Rabu, 08 Januari 2014

Everybody loves a freebie

When I am given a freebie, its a perfectly justified economic act (and I will riot on the streets if it is withdrawn) , but if you are given a freebie, then its economic mismanagement, populism, wasteful expenditure, etc etc. This is the economic philosophy of most Indians, and in reality, most of the people in this world.

This post is a response to the criticism of the raft of freebies granted by the Aam Aadmi Party in Delhi. For non Indian readers, the Aam Aadmi Party, a completely new political outfit formed by non politicians and riding on an anti corruption platform has come to power in the state of Delhi. This is a huge breath of fresh air in the murky politics of India. But they are left of centre and desperately need an Economics 101 course. The two first acts on assuming power was to grant everybody 666 litres of free water and then to halve the power tariff for low volume users. In this blogger's opinion the Party is brilliant politically and disastrous economically.

The learned and the wise of the land have strongly criticised the freebies - populism, wasteful expenditure, etc etc. While there is no denying all of that I am going to train my guns on the accusers and take them to task on the freebies that they get.

One of the worst freebies in India is the cooking gas subsidy. Cooking gas is exclusively used by the middle class and the rich. A poor man in India can hardly afford a gas stove - his fuel is firewood or kerosene. And yet cooking gas is subsidised by more than 50%. I am yet to hear of a single Indian willingly foregoing the cooking gas subsidy - in fact you can't if you are buying from the state oil companies, the chief distributors of cooking gas.

The second absolutely awful subsidy in India is the subsidised price of diesel for cars. Under the guise of needing to subsidise diesel for transport and the impossibility of two tier pricing for diesel, there is a massive unintended subsidy for those owning diesel cars. Diesel cars outsell petrol cars in India by a whopping amount.  Its very difficult to argue that diesel cars are owned by the poor !!!!  Anybody who criticises the Aam Admi Party freebies driving around in a diesel car should be shot.

Take the absolute farce of the Board of Control for Cricket in India. Easily one of the richest organisations in the land. They are hardly able to count the cash that is coming in - that's the rate at which it is flowing. And they pay no taxes - Why ? Because they claim they are a charitable organisation. You and I, the idiots who pay income tax, are subsidising the BCCI.

I am not singling the urban well off. His rural cousin is equally complicit. No rich farmer pays income taxes - one of the most unjustified freebies is the exemption of agricultural income to income tax. He can earn an income of a million (and many do). He pays no income tax.

I can go on and on. Everybody who is criticising freebies is a complete hypocrite  - its all a game of how much anybody can loot from others. Every single citizen of India is complicit in this.

As I said, this is not a peculiarly Indian disease. The non poor who avail of Medicare in the US ,  the rich farmer in France who is cossetted with all sorts of subsidies, the Chinese rich who are taking advantage of the hukou .......... everybody has his hand in the till.

The Aam Aadmi Party's economics deserve to be roundly criticised. But before anybody does that, it would do well if he could forego the boondoggles he is enjoying.  That includes this blogger !
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