty, and an opportunity foregone to help the truly deserving," the survey added
The last economic survey had laid down the genesis of the JAM trinity to reduce subsidies and the latest survey gave pointers on how to expand its scope further. The concept was widely used in reducing subsidy leakages in LPG and food grain.
"While deciding where next to spread JAM, policymakers should consider the challenges of beneficiary identification, distributor opposition and beneficiary financial inclusion. Spreading JAM to other areas will reduce leakages and provide more fiscal space to the government," it said.
Commenting on the survey, Sunil Kumar Sinha, Principal Economist, India Ratings & Research said: "Economic Survey 2016 outlines many of the imperatives that are well known and emphasizes on investment in human capital. No doubt both aspects of human capital - education and health are critical for reaping the demographic dividend and if this indeed is government thought process then hopefully FY17 budget will devote more resources in these areas."
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Ashish Sinha is an experienced business journalist who has covered FMCG, auto, infrastructure, tourism, telecom among several other beats. Ashish has keen interest in the regulatory scenario impacting different sectors. He writes on aviation, railways, post and telegraph, infrastructure, defence, media & entertainment, among a wide variety of other subjects.
