Happy Independence Day!!
I am not sure about you but when I was kid, I always dreamt that I would have participated in India’s Freedom Fight. But still we can do this through some other ways……. go ahead & read this… today you have a chance to do something for the country….
Subsidies are not always good for the economy
Subsidies are given in the form of cash payments, free goods and services, reduced taxes or reduced prices. They are usually given to the poor or as a benefit to a particular group of people or to particular industries that might have the potential to become successful in the future or the ones that are struggling to carry on business.
The Oil Ministry has asked state owned oil refineries and oil exploration companies to give the employees a choice to opt not to take subsidy on purchase of LPG Cylinder. People generally get LPG at close to half the sale price which is a big revenue loss to the government exchequer.
IOC and BPCL have already shown their support to the move by initiating within the company. BPCL chairman has shown the way to his employees by opting to not avail of subsidy on LPG that is entitled to him. 10-12% of employees have already done this 🙂
Be a Financial Freedom Fighter – opt out of LPG Subsidy
The whole process to opt out of the subsidy scheme is now available for every Indian. On LPG companies web portal anyone can access and give his/her preference. This will ensure that it is a simple process requiring minimal effort and time. The portal also has a ‘Scroll of Honour’ which will list names of people choosing to not to take ‘LPG subsidy’.
Govt Numbers Vs Your Numbers – Source Economic Times
I think this is a smart move by the government as high ranked officials and affluent will morally feel obligated to take the option of ‘No subsidy’. It is better than coercing people to opt out of the scheme.
Scroll of Honour – Indane
Process to opt out of subsidy
- Take a cool headed decision that opting out will not impact you much
- Visit website of your LPG Company – LINKS – Bharat Gas – HP Gas – Indane (Indian Oil)
- Register on website using your LPG consumer number & registered mobile number
- Opt out of subsidy 🙂
Role of Subsidy
Subsidies are important but they have to be given to the right candidates at the right time. The subsidies that were given to the IT and ITES sector when the industry was in the nascent stage like tax sops, capital subsidies, zero import duty etc. helped the industry to grow, increase exports and create jobs.
For example, subsidies like giving free education to girls in rural areas or construction of toilets for women in rural areas are steps in the right way as it would help in social development.
But giving farmers subsidy on fertilisers and subsidies on electricity in rural areas can be scrapped as it just leads to misuse of resources and it is unnecessary. Subsidies on diesel benefit the rich than the poor as in cities, people started buying more than 1 diesel car (generally an SUV) for themselves and consumed more fuel. People will use resources more efficiently if they pay the right price. Moreover the money spent on subsidies could have been used in making public transportation more efficient which would do good for more people across all income levels. This can be argued but lets leave it for some other day.
A lot of money is spent on giving subsidies and this takes a toll on government revenue. To compensate for the revenue, the government will
- Raise taxes – Leading to higher production costs and rising prices
- Borrow More Money – Leading to low returns on long term investments and debt investments
- Print Money – If more money is printed without a similar increase in goods’ production, value of currency will fall leading to less purchasing power in the hands of people and this hurts the poor.
Subsidies are required in some aspects but wasteful subsidies have to be curbed. This is an excellent initiative by the government where the power is in the hands of the people to take the right steps. I do hope people who can afford this should surrender LPG subsidy & set examples for others. Today I am going for opt out & you??